Investing in a portfolio of stocks: how an ETF works | sponsored

What is an ETF?

An Exchange Traded Fund (formerly known as an index tracker) is a fund that tracks a specific index. An index can be seen as a measure of the stock price of the largest companies in a country. An ETF is traded as a product on the stock exchange and can be compared with a standard investment fund that invests in multiple stocks. Investing in ETFs is also known as index investing. “

Do you need to be an expert to be able to invest successfully?

“No, you certainly do not need that. At VanEck, we help many beginners. The great thing is that we can make the biggest difference for these people. For people who are already investing, we have better products available and we can also help them improve their strategy. For those who have just started investing, we can do even more. If they switch from saving – which gives little today – to investing, the return can increase significantly in the long run. The three things you need to invest are money you can afford to lose in the long run, good diversification and a good portion of patience. ”

Martijn Rozemuller:

Martijn Rozemuller: “The great thing is that we can make the biggest difference, especially for beginners.”

What is the biggest misconception about investing?

“If you ask the average Dutchman exactly how the stock market works, a large proportion of people think that you only choose one company or share and sell it every now and then to buy something new. The problem with that is that you do not have enough diversification. With concentrated investments, you run an unnecessary risk. The great thing about ETFs is that you do not invest in a few individual stocks, but can buy an entire package. People are often unaware that you can buy an entire index at a low price and in a simple way. For example, we have a product that invests in 250 of the largest companies in the world. You do not have to choose the companies yourself or know the hat and the shade. Because you invest in all 250 companies in one transaction, your chances are well spread. “Something will probably go wrong in one of those companies at some point, but because it’s only a small part of your portfolio, it will not hit you so hard.”

How much risk do you run with an ETF?

“Investment is not the same as speculation or gambling. People are often afraid of the stock market, but it is not necessary at all. If the stock market goes down, you can actually see it as an opportunity to buy new stocks for a lower amount. You can compare it to a sale at Bijenkorf – does it scare you? No, because after the sale, prices rise again. This is how an index is determined: Precisely because you invest in many different companies, the index often comes up by itself. ”

What can VanEck do for a novice investor?

“On our website we have ETF Academy, where we explain the most important things about investing with ETFs. To make it as easy as possible for you, we offer several ETFs. You can see for yourself how much – or rather: how small – risk you want to run. You can diversify by going for different companies, but you can also invest in different products. In addition to stocks, you can also think of real estate, government bonds or corporate bonds. You can also choose an ETF by theme, such as a technology ETF or a dividend ETF. These are all ways to diversify your opportunities as a small investor without having to analyze many different companies yourself. ”

What is the best investment strategy now?

“I recommend the buy-and-hold strategy. This means that you choose your package, buy the product, add an amount on a regular basis and do not change product. You often see people change strategies when their products do not go as well as they hoped.My advice is then: stick to your original plan and try to keep a cool head.Transactions cost money and you have no guarantee that the other product will perform better.I sometimes make the comparison with cows in front of the checkout in the supermarket: If you change rows, you will see that the first row you were in suddenly moves faster. ”

Do you have more advice for investors?

“Do not look at your portfolio too often. If you do, the chances of you getting nervous and selling your shares early are much greater. If you act out of uncertainty, you take your loss. It is a sin and unnecessary. There is always a chance for improvement, provided you have enough time to wait. Stick to the buy-and-hold strategy so you do not trade too often. Remember, there is no magic bullet to get rich quick. Instead, work on a long-term plan and be patient. It works best. “

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