ETFs Can Provide Some Other-Worldly Benefits To Investors
ETFs may sound like aliens from the "Star Wars" movies. But they're actually an increasingly popular investment that offers several potential benefits to investors. The acronym stands for exchange-traded fund. And if you don't already have ETFs in your portfolio, you might want to consider adding some to the mix.
ETFs are securities that normally track an index, such as the well-known Standard & Poor's (S&P) 500. They are traded on a public stock exchange, so prices fluctuate throughout each trading day. Because of this liquidity, and the fact that fees associated with the investment are typically reasonable, more investors are opting for ETFs.
Technically, the ETF owns underlying assets—such as stocks, bonds, commodities, or foreign currencies—and this ownership is divided into shares for investors. Therefore, you own the ETF's investments indirectly and your shares represent their market value.
What's more, ETFs let you diversify across a wide range of underlying investments, while providing investors with other advantages such as being able to buy short or on margin. And taxable gains aren't passed through to shareholders, although you will be taxed on any gains under the usual rules when you sell an ETF.
We can help you determine whether this investment "creature" is suitable for your situation.
© 2021 Advisor Products Inc. All Rights Reserved.
- Watch Out For "Grandparent Scams"
- How To Spell Estate Tax Relief
- Six Tax Items For Small Businesses
- Do You Deserve A High Grade In Financial Literacy?
- Why Turn Down An Inheritance?
- Q's And A's About Financial Aid
- Five Retirement Questions To Answer
- Getting A High Tax Grade For Higher Education Credits
- Five Steps When You Inherit Assets
- How Now, Dow Jones Industrials?
- Don't Be Caught Red-Handed By The Wash Sale Rule
- How You Can Manage Risk Aversion
- Taking Socially Responsible Investing To The Next Level
- One Last Shot At A Tax Exemption
- Sowing Tax Seeds For Capital Gains