What Is the Right ETF Investment?


Quick Answer

When determining the proper ETF in which to invest, Investopedia advises taking into into account the following: asset levels, trading activity, underlying index or asset class, tracking error and market position. Consultation with an investment professional can assist in designing an investment plan and identifying specific ETF investment options.

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Full Answer

Before selecting an ETF, examine and consider costs, structure and the ETF sponsor, along with the ETF's past performance, according to Charles Schwab.

When trading ETFs, it is important not to purchase new, niche, investment products, as these products have no track record and often track very specific market conditions that are hard to research and predict, claims MarketWatch. Investors should also be mindful that certain ETFs target professionals and day traders, rather than individual investors. Further, do not frequently trade ETFs because this can result in a diminished return due to high commission costs.

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