Exchange Traded Funds, or ETFs, are popular for investors who want to diversify without micromanaging an excessive number of individual stocks. ETFs are similar to mutual funds in terms of the assets they are comprised of, but they come with some specific tax benefits. Unlike mutual funds, capital gains taxes are only paid on ETFs when they are sold.
If you want to diversify your portfolio with an investment that covers a wide base, then an Exchange Traded Funds could be perfect. Here are three of the best available on the market today.
Invesco QQQ Trust Series – Tech Sector Heavyweight
If you want to invest in the tech heavyweights in a single fund, then the Invesco QQQ Trust Series (NASDAQ: QQQ) is the place to start. This fund focuses entirely on the NASDAQ, with almost one third of holdings coming from Amazon, Microsoft, and Apple. The exposure to the tech industry with this Exchange Traded Funds is strong, which can be both risky and rewarding.
This ETF should be combined with a broad range of equities if you want the most security from your portfolio. The QQQ Trust Series is an excellent way to gain exposure to pricey tech stocks like Amazon and Alphabet.
Vanguard S&P 500 ETF – A Well Balanced ETF For Large Cap Stocks
Vanguard is the largest fund management company in the world. It has led the market for 12 years, thanks to a popular range of investment products.
The Vanguard S&P 500 ETF (NYSE ARCA: VOO) is one of those products, and it’s worth considering if you want to invest in a fund that covers the most valuable American growth stocks. Because this Exchange Traded Funds tracks the largest cap stocks, it can suffer from periods of heightened volatility. However, when the market is rallying, the returns can be significant.
Schwab U.S. Dividend Equity ETF – Dividend Returns for Income Investors
If you want to gear your portfolio towards stable and mostly passive income, then a dividend focused ETF would be an excellent choice. Charles Schwab offers the U.S. Dividend Equity ETF (NYSE ARCA: SCHD) at low cost and with minimal fees. The fund is made up of some of the largest and most stable U.S. companies, including Verizon, PepsiCo, Intel, 3M, Exxon Mobil, and Home Depot.
This Exchange Traded Funds is currently producing a yield of 3.14%, which can fluctuate depending on market conditions.
Compare Exchange Traded Funds as You Would Any Other Investment
These are just three of the best Exchange Traded Funds on the market today. The right fund for you will depend on your needs and your budget. Always practice due diligence and aim for a diversified portfolio that mitigates as much risk as possible.
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