FinancialEdge: 7 Reasons To Pick ETFs Over Stocks

Apparently nothing can ever be simple on Wall Street. Take the case of a simple question like "should I invest in ETFs?" A beginning investor can spend less than 10 minutes on Google (Nasdaq: GOOG) and learn (if that is the right word to use) that exchange traded funds (ETFs) are the greatest invention since fire, the worst thing since the Yugo, or "investing in ETFs involves risks and may or may not be appropriate for your individual situation; please consult an advisor." (For a background, see our Introduction To Exchange-Traded Funds.)

While it is true that everybody's financial situation is different, here are some advantages of ETFs relative to stocks and mutual funds for beginners to consider. 


Less Due Diligence

The iShares U.S. Medical Devices ETF (NYSE: IHI) contains 40 different stocks. It would take weeks for an individual investor to do proper due diligence on each of those names, and that is one of the advantages of ETF investing. Because the impact and importance of any one stock is relatively small, investors can spend their time thinking about which sectors and markets are poised to perform and make investment choices without being bogged down by an overwhelming amount of initial and ongoing due diligence. 



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FinancialEdge: 5 Investment Ideas Heating Up Right Now

Give Wall Street a little credit - if there is a demand for a product, they will meet it. If there is no demand for a product, they will figure out how to create that demand. With investors back out of their bunkers and looking to put money to work, Wall Street and Main Street have been working overtime to meet that demand. While not all of these ideas are new per se, many are seeing a resurgence in investor interest, and new themes and sub-types are emerging to siphon off some of that demand. (To learn more, check out The Wall-Street Animal Farm: Getting To Know The Lingo.)

Gold
The idea that gold is pretty popular these days is hardly new, but gold bugs are getting increasingly inventive. The Market Vectors Gold Miners ETF (NYSE: GDX) has lagged the SPDR Gold Shares (NYSE: GLD) of late, but the Market Vectors Junior Gold Miners ETF (Nasdaq: GDXJ) has been hot.

Going a step further, would-be investors are apparently trying to get more of the actual metal in their hands. Demand for minted gold coins continues to run hot, with many mints forced to limit order sizes to see that no customer goes away entirely empty-handed. And now this - gold-dispensing ATMs are on their way to the U.S. 


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Financial Edge: Easy Ways To Diversify Your Portfolio

Like a great car, diversification is something that almost everybody wants but seems hard to get if you do not have a lot of money to spend. Luckily for investors, there are more options now than ever before for adding diversity to a portfolio. Better still, these options are not all that expensive. (For more, see The Importance Of Diversification.)

Mutual Funds - Old, But UsefulAn actively-managed mutual fund is still an excellent way to diversify a portfolio. By allocating even just one "slot" of a portfolio to a mutual fund, an investor can draw on the accumulated benefit of potentially thousands of stocks, as well as the skill of the management team making the selections. Although some funds still charge loads, many do not and it is not hard to find funds that are likewise efficient with respect to expenses and taxes.


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