WHAT IS AN ETF?
An ETF is like a pizza with the lot
I want it all
I'm ashamed to say that when I first started the Shares for Beginners Podcast, I didn't even know how to spell ETF.
What is an ETF?
An ETF can be thought of like a pizza with the lot because it provides investors with a diversified mix of assets in a single investment. Just like a pizza with the lot contains a variety of toppings, such as cheese, tomato sauce, pepperoni, mushrooms, olives, and peppers, an ETF can contain a mix of stocks, bonds, and other assets.
When investors buy an ETF, they are essentially buying a basket of assets that is designed to track the performance of a particular index or sector. This can help to provide investors with exposure to a broad range of assets in a single investment, much like a pizza with the lot provides a range of toppings in a single meal.
In both cases, the goal is to provide a diverse mix of components that work together to create a satisfying whole. Just as a pizza with the lot can satisfy a range of tastes and preferences, an ETF can offer investors a convenient and efficient way to invest in a diversified portfolio of assets.
Three investing mistakes that I made that you shouldn't
- Don't use a margin loan
- Don't trade options
- Don't depend on other people for advice - especially if they are making money from your trading
How to buy shares
Trading directly in the share market is not for everyone. It takes time, patience and a lot of study. You can invest in shares via ETFs and micro-investing apps without having to commit your time and energy. But some people want to learn
While it might seem like a complicated process, it's actually quite simple – even beginners can do it with some research and guidance. You'll need to open a brokerage account that allows you to buy shares on the ASX. This will give you access to real-time pricing data, making it easier for you to decide when to buy shares by watching the stock's price movement. Next, you'll need to conduct research in order to identify companies that are likely to provide long-term returns. Lastly, when it comes time to purchase shares, be sure to set limits so that your investment goals remain achievable.
Who wants to eat the same kind of pizza all the time. You want your Margherita, your Vegetarian, Meat-Lovers - although I draw the line at Pineapple. This is what's called diversification. It will help you to avoid losing money in the share market. This means investing in a variety of companies across different industries and sectors.
Match your risk to your experience
This is a great quote from one of my favourite guests, Claude Walker from A Rich Life. He says that when you have an amount of money to invest don't commit it all at once. Start small. Add to it over a long period of time so that you can learn, experience the emotions and not risk everything at once.