With ETFs, you invest in dozens or even hundreds of companies at once. This way, you can easily follow a market without having to constantly make choices or pick the right stock. In this article, you’ll learn what ETFs are, how index investing works, and why more and more people are choosing this way of investing.
An ETF is an exchange-traded fund, which is an investment fund that you can buy on the stock exchange. With such an ETF, you invest in shares of dozens or even hundreds of companies at once. Many ETFs follow an index and are therefore also called index trackers.
Index investing means investing in a basket of stocks that follows a specific stock market index, such as the AEX or the MSCI World. If you invest in an ETF that follows the AEX, your return depends on the 25 largest Dutch companies in that index. If you choose the MSCI World, you invest in an index of global stock markets.
By investing in ETFs, you can easily execute your investment strategy. ETFs come in all shapes and sizes. There’s an index and an ETF for almost every sector. If you think AI will conquer the world within two years, there’s probably an ETF for that. With one transaction, you immediately invest in an entire group of companies, without having to buy each stock separately.
But ETFs are especially well-suited for a risk-averse passive investment strategy. With ETFs, you can buy hundreds of stocks at once across all economic sectors and spread around the world. If things aren’t going well somewhere, it’s often offset by profits from other companies or regions. And the surprisingly fast growers are also included in that basket, so you don’t have to worry about missing out on them.
The costs of ETFs are usually low. How much you pay exactly depends on the provider and the composition of the ETF. For example, ETFs that allow you to invest sustainably are often a bit more expensive than more traditional variants.
Index investing via ETFs is ideal for the prudent investor who wants to consistently execute a long-term investment strategy aimed at risk reduction and growing with the stock markets. This applies to the beginner investor, the expert, and even the multimillionaire.
There are thousands of ETFs, sorted in all colors and flavors by region, sector, composition, sustainability, and so on. If you invest on your own, you run the risk of choosing an ETF that doesn’t match your goals or selecting one that is unnecessarily expensive.
That’s why many people opt for a standard package offered by an asset manager, who invests in one or more ETFs for you based on an agreed strategy.
More and more people are choosing ETF investing to grow with the stock markets. It’s a smart way to diversify your money: instead of betting on one or two companies, you invest in hundreds of stocks worldwide with just one investment. This way, you lower your risk and keep your costs low.
With UpToMore, you don’t have to endlessly compare ETFs yourself. Through the UpToMore Fund, you automatically invest in a selection of cost-efficient ETFs, with a globally diversified portfolio of shares in sustainable companies. This way, you benefit from the advantages of ETF investing without the hassle.