Since ETFs are so simple, why not select a couple and avoid the hustle of monitoring stock picks? While we often hear what is wrong with dividend investing, the bear case for ETFs is almost nonexistent. Today, we’ll highlight a few things about them that prove they’re not perfect and, first and foremost, explain the difference.
You’ll Learn
- Exchange-traded funds, or ETFs, are a valid, sound, and reasonable solution for investors. They offer several advantages, the most appealing one probably because they simplify investing. But what are the basics to know about them?
- Are there fees attached to ETFs? How does it compare to other assets?
- There are different types of ETFs. Mike explains the main categories to us.
- ETF is a “couch potato” investment strategy that can lead investors to achieve good market returns. Up to that point, there’s nothing wrong with them. However, it becomes more difficult than expected when it’s time to invest. For example, now so many ETFs are available that it is hard to choose only one or two. How should investors choose them?
- Mike explains the problem that occurs when holding 4-5, maybe 10 different ETFs.
- Another problem is that no matter which ETF you pick, you have no control over stock selection and might find yourself stuck with companies you don’t like or don’t trust.
- Another complicated aspect of ETFs is finding the right benchmark. How do you do that?
- What about dividend ETFs? Are they easier to analyze?
- How do ETFs perform compared to regular stocks? Is it better, similar, or worse?
Related Content
There are many problems and misconceptions about dividend investing. To be fair, we decided to discuss them as well here:
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