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Pros and Cons of Investing in ETFs

Posted in: Accounting & Finance, Feliciano School of Business

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Feliciano School of Business professor, Dr. A. Seddik Meziani from the Department of Accounting and Finance was recently interviewed by the Motley Fool, a market investment news, analysis and research site for his expert opinion on investing in ETFs (Exchange-traded Funds). He responded to a series of four questions:

  • Are ETFs good for beginner investors?
  • Is an ETF considered safer than an index fund to mitigate risk? Or vice versa
  • Are ETFs considered safer than stocks? Why or why not?
  • How do ETFs help with diversification? Is it possible to over-diversity your ETF portfolio?

Dr. Meziani highlighted how ETFs make investing easy and are “an ideal entry point into the market for  fledgling investors thanks to their simplicity, low upfront cost, simple fee structure, and ease of trade.” Additionally, unlike mutual funds, ETFs don’t require a minimum investment amount. Most ETFs are index funds which make them inherently diversified. Since ETFs typically mirror an underlying basket of securities, they tend to be a safer investment vehicle than owning individual stocks.

To read more https://www.fool.com/investing/how-to-invest/etfs/