Stock is the most popular trade instrument in the financial exchange market. Other financial instruments such as exchange-traded funds are on the rise and are becoming popular amongst the investors.
Stocks and ETF have several similar characteristics, and they are the most used financial assets in the market.
Stocks are the company's shares, where the ownership of the shares is divided amongst the company members. The stock price in the market will depend on the agreement between the buyer and the seller. Its price will also depend on the demand and supply of the stock.
An ETF, on the other hand, comprises many securities at a certain exchange.
The fees that ETF charges are fewer broker fees and expenses than what is incurred while trading in stocks. The transaction fees however, charged in an ETF are usually high. However, this fee may seem low, especially to the investor who wants to invest for a long time.
In ETF, you have a variety of securities to choose from before you invest; hence your risk chances are diversified. In stocks, however, there is no diversification, therefore higher risk chances.
Investing in ETF requires a less amount compared to stock investing.
Also, in Exchange-traded funds, you require a professional that will help you build your portfolio. It is not usually the case in stocks since you need to research a lot to create an excellent portfolio.
You can invest in both financial instruments at the same time. You need to weigh the options in each in and select the best when you want to specialize in one.
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