How to Use ETFs to Achieve Your Financial Goals?

Every individual has different financial goals. Some have short term financial goals online: buying a new car, renovating your house or planning a short vacation. Others have long-term financial goals like building a retirement corpus for their sun years, or saving enough so that they can buy a dream vacation home by the countryside, planning a destination wedding for their daughter, sending their children abroad for foreign education or financially secure in their child’s future. No matter what the goals are, financial planning is essential in order to achieve these goals. Investment planning helps investors determine the short term and long term financial goals. Once you know what you want to achieve over the short term and long term you get a clear idea about the type of investments you should bank on in order to achieve these goals. Just like prioritizing your financial goals is important, one should also be able to understand the degree of rest they can take in order to gain capital appreciation through investments in certain types of schemes. Risk appetite is nothing but an individual’s ability to take risk with the finances to such a big extent so that in the long run they can generate capital appreciation through this investment. There are different financial schemes catering to the needs of investors of different risk appetites. If you are keen on seeking long term capital gains to investments in marketing schemes and carrier high risk appetite you can consider investing in mutual funds like exchange traded funds (ETFs). Exchange traded funds or ETF funds generating capital appreciation by tracking the underlying index for example NIFTY, SENSEX, gold etc. these are passively managed funds and hence carry a low expense ratio as compared to actively managed funds.

Target your long-term financial goals with ETFs

Exchange traded funds are open ended schemes which replicate an index of the total asset and will invest a minimum of 95% in securities of an index. Exchange traded funds are passively managed funds and hence where the fund manager is not actively involved. They can be bought or sold just like us company shares at the stock exchange. Therefore, ETFs are highly liquid in nature. Investors can buy or sell their exchange traded fund units at the stock exchange on a working day. They provide diversification and liquidity to an investor’s portfolio. There are some mutual funds that come with a predetermined lock in period and one may not be able to redeem such funds in case of a financial emergency. Since the investment objective of an exchange traded fund is to imitate cannot perform the underlying index with many miles as they can be considered by investors to target their life’s long term financial goals. Also, one needs to have a demat account in order to hold their exchange funds after purchase. Investors need to be KYC compliant in order to buy and sell exchange traded fund units.

There are some things investors need to keep in mind while choosing the right exchange traded fund. One can check the track performance of the reaction share fund and see whether it has been a consistent performer over the years. They can also compare the exchange traded funds performance to other funds that fall in the same category. Although these are passively managed funds, they still have an expense ratio and hence it is always good to make sure that the expense ratio of the traded fund is not on the higher end.

If you are new to investing and feel the need for their assistance, you can consult for Android before making an investment decision.