Objective | To know what is ETF & the 3 types that will yield a lifetime income.
In our previous post, we discuss how much is enough to fund your child‘s university education.
In this post, we will discuss the only 3 ETF types you must have in your personal retirement or education investment fund.
What is ETF?
An Exchange-traded fund (ETF) tracks a specific index, such as a stock, REIT, bond or other financial indexes. The ETF is made up of a portfolio of financial assets similar to the component of the particular index it is tracking. Eg, SPY ETF has a portfolio of stocks that matches the S&P 500 index constituents as closely as possible.
The ETF is listed on an exchange.
It's traded in the stock market throughout the trading day just like any company stocks.
Its price movement mimics that of the underlying index.
ETF price is a close reflection of the fund net asset value (NAV) rather than purely due to trading momentum.
In our previous post, we discuss how much is enough to fund your child‘s university education.
In this post, we will discuss the only 3 ETF types you must have in your personal retirement or education investment fund.
What is ETF?
An Exchange-traded fund (ETF) tracks a specific index, such as a stock, REIT, bond or other financial indexes. The ETF is made up of a portfolio of financial assets similar to the component of the particular index it is tracking. Eg, SPY ETF has a portfolio of stocks that matches the S&P 500 index constituents as closely as possible.
The ETF is listed on an exchange.
It's traded in the stock market throughout the trading day just like any company stocks.
Its price movement mimics that of the underlying index.
ETF price is a close reflection of the fund net asset value (NAV) rather than purely due to trading momentum.
What's the difference?
ETF is not a mutual fund or unit trust. Here are the differences.
Which 3 ETF types?
How it works?
Investors expecting a high investment return will need to assume a higher risk. Similarly, those preferring lower risk will need to expect a lower return.
The different characteristics of the ETF type, give rise to their corresponding risk & return.
Thus, we will need to vary the proportion of the 3 ETF types to suit investors of different risk appetite.
For conservative investors, the allocation will be 10% - 30% equity ETF and balance REIT & bond ETF.
Neutral risk investors can allocate half to equity ETF & the rest to the others.
Investors of aggressive risk profile can go with 70% - 90% equity ETF & balance accordingly.
You will NOT make any money by merely reading this post. You need to take action.
Assignment
Question | What is your ETF portfolio?
If you do not have a satisfactory answer to the above question, please feel free to contact me at ewppleblog@outlook.com.
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