Beginner’s Guide on Trading ETF
Do you have extra cash that you can spare to invest? If starting a business is a risky move for you, then maybe you can enter the world of stock exchange. This platform has made a lot of people rich without making them leave the comforts of their room. If you would like to begin your investment journey, exchange-traded funds, or ETF, is an ideal investment option for those who are just learning the ropes in investing. Read on to know more about this trading option:
Why invest in the exchange-traded fund
One of the allures of trading in this platform is that a fund manager handles it, thus, lowering the chances of losing your money due to a poorly-researched trading plan. Instead of putting your money in one basket, you can get a diversified portfolio in just one trade. This move is a good safeguard against badly performing individual stocks. It also helps that trading in this platform is a cost-effective way of gaining diversification without having too many stocks to manage. All the prices are transparent and can be viewed in real-time, so you can see how your stock is doing. It is also very liquid, allowing you to pull out your investment if you need your money for emergencies.
Opening an account
To start trading ETF, the first step that you have to do is to open an account to a registered broker. A brokerage firm is handled by financial professionals who will execute your trade on your behalf in the Australian Securities Exchange (ASX). As long as you have a tax number, you can take part in the stock exchange. Once your account has been approved, it will all just take a few clicks of a button to transfer money from your bank to your broker’s platform. The same is true if you want to sell your stocks and get your money back to your account.
Making your trade
At present, there are currently hundreds of exchange-traded funds available in the ASX market. It is best to stick with passive exchange-traded funds and think of long-term investments, rather than venturing on risky trading moves. Another tip when selecting an exchange-traded fund is to stick to the suggestions of your broker firm.
It is also helpful if you place an order at least 30 minutes before the ASX market opens. In this way, the price of the exchange-traded fund that you are planning to buy is closer to its NAV value. If you have more time, you may also consider placing your order when the market for your exchange-traded fund’s underlying assets is about to open. For instance, if you are getting an exchange-traded fund with Chinese shares, you should make your order before China’s market opens.
One final tip is to trade in lump sums. Most firms require a small brokerage fee whenever you make a trade. These small amounts can add up in the long run if you are not careful with how you trade. Remember that you are trading the stock market to earn money, not to lose it.
The best time to invest in the stock market is now. Buying an exchange-traded fund is a relatively low-risk investment option that you can make if you are just starting. What are you waiting for? Open an account and start letting your money grow.