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What risks are there in ETF?


Jovan

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Hello, I have been interested in ETF for a while now. I want to invest in them so that I can make a profit from the investment I make. This is a long-term investment, so I am ready to study the market before I throw in my money. As with any investment, profit should be expected. I have high hopes in this investment, and so I need to make sure that there are no threats to my money. Explain to me if what risks are there in ETF, please.

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Hello Jovan, 
As an investor, you should always be ready to take up certain risks in order to get better returns. By taking up some risks, however, you may end up making losses rather than profits.
 Some investors who do not take up any risks end up not getting any profit. Similarly, they are less likely to suffer any loss. Therefore, risks are inevitable, and you need to carefully study the market to know when it is right for you to take up that risk or not.
One risk that you might face while trading in the ETF is that of tracking the error. This risk occurs when ETF differs from the index performance. This error can occur when an ETF holds onto cash that will receive a distinct return on investment, therefore, causing a divergence between the ETF and the index.
Investors will encounter a currency risk when the fundamental assets are in a currency that is different from the designated one.
ETFs are also highly volatile, making them a high- risk investments. Investors in ETFs also have no jurisdiction on the investments made in this platform.

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