Use ETFs to Help You Grow Your Portfolio

Mutual funds have become a popular investment vehicle. Investors with little or no experience can invest in a mutual fund which will be professionally handled for them. Mutual funds allows for diversification of assets that a regular small independent investor would not be able to achieve on their own. In the ever changing world of finance however a new option exists that can do the same thing that a mutual fund can do but does not charge a fee for the person running the fund. This option is an ETF (exchange traded fund).

An ETF is like a mutual fund in that is is made up of different stocks. However these stocks are typically set. The best part of a ETF is that you do not need to pay any management fees. However most ETFs are not as diversified and do not change. You can get multiple ETFs to diversify yourself. ETFs often have a specific area that they target. For instance you could invest in a international ETF that focuses on overseas stocks. You could also get an ETF that matches the S&P 500 giving you a diverse mix of blue chip stocks.

ETFs are easy to buy online through most brokerage accounts. It is good if you are more then a novice because you may want to diversify into multiple funds so that you diversify your portfolio.

ETFs are also helpful for the more experienced investor to check what stocks an ETF has so that you can make your own stock choices. You can check the top performing stocks of an energy ETF, the top stock of a finance ETF, and add in the top performers of a mining ETF to make your own diversified portfolio based on your own expectations and needs. You can also expect that those stocks will be held by the ETF for a long time limiting the float of a stock and helping to protect the price.

Investing in an ETF can be a good idea for a individual investor. Some ETF options are better for beginners and some ETFs may be better used by experienced investors but all investors can use ETFs in some capacity.