5 Reasons Why You Should
Invest in ETFs in 2024
In the technology-driven era of the 21st century, there are various investment instruments. ETFs, also known as Exchange Traded Funds, are one such option that investors use to build wealth over time. These exchange-traded funds can be understood as buckets that hold a collection of securities, like stocks and bonds and can be traded on the stock exchange.
Just like any investment, ETFs also have some features and benefits that can help investors achieve their financial goals. In this blog, we’ve brought you those 5 favorable reasons why you should invest in ETF in 2024.
1. Diversification
Investing in an ETF via an online investment platform means you are buying several different securities in one go. By providing such diversification, ETFs allow you to get exposure to a wide variety of assets ranging from stocks, and bonds to commodities and sectors. This is important because it helps you in spreading your risk across multiple holdings reducing your fear and constraint regarding investments.
2. Cost Effectiveness
ETFs are generally cost-effective on many levels. They typically cost you less because they allow you to do passive investment. Also, doing a single investment for a bucket of securities not only costs you less but also means you’d only pay for fees. Secondly, the fees charged by the ETF provider are also less compared to other instruments such as mutual funds or individual stocks.
3. Exposure to Industries
ETFs offer flexibility in investment strategies, allowing investors the exposure to invest in specific sectors or asset classes. For example, Gold ETFs allow you to invest in gold indirectly. Based on your needs and risk tolerance level, you can invest in this instrument.
4. Trades on an Exchange
ETFs are an easy-to-go option for many investors because they trade just like a stock. One can trade ETFs at market-based prices throughout the day. Due to this, the investors do not get bound by time rather they’re able to quickly hop in and out of the market when they wish. ETFs can be purchased and sold easily on the exchanges as there are always plenty of buyers and sellers.
5. Liquidity and Transparency
One of the other reasons why an ETF is good for beginner investors is because it provides effortless liquidity and transparency. With these exchange-traded funds, one can buy or sell through the trading day at market prices. On top of that, the ETF provides daily visibility of their holdings so that one can get a clear picture of their investments.
The Bottom Line
ETFs are beginner-friendly and have the potential to give wealth creation benefits. The fact that it enables you to invest in a basket of securities in a single transaction without the hassle of individual securities increases their efficiency and effectiveness. Moreover, ETFs offer exposure to specific themes or industries, allowing investors to capitalize on emerging trends and build a diversified investment portfolio. If you wish to invest in Exchange Traded Funds, choose Dhan, India’s leading online investing and trading platform.
