Most of us know exchange-traded funds trade like stocks. These funds are easy, more affordable way to invest in different bond and stock markets. However, we cannot help but ask the following questions: What are ETFs? Why should I consider ETFs? Is it worth investing? How do I buy and sell those? How do I trade ETFs?

For the last 20 years, more and more investors turn to ETFs. As of August 2015, BlackRock disclosed around $3 trillion is invested internationally through ETFs – and the number continues to grow.

Let us revisit the following benefits of investing in ETFs.

Generate Income

Similar to stocks, various ETFs pay dividends. Certain funds focus on high-dividend paying firms. If you are after investments that can give potential regular income, ETFs may be the answer. Aside from that, ETFs provide easier access to bond markets.

Save Money

ETFs are cheaper than mutual funds. Fund managers maintain fees low by overseeing a fund in mirroring its benchmark index. Also, the taxable capital gains distributions of ETFs are normally lower than mutual funds. Take note some brokerages allow clients to trade several ETFs for free. Others levy a trading commission to purchase or sell such funds.

Gain Market Opportunities

ETFs offer trading flexibility like stocks. The fund enables traders to know the price throughout the day. They can also easily buy and sell ETFs during market hours, using either limit, market, or stop-loss orders.

Reduce Risk

ETFs are huge tool for portfolio diversification. A lot of ETFs can ease the currency peril seen on foreign investments, minimize market volatility, or target certain facets, including growth-focused corporations.

Stay Invested

Instead of putting your money somewhere else, why not invest it in ETFs? While it does not earn bigger returns than equities, ETFs helps you save for short-term goals or choose particular stocks or bonds. Investing in ETFs comes with more risk and volatility, but it gives better growth potential.