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Exchange-tradedfunds (ETFs) like Vanguard High Dividend Yield ETF (NYSEMKT: VYM) provide a simple way to invest broadly in a key theme -- in this case, stocks with a high dividend yield -- to generate passive income. So, for more activeinvestors, this ETF could be a good launch pad for picking stocks.
Billionaire investors like Warren Buffett and others are often known for their stock-picking abilities, and for good reason. But it's also important to know that many of the wealthiest investors in the world own exchange-tradedfunds, or ETFs, as well. He recently stepped down from his active role.)
In fact, investing $100 per month in one simple exchange-tradedfund (ETF) will do the trick. It's not a high-flying tech fund. It's not an ETF that employs a complicated "black box" trading strategy either. To relatively new investors the suggestion seems outrageous. The only catch?
You'll see the two in the world of mutual funds, as an example. Actively managed mutual funds are ones where financial professionals study the universe of investments and decide which ones to buy and sell, and when to do so. Think of a classic index fund, such as one that tracks the S&P 500 index. Real estate funds?
However, despite my preference for being an activeinvestor, I've passively invested in several high-quality exchange-tradedfunds (ETFs). The fund directly holds over 130 stocks, many of which have excellent track records of paying dividends. It distributes this dividend income to investors each month.
For long-term investors who simply want exposure to the energy sector for diversification purposes, the answer is likely to be diversification. Just buy a sector-tracking exchange-tradedfund (ETF) like Vanguard Energy Index ETF (NYSEMKT: VDE). When energy prices are dropping, they'll get the opposite.
Let someone else make the decisions If you're an activeinvestor, it might sound counterintuitive, but you can hire someone else to handle subsets of your portfolio. It has hit that 6% level in each of the past five calendar years, which might entice income investors. Rowe Price, and other fund shops.
You can, instead, buy a gold-backed exchange-tradedfund. But the gold in the fund won't grow over time like a business could. This is why many investors prefer owning precious metals miners. So when precious metals prices are high investors will benefit more directly from the lofty commodity prices.
Robert Brokamp: When you read the announcement of the approval of these investments from the SEC chair, Gary Gensler for uses the term ExchangeTraded Product, or ETP. That's really just an umbrella term for anything trade on an exchange. In options trading involves additional cost. Moving on my second question.
I will be investing every penny into stocks, and maybe a dividend, exchange-tradedfund dividend, ETF. On to Number 7, still here in the Foolish Moves category, smarter moves made by people who are already activeinvestors. "One step I just took," House Hunter, "is to get a side hustle of sorts. Bless you, sir.
Exchange-tradedfunds (ETFs) can be great investment options. ETFs can also be a great way for more activeinvestors to find new stock ideas. One thing you'll notice is that the fund currently has a high concentration of energy stocks right now, accounting for more than 20% of its holdings.
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