RV'ing to Invest in our Retirement
Driving Towards FIRE,  Investing In Retirement

Exchange Traded Funds & Mutual Funds; Investing in Retirement: Part 1

Exchange Traded Funds & Mutual Funds; Investing in Retirement & Investment Accounts…Part 1 (ETFs).

Investing in ETFs

1. ETFs & Mutual Funds are similar but operate differently. ETFs typically track a specific market index (Nasdaq, S&P 500, Dow Jones) and are traded REAL time just like individual stocks.

2. ETFs offer a mix of different assets as an easier way to diversify. ETFs are often very inexpensive to purchase and offer investors tax advantages.

3. Purchasing just one ETF can offer a mix of companies within a particular segment, ie Technology or Green Energy, or Industrials, etc.

4. ETFs are considered low risk and low cost, but you can choose your risk tolerance percentages. If you are younger and just starting out, you’ll typically want to be more aggressive which can be more volatile, but could grow your $ at higher percentages. If you are older and need security and growth, you are more risk adverse and want a less aggressive approach.

5. ETF holdings (number of companies/equities) can range from 20-190. The more holdings you have across a particular segment creates growth but protects you if one or two companies’ stock happens to fall on any given day. Usually you’ll see percentages of your “top holdings”, like 4.7% Apple, 3.5% Microsoft, 2.8% Alphabet(Google) and so on. If Google performs well on one day and Apple falls on the same day, but Microsoft stays consistent, your gains vs losses will be balanced.

6. Many companies offer ETFs. Places like Fidelity & Vanguard are your most common. You can create an account with either for FREE, choose your account you wish to open (Individual Brokerage, SEP IRA, Roth, etc (as well as others like Charles Schwab) and purchase and trade their ETFs many times with zero fees. This would be considered your “portfolio”.

7. ETFs are great for beginners who wish to invest, but want to be passive with managing and keeping up with the market everyday. Because ETFs contain all types of investments like stocks, commodities, & bonds which can either be domestic (US Based) or international equities or both, offer a chance to consistently gain in value without the stress of everyday managing.

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