CREATING YOUR OWN ETFS
Do you wish there were some easier, cost-friendly ways to invest that enable customization? You might a friend in ETFs.
Exchange-traded funds (ETFs) are funds composed of bonds, commodities, real estate assets, or stocks, which can be purchased every day on different exchanges. These investment funds provide diversification due to high liquidity. Speaking of liquidity, it increases when there are many buyers and sellers. ETFs and mutual funds may be the same, but the latter seldom trades huge volumes daily. Mutual funds can only be bought at particular times in the day, but ETFs can be purchased and sold at any time in the day.
Here comes the diversification part: ETFs are highly diversified investments because of having various assets of the same class, or a combination of stocks and bonds. So, instead of looking for stock sectors and asset allocations, you can find an ETF meeting your investment goals. For instance, if you are interested in purchasing an ETF mimicking the overall market indexes, you could obtain the SPDR S&P 500 ETF. Since it is pre-weighted, the largest firms comprise a bigger chunk of the investment fund than smaller ones. It also eases concerns regarding balancing assets based on company size.
Take it from Motifs
Meet Motif Investing, the newest face of do-it-yourself investing block. Like ETFs, their investment options exist as baskets of stocks mirroring some themes or motifs. For instance, you believe the future is clean eating, and you expect it to grow substantially. Looking at this projection, you can choose a bunch of stocks concentrating in the production, distribution, marketing, and selling healthy and organic goods. The online brokerage enables you to form a diversified set of leading companies expected to lead in their respective sectors.
Another thing: Motif offers very low investing fees unlike its counterparts. Normally, mutual funds levy an annual fee along with an expense ratio, and penalize traders for premature redemptions. But ETFs and Motifs only charge transaction fees.
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