Venturing into trade markets and investing in stocks
While stock represents a fraction or share of ownership in a specific company, an Exchange-Traded Fund (EFT) is professionally managed and pooled investment.
ETF managers will buy stocks, commodities, bonds and other securities, creating what is generally referred to as a basket of funds. The funds within the basket are called holdings. When you buy a share of an ETF, you own a fraction of that pool of investments while stocks - also known as equities - are shares of ownership issued by companies in efforts to raise funding.
A share of stock gives you a portion of voting ownership in a company. Both ETF and stock values will change or "move" throughout a trading day. They trade on an exchange, offering high liquidity and transparency; give you a broad range of investment options; support a wide variety of order types; make it possible to use options or even sell short; may pay dividends, and can be traded with zero commissions.
The differences between stocks and ETFs are that ETFs are made up of more than one holding that affect your portfolio performance, diversification and focus of the investment.
The main difference between buying an ETF and buying stocks is that even one ETF share is already a diversified portfolio. An owner of a single company’s stocks is dependent on its success. If the chosen company goes down, the shareholder loses all invested funds. The capital of ETF owners is more immune to risk. ETFs often include securities of a large number of companies (except for several commodity ETFs like the American oil fund). In case of any problems, a decline in the price of one asset is compensated by the growth of the rest.
ETF vs CFDs
Contract for Difference (CFD) is a tradable financial instrument which constitutes a contract between two parties to exchange the difference between the current price of an underlying financial instrument and its price when the contract expires. CFDs provide opportunities for speculation and are usually utilised for short-term investment strategies, whereas ETFs are mostly suitable for long-term investment. ETFs are safer investment instruments with smaller gains. With ETFs, a trader can never incur more losses than his/her initial investment. However, with CFDs, the use of leverage implies that both profit and losses will accumulate.
With ETFs, the main goal is to make money passively without being overly involved in the markets. The premise of an ETF investment is to receive returns from the discrepancies of a particular index. You can find ETFs being traded in the normal stock market just like other commodities. In general, they are, however, different in actual value since CFDs are initially cheaper than ETFs.
CFDs also have more flexibility when it comes to the scope and range of trade, while ETFs have characteristics that make them like traditional assets.
ETF or Indices
Indices are a measurement of the price performance of a group of shares from an exchange. For example, the FTSE 100 tracks the 100 largest companies on the London Stock Exchange with the highest market capitalisation, and S&P 500 represents a broad range of 500 American companies. Trading indices enables you to get exposure to an entire economy or sector at once, while only having to open a single position.
The composition of exchange-traded funds can be similar to indices: For instance, QQQ, Invesco QQQ Trust, Series 1 is analogous to NASDAQ-100. However, ETFs may combine very diverse assets that never go together in classic instruments. Or they can have only one underlying asset: For example, GLD (the ETF of SPDR Gold Trust) is a trust with 100% gold-backed stocks from the company’s own reserves.
LAMM Investment
The cutting-edge copy trading platform Lot Allocation Management Module (LAMM) is an automated system that allows newcomers to make huge profits by mirroring orders placed by professional traders. With LAMM investment, the fund manager not only does business with his account but his or her transactions are duplicated in the accounts of the investors. An investor can always check the manager’s real-time action. This service benefits both the trader and the investor. The manager doesn’t have to worry about the number of investors connected to the account. Investors can independently monitor every trade being copied. Moreover, the investor can diversify funds by allocating several fund managers.
The benefits of LAMM investment is that investors’ funds are not transferred to the manager’s account, but stay with the investor all the time. The investor can cancel or disconnect from the manager any time he or she feels like it. Transaction is copied automatically, and withdrawal can be done any time.
Helena Nyau is the Namibian business coordinator for Grand Capital.
ETF managers will buy stocks, commodities, bonds and other securities, creating what is generally referred to as a basket of funds. The funds within the basket are called holdings. When you buy a share of an ETF, you own a fraction of that pool of investments while stocks - also known as equities - are shares of ownership issued by companies in efforts to raise funding.
A share of stock gives you a portion of voting ownership in a company. Both ETF and stock values will change or "move" throughout a trading day. They trade on an exchange, offering high liquidity and transparency; give you a broad range of investment options; support a wide variety of order types; make it possible to use options or even sell short; may pay dividends, and can be traded with zero commissions.
The differences between stocks and ETFs are that ETFs are made up of more than one holding that affect your portfolio performance, diversification and focus of the investment.
The main difference between buying an ETF and buying stocks is that even one ETF share is already a diversified portfolio. An owner of a single company’s stocks is dependent on its success. If the chosen company goes down, the shareholder loses all invested funds. The capital of ETF owners is more immune to risk. ETFs often include securities of a large number of companies (except for several commodity ETFs like the American oil fund). In case of any problems, a decline in the price of one asset is compensated by the growth of the rest.
ETF vs CFDs
Contract for Difference (CFD) is a tradable financial instrument which constitutes a contract between two parties to exchange the difference between the current price of an underlying financial instrument and its price when the contract expires. CFDs provide opportunities for speculation and are usually utilised for short-term investment strategies, whereas ETFs are mostly suitable for long-term investment. ETFs are safer investment instruments with smaller gains. With ETFs, a trader can never incur more losses than his/her initial investment. However, with CFDs, the use of leverage implies that both profit and losses will accumulate.
With ETFs, the main goal is to make money passively without being overly involved in the markets. The premise of an ETF investment is to receive returns from the discrepancies of a particular index. You can find ETFs being traded in the normal stock market just like other commodities. In general, they are, however, different in actual value since CFDs are initially cheaper than ETFs.
CFDs also have more flexibility when it comes to the scope and range of trade, while ETFs have characteristics that make them like traditional assets.
ETF or Indices
Indices are a measurement of the price performance of a group of shares from an exchange. For example, the FTSE 100 tracks the 100 largest companies on the London Stock Exchange with the highest market capitalisation, and S&P 500 represents a broad range of 500 American companies. Trading indices enables you to get exposure to an entire economy or sector at once, while only having to open a single position.
The composition of exchange-traded funds can be similar to indices: For instance, QQQ, Invesco QQQ Trust, Series 1 is analogous to NASDAQ-100. However, ETFs may combine very diverse assets that never go together in classic instruments. Or they can have only one underlying asset: For example, GLD (the ETF of SPDR Gold Trust) is a trust with 100% gold-backed stocks from the company’s own reserves.
LAMM Investment
The cutting-edge copy trading platform Lot Allocation Management Module (LAMM) is an automated system that allows newcomers to make huge profits by mirroring orders placed by professional traders. With LAMM investment, the fund manager not only does business with his account but his or her transactions are duplicated in the accounts of the investors. An investor can always check the manager’s real-time action. This service benefits both the trader and the investor. The manager doesn’t have to worry about the number of investors connected to the account. Investors can independently monitor every trade being copied. Moreover, the investor can diversify funds by allocating several fund managers.
The benefits of LAMM investment is that investors’ funds are not transferred to the manager’s account, but stay with the investor all the time. The investor can cancel or disconnect from the manager any time he or she feels like it. Transaction is copied automatically, and withdrawal can be done any time.
Helena Nyau is the Namibian business coordinator for Grand Capital.
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