1st ETF ✅ Which ETF to invest in?

ETFs are one of the best beginner friendly way to start investing to achieve your financial goals.

Simply put, ETFs are a basket of securities (aka stocks etc.). 🧺

𝗔𝗻𝗮𝗹𝗼𝗴𝘆: It’s like buying Sephora as a whole, instead of all the individual brands they carry one by one (e.g Fenty beauty/ Clinique/ Tarte etc.) 💄

1. 𝗦𝗣𝗬 - 𝗦𝗣𝗗𝗥 𝗦&𝗣 500 𝗘𝗧𝗙 𝗧𝗿𝘂𝘀𝘁:

👍 Pros:

- Broad US market exposure: Tracks the S&P 500, capturing a large portion of the US stock market.

- Diversification: Provides exposure to various sectors and industries, reducing risk.

- Liquidity: Highly tradable with tight spreads, making it easy to buy and sell.

- Low fees: Expense ratio of 0.095%, making it cost-effective.

👎 Cons:

- Average returns: Tracks the market average, not aiming for outperformance.

- Limited international exposure: Primarily focused on US companies, missing potential growth in other markets.

- Vulnerable to US market downturns: Can suffer significant losses if the US market experiences a decline.

2. 𝗩𝗧𝗜 - 𝗩𝗮𝗻𝗴𝘂𝗮𝗿𝗱 𝗧𝗼𝘁𝗮𝗹 𝗪𝗼𝗿𝗹𝗱 𝗦𝘁𝗼𝗰𝗸 𝗘𝗧𝗙:

👍 Pros:

- Global diversification: Invests in stocks from developed and emerging markets, spreading risk geographically.

- Long-term growth potential: Captures the overall growth of the global stock market.

- Low fees: Expense ratio of 0.03%, making it a cost-efficient option for global exposure.

👎 Cons:

- Lower returns than US-focused ETFs: May underperform compared to SPY or QQQ in strong US markets.

- Exposure to emerging markets: Can be impacted by political and economic instability in some countries.

- Less liquidity than SPY or QQQ: Trading volume may be lower, impacting buy and sell ease.

3. 𝗜𝗻𝘃𝗲𝘀𝗰𝗼 𝗤𝗤𝗤:

👍 Pros:

- High growth potential: Tracks the Nasdaq-100, focusing on technology and growth-oriented companies.

- Greater return potential than SPY: Historically outperforms the S&P 500 over the long term.

- Concentration in innovative sectors: Provides exposure to leading tech companies driving future growth.

👎 Cons:

- Higher volatility: More susceptible to rapid price swings due to sector concentration.

- Valuation concerns: Tech stocks can be overvalued, leading to potential downside risk.

- Limited diversification: Less diversified than SPY, concentrated in a specific sector.

4. 𝗶𝗦𝗵𝗮𝗿𝗲𝘀 20+ 𝗬𝗲𝗮𝗿 𝗧𝗿𝗲𝗮𝘀𝘂𝗿𝘆 𝗕𝗼𝗻𝗱 𝗧𝗟𝗧:

👍 Pros:

- Low volatility: Provides stability and reduces portfolio risk during market downturns.

- Regular income: Pays fixed interest payments, offering a steady income stream.

- Hedge against inflation: Can protect against rising inflation due to the inverse relationship between bonds and inflation.

👎 Cons:

- Lower potential returns: Offers lower returns than stocks over the long term.

- Interest rate risk: Bond prices fall when interest rates rise, leading to potential capital losses.

- Limited growth potential: Primarily for income generation and risk mitigation, not capital appreciation.

Ultimately which ETF to choose boils down to your individual risk tolerance and financial goals ❤️

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