More and more investors are turning to exchange-traded funds for their investments. There are many reasons why ETFs have become so popular, and you they come in a wide range of options.
The primary advantage of an ETF is that, in most cases, they are highly diversified. For example, you could buy shares of SPDR S&P 500 ETF (SPY), which tracks the performance of the overall S&P 500. The key here is that your money is spread across the stocks in the S&P 500, so you do not have to track each and every stock, and should one stock run into trouble, it will not result in a huge drop in the ETF since there are so many other names to help balance out the weakness.
Diversity is the primary key, but another reason is how easy they are to buy and sell. Instead of having to buy a basket of stocks, you simply buy the ETF. Few commissions, and a lot less to keep track of. It is very difficult to follow a basket of stocks and stay on top of diversified stock portfolio, but for ETFs you only have to keep up with the sector it covers, or the overall market if you are in index-based funds such as SPY.
ETFs are simple, highly liquid, and require less tracking. If this sounds good to you, we have five ETFs that are perfect candidates to buy and forget. Let’s take a closer look.