Wednesday, June 19, 2013

Invest in ETFs

Unmanaged ETFs or exchange traded funds, that follow or track various indexes, are a low-cost way of diversifying investments.
                       
However, apart from fulfilling your investment purpose, be sure to buy seasoned funds that have been around for awhile.
                       
ETFs can sometimes be costly to trade. A big buy or sell order can adjust that price. That is, to a premium where the price is higher than underlying assets, or a discount, if the price is lower than the net asset value or NAV of that ETF. 

New, smaller ETFs may have this problem, which generally disappear when the fund is around a few years and has grown in size. You can check to see what the stated, recorded amounts of premium or discounts are on average. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

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