Mutual funds have remained the most popular destination for investment for the last three decades, especially the youth find SIP a better option in mutual funds. Because one can start investing with a small amount and can raise a bigger fund from it.
But at the moment there is a lot of talk about ETFs. Some people are considering ETFs as a better option for investment than Mutual Funds. However, the number of people investing in Mutual Funds in the country is still much higher than ETFs. But it is also true that in the past years people’s inclination towards ETFs has increased, investors now want to know about ETFs in depth.
If you also want to invest in ETF, then we tell you when and how you can make money by investing. When you invest in ETF under a special strategy, you will be able to make more profit than others. As far as the comparison of ETF with mutual fund is concerned, in the last few years ETF has made a lot of money, which is more than mutual fund. Due to which ETF has attracted investors.
What is ETF?
In simple terms, ETF is an investment option. Investments are made in the stock market through Exchange Traded Funds (ETF). Investment is made in a set of shares through ETF. It usually tracks a particular index.
How to buy ETFs?
Just like shares, ETFs are bought and sold on stock exchanges. ETFs can be sold at any time during the trading period. Just like you buy and sell shares. To invest in ETFs, you must have a demat account.
When to invest in ETFs?
For those investing in ETFs, choosing this time is the most important. You can get trapped by investing in ETFs without any information. Therefore, the easiest way to invest in ETFs is – ‘Buy on Dips’, that is, whenever there is a fall in the market or the ETF index, you invest in ETFs.
For example, if the stock market falls only on 5 days in a month, then you should invest in ETFs only on these 5 days. If you want to invest Rs 50,000 in ETFs, then divide it into 5 parts, and on every day when the index falls, invest Rs 10,000 each.
Apart from this there is another special formula- 7, 14, 21, 28. Note down these 4 dates of the month. If you want to invest 20 thousand rupees every month in ETF, then invest 5000 on 7th, 5000 on 14th, 5000 on 21st and 5000 on 28th in your favorite ETF, you will get better returns than others. If 7, 14, 21, 28 is Saturday or Sunday then you can shift it by one day. But in this formula, when you invest money in ETF for several months, then whenever the market goes up, your portfolio will look more green.
Let us tell you, ETF is gradually becoming popular among retail investors. The reason for this is its excellent returns. Some ETFs have given up to 100 percent returns in the last one year. Investments are made in index, commodity, bonds through ETF. According to Amfi, ETFs are those funds which track indexes like CNX Nifty or BSE Sensex. There are fund managers for every ETF, so the investor does not have to buy or sell shares.
Let us know why investing in ETF is beneficial compared to mutual funds.
Just like you buy and sell shares, you can buy and sell EFT as well.
– You can keep an eye on ETF while trading in the stock market, investment in it is more transparent.
– ETFs can be easily sold, just like shares are sold.
– Investment can be made in different sectors through ETF.
– There is no income tax on dividends received from ETFs.
– Investment in ETF has lower expense ratio as compared to mutual funds.
– Investors do not have to pay any exit load on withdrawal of ETF.
– If you do SIP in mutual fund then it will get auto-debited every month, whereas you can invest in ETF whenever you wish.
(Note: Before investing anywhere, take the help of a financial advisor)
Source (PTI) (NDTV) (HINDUSTANTIMES)