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October 26, 2021

Why ETFs Can Be a Good Investment

Invest in a more diverse portfolio today with ETFs.

What are ETFs and how do they work?

An ETF, or exchange-traded fund, is a security that tracks indexes to follow markets trends. ETFs are like stocks but represent a much wider combination of investments than stocks do. When you purchase a share of an ETF you own a portion of a fund but not the underlying assets, which allows for a lower-risk investment strategy.

ETFs compared to index funds

Exchange-traded funds and index funds are similar but have several key differences. Index funds are a type of mutual fund that combines an investor’s money into a group of investments and tracks a target index. ETFs are also passively managed which reduces investment costs. However, as compared to index funds, ETFs may have a higher commission fee. Contact an investment professional at Citizens First Bank to compare ETFs and index funds and see which is the best option for you.

How ETFs can help you

Investing in ETFs is an easy way to diversify your portfolio. By including several securities into one asset, you can have investments in different bonds, commodities, and industries. ETFs also have an advantage over mutual funds since they are only taxed when the investments are sold. ETFs are an especially good idea for investing in industries that have high earning potential but high risk such as tech startups.

How to start investing

Do ETFs sound like an option to grow your portfolio? Visit your local Citizens First Bank to find out how you can begin investing for your future today. The experienced team can help you select the best strategy to save for your goals.