As with any investment, it is important to understand the product you are using in your portfolio. So before you decide to include ETFs in your investment strategm, you should understand the basics about Exchange Traded Funds. A good place to get started is to read the artcle, What is an ETF.
Once you understand the basic concept of an exchange traded fund, then you can read on to find out what you need to do in order to get started trading ETFs.
1. Know the Benefits and Risks of ETFs
Once you have an understanding about ETFs, you can learn how they work to your advantage. Understanding the benefits of ETFs will help you utilize the correct investment strategy when including exchange traded funds in your portfolio.
It is equally important to understand the disadvantages of ETFs. Before you buy or sell any investment product you need to know all the limitations of the asset. You don't want to have any misconceptions about an investment’s performance and you need to understand all the risks involved. Here are some good articles to help you understand the pros and cons of ETFs
2. Learn About the Different Types of ETFs
There is no shortage of selection when it comes to ETFs. There are multiple Exchange Traded Funds for indexes, sectors, styles, and regions. It can be a little overwhelming, but if you have a better understanding of the major types of ETFs, it will help you narrow down which kind of funds will fit your investing strategy. Here are some articles on about the major types of ETFs
3. Decide On the Best ETF Investing Strategy
Are you investing in ETFs to gain exposure to a market sector? Are you using ETFs as a hedge against foreign risk? Do you want to trade ETF derivatives against your positions? Before you add ETFs to your portfolio, you need to decide why you are investing in the funds. Only then can you decide which ETF trading strategy is the best fit for your portfolio. Here are some different articles about ETF investing strategies to help you get started
4. Understand How ETFs will Affect your Tax Return
One of the major benefits of ETFs is the tax advantage it holds over other investment vehicles, especially mutual funds. Due to the nature of ETFs, capital gains taxes are not realized the same way they are with other investment products. However, that does not hold true in all countries, so it is important to be in synch with local tax laws. For more information about ETF taxes, read these articles
5. Consider a Few More Things Before you Invest in ETFs
Proper research is essential for any investment, but especially with ETFs. Even if you have a handle on ETF benefits, risks, types, investing strategies, and taxes, there are still some other factors to consider. For more information on these factors, read this article
6. Set up a Brokerage Account
If after due diligence and lots of research you feel you are ready to add ETFs to your investment portfolio, it’s as easy as calling your broker. Or opening an online brokerage account will work just as well. If you are interested in learning more about brokers and brokerage accounts, these articles may help.
And if your having trouble picking a broker, here are some reviews by ConsumerSearch that may help. Online Broker Reviews