I always suggest to have a diversified portfolio in investment. It helps us protect our whole investment and lessen the risk most especially for long term investors like us.
In stock market, we can buy stocks in different sectors to have a diversified portfolio. As you ay know, companies are divided per sector like banking, mining, real estate and others. Buying stocks of various sectors is a good decision. You don’t want to put all your money buying only real estate companies. What if the property boom declines? That means all your stocks will also decline in value. Having a diversified portfolio somehow eliminates that scenario.
PSE has announced that in coming days, their new product called Exchange Traded Fund (ETF’s) will be soon traded in the market.
An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. ETFs are the most popular type of exchange-traded product.
With ETF, the companies can create various ETF products for us to buy. For example, they can create ETF for Financial Companies and they will invest it in the top 5 banks in the country like MBT, BDO, PNB, BPI and EW. This is just example. In reality, these campanies can create as much as ETF package to sell to us.
You can buy individual stocks of each companies. However, with ETF, you can buy only 1 stock but are invested into those 5 companies. The risk is less compare to buying one company only. A sure way to have a diversified portfolio.
ETF is not limited to stocks only. It can also be a combination of other assets as stated on the definition.
It is somewhat similar to mutual fund and UITF, only that you can trade daily. It’s really more fun investing in the Philippines. Can’t wait to have ETF under my portfolio 🙂
P.S. A year ago, I do not know anything about investment. Then I joined Truly Rich Club by Bo Sanchez. It was the best decision I ever made in my life. Brother Bo is a spiritual preacher and at the same time, financial literacy advocate whose purpose is to help people become rich in order to serve the LORD with the money that they have. He guided me along the way, explaining how I can manage my money and make it work hard for me. Now I’m investing in stocks and mutual funds and have a clear path for my future. Soon I’ll open UITF account as well. All are made possible by his guidance and teachings on every steps to become an investor. Being OFW isn’t forever, this is my EXIT PLAN. It’s amazing how his teachings change my life. I’m inviting you to join the club too, JOIN TRULY RICH CLUB. If you have any question, feel free to leave your comment below. CLICK HERE TO JOIN