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Why people choose to invest in ETFs
There are several reasons investors can choose to invest in ETFs to help reach their investing goals. Because ETFs are purchased and sold throughout the day on an exchange, they offer a great amount of flexibility for investors, and are uniquely suitable for those who enjoy the responsibility of managing their own investments. Here are some more reasons some investors choose ETFs:
- ETFs can be a good way to add diversification to a portfolio
- The prices for ETFs change minute- by minute, making them suitable for day traders as well as long-term investor
- ETFs tend to have lower fees and no minimum investment, making them a low-cost alternative for many portfolios. However, investors should be mindful of trading commissions and trading costs (bid-ask spreads) that may result from the frequent trading of ETFs, and could potentially eat away at returns.
- ETFs tend to be more transparent in their disclosure of holdings. Many ETF issuers provide the full list of underlying holdings on their website.