Is investing in ETFs wise in 2023?

ETFs are increasingly popular, but is investing in ETFs actually wise? In this article, we discuss whether it’s smart to invest in ETFs.

ETFs in a nutshell

You can use ETFs to passively invest in an index: for example, you can track a basket of stocks listed on the Amsterdam stock exchange. In this article, you can read more details about what ETFs are and how they work.You can buy and sell ETFs through an online broker. It’s wise to choose a low-cost ETF broker: that way, you can avoid losing a lot of money on transaction costs. In the overview you see some of the best brokers you can use to invest in ETF’s:

Brokers	Benefits	Register
	Buy ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of ETF's with a free demo!	Register

Is investing in ETFs wise?

Investing in ETFs can certainly be wise! Many investors make the mistake of trading too frequentally when they don’t have the knowledge required for it. They then pay transaction costs over each trade and time their investments wrong, which can cost a lot of money.Investing in ETFs is also not suitable for everyone: for example, you need to have enough money that you can afford to lose for the long term.However, for most people, ETFs are the most suitable investment. Due to the high level of diversification and low costs, ETFs are suitable for building wealth.

An ETF won’t just go bankrupt

Investing in ETFs can be smart because the chance of losing your entire investment actually disappears. The chance that one company goes bankrupt is always present, of course. However, the chance that dozens of companies included in an index will suddenly go bankrupt is practically zero. If this were to happen, the whole world would be on fire.If you’re looking for a relatively less risky investment, an ETF can be a wise choice.

Less volatility

Another advantage of ETFs is that they are less volatile. One share can suddenly rise or fall significantly in value due to news. A scandal can lead to panic, causing everyone to suddenly dump their shares.In this case, you can still lose money with an ETF that includes this share, but you don’t lose your entire investment immediately. The remaining shares in the ETF provide more stability and can absorb your losses. However, don’t forget that you won’t make a quick fortune with an ETF: you’ll have to be able to live with this.

Perfect for building wealth

ETFs are a very wise choice if your goal is to build wealth over time. By periodically buying a well diviersified ETF with a fixed amount of money, you ensure that you benefit from the average return in the market.By also reinvesting your return over and over again, you benefit from compound interest. This can cause your results to grow exponentially, allowing you to build a nice retirement fund.

Low costs = wise

The low costs are also a reason to choose ETFs. One of the reasons why many active investors fail to beat passive investors is the much higher costs. You can buy ETFs without any costs at some brokers. At the same time, you pay higher transaction fees for shares each time, causing part of your return to disappear immediately. This makes it much more difficult for active investors to beat the market; you would have to do much better!

However, we still can’t live without active investors

Despite the fact that ETFs are a very wise investment, we still can’t do without active investors. Active investors contribute to the efficiency of the markets, and without this group, ETFs would not function well either. After all, the markets are driven by active traders who weigh information and buy certain shares based on it.Personally, I find investing too enjoyable. I know that it’s wise to invest in ETFs, but I always invest a portion of my money in shares. In this article, you can read more details about how this works.

Investing in ETF tips: how to achieve better results

If you want to invest in ETFs but don’t know how to proceed, then you’ve come to the right place! In this article, we’ll give you some essential tips that can help you achieve better results with investments in ETFs.

Tip 1: select the right ETF

Despite the fact that investing in ETFs has a passive image, you can’t just sit back and relax. It’s essential to choose an ETF that suits you. Always read the KIID (key information document), which shows you:

• An overview of the costs of the specific ETF
• An overview of the financial products the ETF invests in
• The risks associated with the ETF

Do you need help selecting a good ETF? Then read our article on selecting a good ETF.

Tip 2: selecting an affordable broker

By choosing a broker with low transaction fees, you automatically achieve better results with your investments. High transaction costs can significantly reduce your return in the long run. This is because your assets grow exponentially over the long term with reinvestment. The costs can hinder this process, which causes you the miss return.Are you curious with which brokers you can invest in ETF’s? Than take a look at this overview:

Brokers	Benefits	Register
	Buy ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of ETF's with a free demo!	Register

Tip 3: pay attention to the costs of the ETF

In addition to the transaction costs you incur with the broker, you also pay fees to the managing party of the ETF. You pay an annual management fee on the value of the ETF. Many ETFs are cheap due to the large amount of investors they attract: you then only pay 0.2 or 0.3 percent in management fees. However, on more exotic ETFs, this percentage can rise significantly, up to one percent!If the fund invests in a different currency than your own, you also face a currency risk. You also have to exchange your currency into another currency, which also costs money.A good tip is to invest mainly in larger ETFs. The larger ETFs charge lower management fees and can also buy shares at lower costs.

Tip 4: spread your investments over time

Despite the fact that ETFs often have a lower risk, it’s important to also consider market risk. When the market as a whole performs less well, ETFs will also perform less well. If you invest a large amount at the top, you can lose a significant amount of money. It’s therefore recommended to protect yourself against this risk.You can do this by investing a fixed amount in an ETF periodically. This ensures that you buy the ETF at both low and high prices, allowing you to achieve an average return.

Tip 5: research the diversification of the ETF

Many investors feel a bit too safe with an ETF. It is important to investigate whether an ETF is really as diversified and passive as it seems.You can do this by looking into what the ETF invests in. For example, an ETF that invests only in a handful of cannabis companies is not very diversified: you would then be heavily dependent on one specific sector.Also, pay close attention to the weighting of stocks within an ETF. In some ETFs, a handful of stocks have a very heavy weighting. You may think you are investing in more than 3000 stocks, while in practice, a handful of shares determine your result.Therefore, make sure you invest in an ETF that is broad enough or in multiple ETFs that are active in multiple sectors.

How to achieve better investment results with ETF’s?

ETFs are mainly used to passively track  a market. You achieve the best results when you take the following factors into account:

• Make sure you select the right ETFs that fit you well
• Choose an inexpensive broker where you can invest in ETFs
• Compare ETF costs and minimize them
• Diversify your investments over time
• Study the degree of diversification of the ETF

It is also possible to actively trade ETFs. By entering at the right time, you can achieve a high return. However, remember that trading ETFs in this way can be just as risky as ‘trading stocks’ as many of the benefits of ETFs no longer apply.

What are the disadvantages of investing in ETFs?

ETFs have many advantages, especially their simplicity and diversification, which make them interesting investment products for beginner investors. But what are the disadvantages of investing in ETFs?

Disadvantage 1: Trading Costs

ETFs are traded just like stocks, which means you can actively buy and sell ETFs during market hours. Many brokers charge fees for every transaction you make. Additionally, there is a difference between the buying and selling price of an ETF, which we call the spread. Make sure the difference between the buying and selling price doesn’t become too large, as this can quickly increase your costs.When buying ETFs, it is important to choose a cost-effective broker. You can take a look at the best ETF brokers in the overview below:

Brokers	Benefits	Register
	Buy ETF without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of ETF! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of ETF with a free demo!	Register

Disadvantage 2: Market Risk

Some investors incorrectly believe that there are no risks associated with ETFs. However, even when you invest in tens of different stocks with an ETF, you can still lose money. Sometimes something big happens that causes all markets to crash, such as the 2008 financial crisis or the beginning of the COVID-19 pandemic in 2020.With an ETF, you also face market risk, which can result in a significant loss of money. You can somewhat protect yourself against market risk by investing gradually over time. For example, if you buy an ETF monthly and invest the same amount, you buy both at high and low prices.

Disadvantage 3: Lack of Liquidity

In some cases, it may be difficult to sell your ETF: in this case there is a lack of liquidity. When you invest in a small ETF, there may simply be a lack of buyers. You will then receive a worse price for your ETF, which results in a loss. Therefore, always research whether the fund you want to buy is sufficiently liquid.

Disadvantage 4: Dividend Leakage

Some funds pay out the dividend they receive to ETF holders. However, this can lead to dividend leakage. Different countries charge different tax rates on dividends, which can reduce your return on investment. You can read more about dividend leakage in this article.

Disadvantage 5: Limited Risk Diversification

A major advantage of ETFs is the high degree of risk diversification they provide. However, this diversification can sometimes be limited in practice. There are very specific ETFs that only invest in a certain sector. For example, if you invest in an ETF that only buys South Korean game companies, your diversification will be minimal.But even with ETFs that focus on a broad market, you should carefully investigate whether there is really a high degree of diversification. For example, within some indexes, you may see that a handful of companies have a very large weight compared to other companies. An investment in a Nasdaq ETF, mainly consists of Apple, Microsoft, Amazon, Alphabet, and to a much lesser extent, a series of other companies.Therefore, always study how the ETF is constructed in detail to avoid unpleasant surprises. I personally use Morningstar to obtain information about various funds.

Disadvantage 6: be careful with leverage

Leveraged ETFs are risky and have a much higher degree of volatility. In addition, using leverage costs money, which means that these types of ETFs can perform poorly even during good economic times.

Disadvantage 7: no control

Another disadvantage of investing in ETFs is that you have no control. When you buy individual shares, you can make decisions about which companies to invest in completely on your own. For example, if you do not want to invest in environmentally polluting companies due to personal conviction, you can avoid doing so. However, with an ETF, you have no say in what happens to your money.If you prefer to buy individual stocks, you can learn how to do this in in our manual:

Disadvantage 8: no high returns

ETFs are designed to track an index, not to beat it. Therefore, you will not achieve astronomical returns with an ETF. In a time when cryptocurrencies sometimes achieve thousands of percent returns in a short time, this can be painful. However, do not forget that most people achieve worse results by actively trading the markets.If you are interested in how to achieve higher returns, our article on achieving a high return can be interesting:

Disadvantage 9: tracking error

Although the basic principle is simple, it is often difficult in practice to follow an index accurately. Indexes always charge some money to cover the management costs. Besides this, timing the distribition of dividends and rebalancing the ETF can be challenging.As a result, the price of an ETF may deviate from that of the underlying index. When this deviation becomes significant, investors can lose a considerable amount of money.

Disadvantage 10: adjustments to the underlying index

When investing in ETFs, it is essential to consider the hidden costs of the underlying index. Research shows, for example, that a fund often incurs losses when it has to make adjustments. An ETF that tracks the NYSE, will have to buy and sell shares regularly to continue tracking the index. Other market players are aware of this and can use this fact to their advantage.They then sell the shares that the fund will have to sell later and buy the shares that the fund has to buy. As a result, the fund receives less money for the shares it needs to sell and pays more for the shares it needs to buy. These hidden costs can significantly reduce the return of an ETF that tracks an index.When a fund delays making these adjustments, you often see that this has a favorable effect on returns.

Disadvantage 11: closure risk

If an ETF fails to attract enough customers, it may be closed. The ETF is then liquidated, and as an investor, you receive the value at that time. However, if the ETF has lost value in the meantime, you may incur a significant loss.

Disadvantage 12: rising costs

The average annual management fee for an ETF is about 0.4%. However, you will see that new funds are often offered at much higher prices. An ETF for which you pay 1% is less rare than you might think. Therefore, it is highly recommended to thoroughly research the ETF in which you want to invest. An ETF should never charge a very high cost percentage, as it is a completely passive investment.

What is the best high dividend ETF for 2023?

Are you curious about the best dividend ETF for 2023? In this article, we discuss 4 ETFs that are definitely worth considering if you want to achieve a high dividend yield! We also briefly discuss what high dividend ETFs are and how to buy them.

What are dividend ETFs?

An ETF, or exchange-traded fund, is traded on the stock exchange and aims to closely track an index. ETFs can be very useful as you can easily diversify your money across a large number of stocks.There are thousands of different ETFs you can invest in. A dividend ETF is a fund that primarily invests in stocks that pay a high dividend. Companies may choose to pay a portion of their profits as dividends.To read more details about what ETFs are and how they work, read this article:

How to buy dividend ETFs?

You can invest in dividend ETFs through a broker. In the overview below you can see which brokers you can use for investing in high yield dividend ETF’s:

Brokers	Benefits	Register
	Buy dividend ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of dividend ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of dividend ETF's with a free demo!	Register

What are the best high dividend ETFs?

In this part of the article, we discuss some interesting ETFs that you can use to benefit from a high dividend.

Vanguard FTSE All-Word High Dividend Yield

The average dividend for the Vanguard FTSE All-World High Dividend Yield is around 3 to 4 percent per year. The costs are reasonable at 0.29%, and the fund contains no less than 1,835 stocks, which provides a solid level of diversification. This fund invests in stocks from around the world, but America is clearly dominant. You can find the ETF under ISIN code IE00B8GKD.

VanEck Vectors Ms Developed Markets Dividend Lead

You can find this ETF under ISIN code NL0011683594. This is an interesting ETF if you want to invest in companies in developed countries with a high dividend payout. The dividend yield fluctuates, just like the underlying stock prices, but averages around 4 to 5 percent per year.A disadvantage of this ETF is the limited diversification: at the time of writing, the ETF contains only 98 shares. However, the fund is well-diversified across different regions: America, Europe, Canada, and Japan are the largest regions included.

Deka DAXplus Maximum Dividend UCITS ETF

When you have a lot of confidence in the German stock market, this is an interesting ETF to consider. By investing in this ETF, you invest in stocks included in the DAX with a high yield.With a management fee of 0.3%, this can definitely be an attractive option. However, be aware of the limited diversification: with this ETF, you only invest in German stocks and the car manufacturers Daimler and BMW have a significant weight due to this. You can find this ETF under ISIN DE000ETFL235.

SPDR S&P US Dividend Aristocrats

With this ETF, you invest in stocks that have consistently paid out signidicant dividends (so far). This ETF only includes companies that have raised their dividend every year for the past 20 years. These types of companies are also known as dividend aristocrats, hence the name of this ETF.One disadvantage of the SPDR S&P US Dividend Aristocrats is that the diversification is minimal: it only includes American companies. However, there is sufficient diversification across different sectors. The expense ratio is 0.35% per year. You can find this ETF under ISIN code IE00B6YX5D4.

Why invest in a high dividend ETF?

It can be attractive to invest in high dividend ETFs as this allows you to build a passive income from your investments. When you regularly invest money, this can add up significantly over the long term.It is also less painful when the prices decline. Many high dividend stocks are stable value stocks that can still pay out a portion of their profits in the form of dividends.

What are the disadvantages of a high dividend ETF?

No compounding

You benefit less from compound interest with a high dividend ETF. When you invest in an ETF that reinvests the dividend, your returns can grow faster. Of course, you can choose to reinvest your dividend yourself.

Limited diversification

The diversification is often more limited with high dividend ETFs than with broader ETFs. The fund manager only selects funds that pay high dividends, so many companies are immediately excluded.

Not the best performance

Companies that pay high dividends are not necessarily the best companies. A company that constantly pays dividends often sees no more opportunities for growth. Growth stocks that do not pay dividends can generate a higher return on investment if they are successful, simply through price gains.

Dividend payments can dissapoint

Also, keep in mind that a dividend payout can disappoint even with a high dividend ETF. In difficult times (such as during the COVID-19 pandemic), companies may decide not to pay dividends temporarily.

Dividend leakage

It is also important to remember that dividend payments within an ETF can lead to dividend leakage. You then lose part of your dividend due to unfortunate tax agreements.

Unstable price

You may notice with a high dividend ETF that the price can drop significantly when many companies lower their dividends. When the economic situation is poor, promises can no longer be kept. Because the price subsequently drops sharply, you cannot simply sell the ETF either. Therefore, take this risk into account when you want to invest in a high dividend ETF.

What to consider when selecting a high dividend ETF?

It is important to spend enough time selecting an ETF. Pay attention to these characteristics:

• Costs: how high are the annual management costs?
• Diversification: are you investing in diversified shares?
• Dividend: how much dividend does the ETF pay out on average?
• Performance: how are the underlying stock prices developing?
• Dividend leakage: is there a high level of dividend leakage?

Once you have selected an ETF, it may be wise to periodically invest. You will then benefit from an average return since you spread out the purchase moments. This prevents you from investing your money at the peak of the market.

Frequently Asked Questions About High Dividend ETFs

What are the risks of investing in ETFs?

ETFs are more popular than ever! This is mainly due to their image of having little risk. However, like all investments, there are certainly risks associated with investing in ETFs. In this article, we discuss the biggest risks of ETFs and how you can minimize them.

Risk 1: Market Risks

The biggest ETF risk is the same as the risk of investing in general: the so-called market risks. The prices of ETFs generally move with those of the overall market. During an economic crisis, the prices of ETFs also decline.The degree to which the price of an ETF declines can be lower due to risk diversification. This does not mean that you will not lose a significant amount of money when the market falls.You can pay attention to the beta of the ETF. The beta shows how strong the fund moves with the market. If you look for an ETF with the lowest possible market risk, it is best to invest in an ETF with a low beta.

Risk 2: Disappointing Diversification

Many investors blindly trust the image of ETF’s and assume a high degree of diversification. However, an ETF does not necessarily have to be low risk.There are plenty of ETFs that invest exclusivly in very specific stocks. For example, if you invest in a Bitcoin ETF or a cannabis ETF, you are still investing in a very specific investment category.However, the diversification in an ETF that tracksan index can also be disappointing, because some stocks can have a very high weight within the index. If all the largest companies in an index are technology companies, diversification may still be disappointing.Therefore, research carefully in which securities an ETF invests. You can always find this information in the mandatory prospectus.

Risk 3: Disappearing ETFs

If an ETF does not attract enough capital, it can be liquidated. In practice, about 20% of ETFs are liquidated prematurely. As a holder of the ETF, you would get your money back. However, when the price decreases you make a loss on your ETF investment.

Risk 4: Unclear Product Structure

With a physical ETF, you know immediately where you stand: the ETF physically buys the underlying securities, which makes the price development transparent and understandable. A synthetic ETF, however, uses derivatives which makes it difficult to understand the price development. Synthetic ETFs also sometimes lend securities, which adds an extra risk. In this article, you can read more details about the differences between the two fund types.Remember that with an ETF that uses derivatives, you always have counterparty risk. If the counterparty cannot meet its obligations, you risk losing your money.

Risk 5: Dividend Leakage

The country that issues the ETF is also important. Not all ETFs pay dividend tax in a favorable way. This can cause you to lose part of your dividend, which we call dividend leakage. By investing in ETFs registered in your country, you can avoid this risk as much as possible. Click here to learn more about dividend leakage and how to avoid it as much as possible.

Risk 6: Currency risk

When investing in an ETF that invests in other countries, you often face currency risk. When investing in an ETF that buys US stocks, for example, your currency must first be exchanged for dollars. If the dollar then loses value, you will lose money as you have invested in your currency.The currency risk is of course even stronger for investments in exotic ETFs that invest in emerging economies with unstable currencies.

Where can you find an ETF’s risk?

In most countries, every ETF must provide a prospectus which countains important information about the risks associated with the ETF. This includes, for example:

• Risk scale: how risky is the investment product on a scale of 1 to 7
• Performance scenarios: how much can you lose in a bad scenario
• Objective: how and where does the fund invest
• Costs: how much does the fund charge

The prospectus gives you a good idea of the risks associated with the ETF in question. If you want to better assess the risks of your ETF, it may be wise to do further research. Morningstar is a good source for this: you can often find everything you need to know in the factsheet.On the third page of the factsheet, you often find a clear overview of the allocation of the ETF in question. This allows you to investigate whether certain stocks, sectors or countries have an above-average weight in the index. A well-informed investor is a wise investor!

How to reduce the risks of your ETF investments?

• Invest in ETFs with a low beta to avoid high volatility
• Invest in ETFs in your own currency to avoid currency risk
• Apply solid diversification to reduce the risk of major declines
• Avoid complex ETF constructions to reduce your risk
• Invest in local ETFs to avoid dividend leakage
• Coduct solid research before buying an ETF on the stock market

Is investing in ETFs risky?

Investing is always risky. However, for most people, ETFs are the least risky investment option. With an ETF you can still benefit from the average return on the stock market. It is advisable to invest in ETFs with broad diversification.

How to invest in Bitcoins through an ETF?

Recently, it has become possible to invest in Bitcoins directly on the stock market by buying a Bitcoin ETF! But how does investing in Bitcoins with an ETF actually work and which ETFs can you buy? In this article, you will find everything you need to about trading Bitcoins directly with an ETF.

How to buy a Bitcoin ETF?

You need an account with a broker to be able to invest in Bitcoin ETF’s. In the overview you can see which brokers you can use for investing in Bitcoin ETF’s:

Brokers	Benefits	Register
	Buy Bitcoin ETF without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Bitcoin ETF! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Bitcoin ETF with a free demo!	Register

After you open a brokerage account, you must first go through the verification steps and deposit funds. Only once there is money in your account can you invest in Bitcoin ETFs.After you have deposited funds into your brokerage account, you can navigate to a Bitcoin ETF you want to invest in. This could be the VanEck Vectors Bitcoin ETN with ISIN code DE000A28M8D0, for example. Then click on the buy button to open the order screen for this Bitcoin ETF.You can enter how many shares of the ETF you want to buy. You can use a market order or a limit order:

• Market order: you buy the Bitcoin ETF at the current price.
• Limit order: you buy the Bitcoin ETF at a specific price.

What are Bitcoin ETFs?

An ETF, or exchange traded fund, is a passive fund that is traded on the stock market. This means that you can buy & sell an ETF directly on the stock market, just like a share.A Bitcoin ETF is a fund that tries to track the price of Bitcoin as closely as possible. When you invest in a Bitcoin ETF, you can easily track the price of Bitcoin within your portfolio.Do you want to know how ETFs work? Then read our ETF explanation article:

How much does investing in Bitcoin ETFs cost?

It is always important to pay attention to costs when investing, as costs reduce returns! When you buy an ETF, you pay transaction fees.You will also encounter a spread: this is the difference between the buy and sell price. In times of high volatility, the difference between the buy and sell price can increase significantly, which results in higher transaction costs.Additionally, don’t forget to investigate the management fees. Most ETFs charge 1% yearly in management fees, which reduces your return. You can avoid these costs by physically buying Bitcoins.

What are the best Bitcoin ETFs?

WisdomTree Bitcoin ETP

Wisdom TreeBitcoin physically buys Bitcoins, and the fluctuations in the value of this product are therefore linked to the development of the Bitcoin price. You can trade this effect under ISIN code GB00BJYDH287.

VanEck Vectors Bitcoin ETN

The VanEck Vectors Bitcoin ETN is a Bitcoin ETF listed in euros. You can trade this ETF on the German stock exchange under ISIN code DE000A28M8D0.

VanEck Vectors Ethereum ETN -EUR

You can invest in another popular cryptocurrency with this ETF: Ethereum. The VanEck Vectors Ethereum – EUR is listed under ISIN code DE000A3GPSP7.

What are the benefits of investing in Bitcoin ETFs?

The biggest advantage of Bitcoin ETFs is simplicity. When you buy Bitcoins yourself, you have to store them securely in a wallet. You also need an extra account with an exchange to store the Bitcoins. This is not the case with an ETF: a third party takes care of this for you, so even with little knowledge, you can benefit from investments in the crypto market.Another advantage is security. With an ETF, you are generally protected against possible hacks. Your ETF has a certain value that is linked to the price development of Bitcoin.

What are the disadvantages of investing in Bitcoin ETFs?

The biggest disadvantage of Bitcoin ETFs are the extra fees. You pay the fund for managing the Bitcoins. Bitcoin ETFs are therefore not cheap: you pay roughly 1% in managements costs annually. If you invest $10,000 in a Bitcoin ETF, you will pay$100 each year, regardless of the results of the fund.The liquidity can also be a problem: when many people withdraw at the same time, the fund suddenly has to sell large amounts of Bitcoins. Especially when the market crashes, this can be a challenge. However, this risk also applies to the physical Bitcoin market since it is also difficult to sell your Bitcoins when the market suddenly drops significantly.The lack of control is also a disadvantage of Bitcoin ETFs. For example, you cannot perform staking to earn extra returns. It is also more challenging to diversify your risks by investing in a group of cryptos.

Bitcoin ETFs and the news

Bitcoin ETFs receive a lot of media attention: this is not surprising given the sharp price increases of Bitcoin itself. An increasing number of investors are seeking out methods to invest in Bitcoins and where there is demand, supply arises. Therefore, an increasing number of countries work on launching ETFs.These launches are generally positive for the Bitcoin price: when Bitcoin becomes more accessible, more money flows into it, which can further boost the price. A large Canadian fund, for example, already owns more than 20,000 Bitcoins, and this number is growing rapidly due to increasing demand.Funds in the United States also work hard to obtain permission to launch a Bitcoin ETF. If this succeeds, even more money is expected to flow into Bitcoin, which could give the price an even further boost.Therefore, if you consider an investment in Bitcoin, it is worth to keep an eye on the price development of Bitcoin.

Frequently Asked Questions about Bitcoin ETFs

Why should you invest in ETFs? 6 reasons

Investing in ETFs is more popular than ever, but why? In this article, we will discuss 6 reasons why investing in ETFs can also be an attractive option for you.

Ready to get started with ETFs?

• Read in this article what ETFs are
• Discover here how you can invest in ETFs

Reason 1: more flexibility with ETFs

A good reason to invest in ETFs is the high degree of flexibility. With ETFs, you can enter or exit at any time. ETF prices are constantly updated, and ETFs are traded on the stock exchange just like shares.This means that you benefit from complete flexibility when investing in ETFs. With traditional mutual funds, you can often only exit once a day, and the price formation is also much less transparent.

Reason 2: diversify risks

With ETFs, you can easily diversify your risks, even with small amounts! With some ETFs, you invest in thousands of stocks with one investment product. This allows you to reduce the volatility and risk of your portfolio.You can use ETFs to diversify your risks across different countries and sectors. Moreover, by entering at different times, you can also diversify your risks over time. This allows you to avoid investing a lot of money just before a crash at the top of the market.

Reason 3: low costs

Another good reason to invest in ETFs are the relatively low costs. You typically pay a low commission once at the broker for buying an ETF, just like with stocks. Thereafter, you pay management fees for the fund, which usually amount to 0.5% or less.These costs are in stark contrast to the high transaction costs of normal mutual funds. With a normal mutual fund, you sometimes pay more than one percent, which can lower your returns. Moreover, actively managed funds rarely perform better than passively managed funds.

Reason 4: building wealth

ETFs are very suitable for building wealth at a relatively low risk. By investing periodically with a fixed amount, you benefit from returns on returns. This allows your wealth to increase significantly in the long term. With this tool, you can directly calculate the return you will get when investing in an ETF for multiple years.

Reason 5: it takes little time

Another reason why you should invest in ETFs is that it takes little time. You don’t have to research hundreds of stocks and keep an eye on the news of each individual share. No, it’s enough to select a good ETF and periodically deposit money into it. Because it takes little time, even people with busy jobs can benefit from developments in the stock market.

Reason 6: it’s accessible

Investing in ETFs is very accessible: you only need an account with a broker to trade ETFs directly. Do you want to get started buying ETFs yourself? Then open an account with a broker right away and start building wealth:

Why invest in ETFs?

As you may have read in this article, there are several benefits associated with investing in ETFs. By investing a fixed amount regularly in ETFs, you can build up a substantial fortune with minimal risk & low costs.Are you curious where you can invest in ETF’s? In the overview below you directly see with which brokers you can trade in ETF’s:

Brokers	Benefits	Register
	Buy ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of ETF's with a free demo!	Register

Which ETF is the best? How to select an ETF

Are you curious which ETF to buy? In this article, we provide you with a list of attractive ETFs to invest in. We also discuss how you can select an ETF that suits you best.

Which ETF is the best to buy?

Below we discuss some strong ETFs that we have selected for our readers. Always do your research first to see if the ETF in question is right for you.

Vanguard All World ETF (IE00BK5BQT80)

If you find good diversification important, the Vanguard All World ETF is a good choice. With a cost percentage of only 0.22% and more than 3,500 different stocks, this fund provides solid diversification.

Vanguard S&P 500 (IE00BFMXXD54)

With the Vanguard S&P 500, you invest in the 500 largest publicly traded companies in America. Note that the technology sector is overrepresented within this index. The modest cost percentage of 0.07% is very favourable.

iShares alternatives

You can also choose to invest in the MSCI World ETF (IE00B4L5Y983) or iShares S&P 500 ETF (IE00B5BMR087). These are also good options which allow you to invest in a wide selection of stocks at favourable rates.

Which ETF suits you best?

The ETFs mentioned above are the most popular ETFs you can buy. However, this does not necessarily mean that these ETFs are the best choice for you. Perhaps you find sustainability very important or want to invest in a specific emerging market? Therefore, it is important to first create a plan for yourself before investing in ETFs:

• What is your investment goal and investment horizon?
• What types of investment products do you want to invest in?
• Which regions and currencies do you want to invest in?

Once you have created a clear list, you can start shopping. In the overview below you see at which brokers you can invest in ETF’s:

Brokers	Benefits	Register
	Buy ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of ETF's with a free demo!	Register

What to consider when selecting an ETF?

When selecting an ETF yourself, you can look at various characteristics.

Type of investment

Investigate what the fund invests in. ETF’s can invest in stocks, bonds, Bitcoins among others. Delve into the details and research how the distribution is. Some funds that seem diversified on paper mainly invest in a handful of stocks.

Fund size

Large funds are generally more attractive. This is the case because they have higher liquidity: you can then sell them more easily on the stock market. Larger funds can also often make better deals, which means that transaction costs are lower.

Ongoing costs

When selecting the best fund, pay close attention to the ongoing costs. The ongoing costs indicate how much you will spend each year on the fund’s management.

Dividend payout

Pay attention to how the fund handles dividends. An accumulating fund automatically reinvests the dividend, while a distributing fund pays out the dividend. With an accumulating fund, you can maximize compound interest, allowing your wealth to grow faster, while with a distributing fund, you can build up a nice small income. Read more about the differences here.

Diversification level

A solid ETF has a high degree of diversification. Some funds may appear to be highly diversified. In practice, however, the level of diversification might be disappointing: the weight of the largest stocks can be significant.

Currency and exchange

It is also important to pay attention to the exchange when selecting an ETF. Many popular ETFs are listed on multiple exchanges. When you can choose the exchange of your country, this is often the best choice since transaction costs are lowest there.When you invest in a different currency, you will also incur costs for converting that currency. There is also a currency exchange risk: if your currency becomes less valuable compared to the currency of the fund, you will lose money.

Morningstar as a tool to find the best ETF

Morningstar is a very useful tool for selecting the best ETF to invest in. Under rating and risk, ETFs are evaluated on various factors. You can also see to what extent the fund invests in different funds. By using the Morningstar tool, you can examine a lot of useful information at a glance that can help you make a smart decision.

What are accumulating and distributing ETFs?

Would you like to know what an accumulating or distributing ETF is? In this article, we briefly discuss what an accumulating and distributing ETF entails.

What is an accumulating ETF?

An accumulating ETF is an ETF that reinvests the dividends received. This can be advantageous: without any effort, your returns can exponentially grow due to the effect of compound interest.

What is a distributing ETF?

A distributing ETF is the opposite: a distributing ETF pays out the dividend in cash to your account. This often happens quarterly.

Is an accumulating or distributing ETF better?

On paper, the difference between an accumulating and distributing ETF seems limited. However, your choice between the two can have significant consequences!

Return

The return on an accumulating ETF is much higher in the long run. This is due to the effect of compound interest. When the dividend is reinvested, you can earn a return on it again. As a result, over a longer period, the return on an accumulating ETF can increase much faster. You can use this tool to see how this works in practice.

Costs

Pay attention to the costs: with some brokers, you pay costs when dividends are paid out. This is a shame: you lose part of the profit that could have been avoided. Do you want to know which brokers allow you to receive dividends without paying costs? Then take a look at our brokers overview:When you reinvest the paid-out dividend yourself, you will pay transaction costs again. By doing this automatically through the fund, you save on your transaction fees.

Dividend tax

You pay dividend tax when you receive dividends. The amount of this tax depends on the country where the ETF is based. By not paying out dividends, you avoid this tax, which allows you to achieve a higher return in the long run.

How do you recognize the type of ETF?

You can always recognize the type of ETF by the name:

• Distr: this fund pays out the dividend
• Acc: this fund reinvests the dividend

Is an accumulating or distributing ETF better?

Personally, I think an accumulating ETF is better. This way, you automatically reinvest your dividend, allowing you to benefit optimally from compounding. Moreover, you can avoid dividend tax in this way, allowing your wealth to grow even faster.It is important to choose a broker where you do not pay any costs for dividend payouts. A good option for this, in my opinion, is eToro. Use the button below to open an account with eToro:

What is a synthetic ETF?

When investing in ETFs, you can choose between a physical or a synthetic ETF. In this article, we will discuss what a synthetic ETF is and what the potential advantages and disadvantages are.

What is a synthetic ETF?

A physical ETF actually purchases the underlying securities. For example, a physical ETF would buy all the shares that are part of the AEX index.A synthetic ETF does not purchase the underlying assets and therefore does not have them in its possession. Instead, the fund uses derivatives to replicate an index. The ETF’s price is then determined through a so-called swap.

Where can you invest in synthetic ETFs?

You can invest in synthetic ETF’s with a broker:

Brokers	Benefits	Register
	Buy Synthetic ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Synthetic ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Synthetic ETF's with a free demo!	Register

What are the advantages of a synthetic ETF?

One advantage of investing in a synthetic ETF are the lower costs. With a physical ETF, the underlying stocks must be bought and sold, and transaction fees are charged each time which can lower the return. With a synthetic ETF, no shares need to be purchased, which means the return can be slightly higher.Another advantage of a synthetic ETF is that there is no tracking error. The counterparty is responsible for offering a correct price through the swap. With a physical ETF, a tracking error almost never works out in favor of the investor.

What are the risks of a synthetic ETF?

The biggest risk of a synthetic ETF is counterparty risk. If the counterparty does not deliver, you could lose your investment. Fortunately, this does not happen often: the fund has no interest in this and is therefore extremely critical in choosing a counterparty. In addition, a fund usually works with multiple parties to further hedge the risks.Financial regulators warns about the lack of transparency in synthetic ETFs. It is therefore very difficult for private individuals to understand how the investment product is actually structured.

Which type of fund is better?

Which type of fund is better ultimately depends on your personal preference. When possible, I prefer a physical ETF. With this type of ETF, the investment is completely transparent and you know exactly what you are investing in.In some markets, you can only choose a synthetic ETF. If this is the case, I will not shy away from the investment. Given the high level of regulation, I have confidence that a fund will not do anything too crazy.

The best ETF’s to invest in the S&P500

Are you considering investing in the S&P 500? Then you can easily do so with an ETF! In this article, we will discuss how and where you can invest in the S&P 500 using an ETF.You need an account with a reliable broker to invest in S&P 500 ETF’s. In the overview below, you can find the best brokers with which you can buy S&P 500 ETF’s:

Brokers	Benefits	Register
	Buy S&P500 ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of S&P500 ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of S&P500 ETF's with a free demo!	Register

What are the best S&P 500 ETFs?

The best S&P 500 ETFs are the Vanguard S&P500 UCITS ETF and the iShares Core S&P 500 ETF.

Vanguard S&P500 UCITS ETF (IE00B3XXRP09)

The Vanguard S&P 500 UCITS ETF is very suitable for investments in the S&P 500. With an annual cost percentage of only 0.07%, you lose only a minimal amount in transaction costs.It’s good to know that Vanguard, the organization behind this ETF, has no profit motive. They have often lowered the fund’s costs in the past, which can be a good reason to choose this ETF.

iShares Core S&P 500 ETF (IE00B5BMR087)

The iShares variant of the S&P 500 ETF is also definitely a good choice. The cost percentage for this ETF is the same as for the Vanguard variant, at 0.7%. However, the iShares has a larger volume, which can give it higher liquidity.However, iShares lowers costs less frequently. Instead of lowering costs, you see that they often launch a new product. When selecting an ETF, you can therefore decide whether you prefer a more reliable brand (Vanguard) or a larger fund (iShares).

What are S&P 500 ETFs?

An ETF is an exchange-traded fund in which you can invest. Because the fund is listed on the stock exchange, you can easily buy and sell your participation at any time. An ETF normally passively tracks an underlying index.In the case of an S&P 500 ETF, the S&P 500 is tracked: this is an index that contains the largest 500 listed companies in America. With the S&P 500, you can therefore invest in the price development of the American stock market.Would you like to read more details about how ETFs work? Then read our article explaining ETFs:

How to buy an S&P 500 ETF?

Buying an S&P 500 ETF is easy: you only need an account with an online broker. I use eToro for buying and selling ETFs because they do not charge transaction fees on funds from the core selection. Use the button below to open an account with eToro:Within your eToro account, you can use the search box to quickly find the right fund. You can enter the name of the fund or the so-called ISIN code. Then, click the buy button to place an order.You can fill in how many shares you want to buy in the order screen: once you have done this, the shares will be added to your account immediately.

How to choose a suitable S&P 500 fund?

When selecting a suitable S&P 500 ETF, pay particular attention to size and costs. A large fund is often more liquid, meaning that you can exit more easily if you like. The spread of a larger fund is also smaller, which makes your transaction costs lower. The spread is the difference between the buying and selling price of the ETF.In addition to size, pay close attention to costs. The costs of ETFs can vary widely. On average, S&P 500 funds are very inexpensive, as there is a lot of competition and the product is extremely popular. Therefore, you actually pay less than 0.1% in transaction costs.

Is investing in an S&P 500 ETF wise?

Whether investing in an S&P 500 ETF is wise depends largely on your personal situation. A major advantage of investing in an S&P 500 ETF is diversification: by investing in different funds, you avoid one poorly performing stock derailing your entire investment portfolio.However, it is important to remember that the S&P alone does not lead to good diversification within your portfolio. With an S&P 500 ETF, you only invest in America. Within the fund ten companies determine more than 25% of the fund’s price movement because they are relatively large. Therefore, it is advisable not to invest only in an S&P 500 ETF if you want to apply extensive diversification.Finally, pay close attention to the exchange rate: the S&P 500 only invests in American companies, so the value of the dollar can have a significant impact on your investment results. When the dollar weakens, you can lose money.

Frequently Asked Questions about S&P 500 ETFs

Gold ETF: how to invest in gold with an ETF?

Gold is a popular investment, especially in uncertain times. However, it can be impractical to fill your home with gold bars. Fortunately, there is a smart solution that allows you to still benefit from the price movement of gold: a gold ETF! In this article, you will learn everything you need to know about investing in gold ETFs.

What is a gold ETF?

A gold ETF is an investment instrument that attempts to track the price of gold as closely as possible. By investing in a gold ETF, you can also invest in the gold price. A gold ETF does not always physically hold the commodity: sometimes derivatives are used. In this article, you can read more details about gold ETFs.

How can you invest in a gold ETF?

ETFs are traded on the stock exchange: the price of a gold ETF can therefore fluctuate regularly. You need an account with a broker to invest in gold ETFs.You need an account with a reliable broker to invest in gold ETF’s:

Brokers	Benefits	Register
	Buy gold ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of gold ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of gold ETF's with a free demo!	Register

After you have created an account with a broker, buying a gold ETF works the same as buying a share. You can use the search bar to find the gold ETF you want to buy. Then, press the buy button to open the order screen.Within the order screen, you can then determine whether you would like to place a limit order or market order. With a limit order, you open the investment at a certain price, and with a market order, you open the order at the prevailing price. You can sell gold ETFs at any time after purchasing them.

What to Consider When Selecting a Gold ETF?

Despite all gold ETFs attempting to track the price of gold, there are differences between the various funds. In this part of the article, we discuss what to consider when selecting a gold ETF.

The Structure

Physical gold ETFs actually hold the gold in a large vault. A disadvantage of physical gold ETFs is that costs are often higher. After all, payment must be made for storing and insuring large amounts of gold. Additionally, constantly buying and selling physical gold costs money.Synthetic gold ETFs, on the other hand, use derivatives to mimic the price of gold. Synthetic gold ETFs typically charge lower costs because the gold does not actually have to be purchased. However, transparency with synthetic gold ETFs is lower: derivatives are more complex, which makes it more challenging to understand how the gold price is established within the fund. You can read more about the differences between these structures in this article.

Size of the fund

The size of the fund can also influence performance. Large gold ETFs typically perform better because they have lower transaction costs. When a fund purchases larger volumes of gold at once, purchase costs are lower. Additionally, fixed costs (such as administrative costs) can be spread over more customers. Therefore, a large fund is often preferred.

The Currency of the Fund

Another factor that can affect the performance of a gold ETF is the currency of the fund. Gold is traded in dollars on the market. Therefore, if the gold ETF is listed in a different currency, the exchange rate can have a significant impact on the outcome. For example, if the gold ETF is expressed in euros, your result can be significantly influenced by euro exchange rate developments.

Leverage

Some gold ETFs apply leverage. You can read leveraged ETFs work in this article. Gold ETFs with leverage are often more suitable for short-term speculation. With a leverage ETF, both your profit and loss can increase more quickly. It is important to be careful with leveraged gold ETFs due to the higher risk.

Why Invest in Gold?

Not everyone is a big fan of gold: it essentially lies around without producing anything. However, under the influence of scarcity, the value of gold can continue to rise: the commodity is highly sought after, and global supply is decreasing.Additionally, gold is an excellent protection against inflation, making it possible to use gold for wealth preservation. If you want to learn more about investing in gold, read our special on the subject:

What Are the Best Gold ETFs?

Ultimately, the best gold ETF is obviously the one that suits you best. In this part of the article, we discuss some gold ETFs that may be of interest.

Invesco Source Gold ETC

This is one of the best funds for investing in physical gold. The annual fund costs are only 0.15%, and you can find this fund under IE00B579F325. The gold bars are held in the vault of the well-known J.P. Morgen Chase bank in London. This makes it a very cost-effective fund; physical gold ETFs are normally much more expensive.

Xetra Gold

For this gold ETF, you pay higher transaction costs: 0.3% per year. An additional, unique feature of this fund is that you can have the gold delivered to your home at some point. Until then, the gold is safely stored in a vault in Frankfurt guarded by the German Central Bank. You can find the Xetra Gold fund under ISIN DE000A0S9GB0.

WisdomTree Physical Swiss Gold ETC

This fund is very similar to the Invesco Source Gold ETC, which you can find under ISIN JE00B588CD74. The fund’s annual costs are only 0.15%, and the fund is denominated in dollars. The gold is safely stored in vaults in Zurich…

VanEck Vectors Gold Miners UCITS ETF A USD

With this ETF, you can indirectly invest in the gold market. With the VanEck Vectors Gold Miner Gold ETF, you invest in a selection of gold mines. The fund is denominated in dollars, and the costs are 0.53% per year. You can find this gold ETF under ISIN IE00BQQP9F84. They limit the weight of companies that also engage in silver mining to a maximum of 20%.

iShares Gold Producers

With this ETF, you can also invest in companies engaged in gold mining. The cost percentage of this ETF is 0.55%, and you can find the fund under ISIN IE00B6R52036.

Conclusion: What is the best gold ETF?

There are hundreds of gold ETFs, and not every broker offers the same gold ETFs. It is therefore worth comparing the different ETFs with each other. This allows you to determine which gold ETF suits you best. When investing in a physical gold ETF, the cheapest fund is often the best option.

Index fund versus ETF: what are the biggest differences?

Are you unsure whether it is smarter to invest in an index fund or an ETF? On this page you can find the most significant differences between ETFs and index funds. We will then discuss which investment option is better.

What are ETFs?

ETFs are funds that track an index and are freely tradable on the stock exchange. You can trade ETFs with an online broker. In this article, you can read in more detail how an ETF works.

What are index funds?

Index funds track an index, but they are not freely tradable on the stock exchange. You often buy index funds directly from the provider.

Difference 1: tradability

The first major difference between ETFs and index funds is the level of tradability. ETFs are traded directly on the stock exchange, creating a market of supply and demand. This allows you to sell your shares at any time of the day at the prevailing price. Because ETFs are traded on the stock exchange, the price is also 100% transparent at any time of the day.With index funds, this works differently. You can usually only sell an index fund once a day, excluding active trading. The price data is also typically updated once a day.ETFs, therefore, have the advantage of flexibility: you can time the purchase or sale of a fund very specifically using limit orders.

Difference 2: buying fractions of a fund

An ETF is almost always traded at a certain price, and you can indicate how many you want to buy. If the price is $20, and you would like to invest $30, in this case, you can only buy one participation in the ETF.This works differently for investment funds: you can invest in fractions here. Therefore, you would be able to invest the entire amount of $30.It is also easier to invest small amounts periodically within an investment fund. For example, you can deposit $100 monthly or weekly into the fund. This is not possible with an ETF, and therefore you have to set up a new order every time.

Difference 3: cost structure

The management costs of ETFs and index funds are often the same, especially when you look at the larger funds. These costs are on average around 0.5%.However, the purchase and sale costs between index funds and ETFs can differ greatly. Because you buy ETFs from a broker, you typically pay fixed transaction costs. This can make it less attractive to invest in an ETF with small amounts.With many index funds, you do not pay any costs when depositing money. This allows you to invest periodically in an index fund with small amounts.Another advantage of index funds in terms of costs is that they can typically handle dividend leakage better.

Is there a difference in return?

There is no difference in return between ETFs and index funds. Both investment products aim to track the index as accurately as possible. The so-called tracking error is minimized as much as possible (this is the difference between the actual index and the price of the investment product).Of course, this does not mean that the returns between different ETFs and index funds do not differ. Each index fund and each ETF is unique: therefore, research them well before investing.

Are ETFs or index funds better?

There is no absolute answer to this question: which type of investment is better for you depends entirely on your personal situation. It is important to remember that ETFs and mutual funds are very similar, as they both follow indexes and thus aim for average returns. Both investment products are therefore suitable for building wealth in the long term.Investors who prefer ETFs often point to their higher degree of flexibility. With one broker account, you can invest in funds from thousands of different parties. You can buy or sell your shares at any time, and transparent pricing allows you to know how your investments are performing at any given time.On the other hand, investors prefer index funds because of their convenience: you can typically automatically invest a periodic amount without looking at it.Which type of investment fund do you prefer? Please let us know in a comment below the article!

How to invest in a leveraged ETF – explanation

With a leveraged ETF, you can quickly achieve a significant return. However, unlike a normal ETF, leveraged ETFs are everything but stable and relatively safe. In this article, we will discuss how leveraged ETFs work.

What are ETFs?

Before we dive into what a leveraged ETF is, let’s briefly discuss what normal ETFs are. An ETF is an exchange-traded fund, which means that you can trade the fund on the stock exchange.A normal ETF tracks a certain index, such as the S&P500 or AEX, but it can also be a basket of cannabis stocks. You can then invest in these at relatively low costs.If you want to read more about what ETFs are and how they work, read this article:

What is a leveraged ETF?

A leveraged ETF is an ETF that allows you to invest with a leverage in the underlying securities.When you invest in the AEX with a normal ETF, and it rises by 3%, the ETF would also increase by about 3%.However, with a leveraged ETF, a leverage is applied, which could be 3, for example. In this case, you would make a profit of 9%. The opposite can also happen, and you would lose 9% instead of 3%.

What is an inverse ETF?

With an inverse ETF, you can speculate on a price drop of an underlying index. This is also a risky investment, but can be a suitable alternative to a normal short position.When you take a short position, your loss is theoretically unlimited. With an inverse ETF, you can never lose more than the amount you pay when you buy the investment product.Inverse ETFs can also be leveraged, allowing you to place a leveraged bet on a declining price.

How and where can you invest in Leveraged ETFs?

Investing in leveraged ETFs works the same as investing in normal ETFs. You need an account with an online broker. I, personally, use eTorofor trading ETFs because of their low costs and high level of reliability, which makes them suitable for ETF investments. Use the button below to open an account directly with eToro:

How do leveraged ETFs work in practice?

In the table below, you can see how the return of a normal ETF develops compared to a leveraged ETF. In this example, the index starts at a price of $100.

Price development	Normal ETF	Leveraged ETF (X3)
+10%	110	130
-20%	88	52
+20%	105,6	62,4
-5%	100,32	59,28
Total	0,32%	-40,82%

As you can see, leverage can greatly affect the return. On the first day, in this example, you would achieve a much higher return with the leveraged ETF. However, losses also pile up much faster, resulting in a much lower return.This is because the results are calculated every day. If you enter at the wrong time, you can lose a lot of money with leveraged ETFs!Investing in leveraged ETFs is therefore only suitable for active traders and not for people who want to invest in the long term. Leveraged ETFs work completely differently from normal ETFs, which are excellent for long-term investments.Therefore, only invest in leveraged ETFs if you understand these risks well and are willing to lose a large portion of your investment.

How is the price of a leveraged ETF determined?

A leveraged ETF uses derivatives to achieve leverage. For example, the funds work with option contracts that amplify the daily returns on the fund. It is advisable to investigate which derivatives a leveraged ETF uses to achieve leverage. Only invest in the leveraged product when you fully understand how it works.Leveraged ETFs are always synthetic by definition: this means that the underlying securities of the ETF are not held.

How much does investing in leveraged ETFs cost?

In theory, if you enter at the right time, you can achieve a high return with leveraged ETFs. However, the costs of a leveraged ETF are much higher, which means you have to achieve much better results to achieve a good result.This is the case because high premiums must be paid for the derivatives. In addition, money is borrowed to apply the leverage: you then invest on margin. As a result, the cost percentage of a leveraged ETF is often above 1%, while the costs of normal ETFs are often 0.5% or less.When investing in an inverse leveraged ETF, costs can increase even further: sometimes up to 3%. Therefore, do thorough research into the cost structure before executing an investment in leveraged ETFs.

Who are leveraged ETFs suitable for?

Leveraged ETFs are especially suitable for active traders who want to speculate on price movements in the index. Due to the high-cost structure and high risk, leveraged ETFs are not suitable for long-term investments.Leveraged ETFs are in any case not suitable for novice investors: the ETF’s are not very transparent, and the return you achieve can vary greatly from the return that the actual index achieves.

What are the risks of leveraged ETFs?

Leveraged ETFs carry a high risk and are therefore not suitable for passive investors. Due to the leverage, you can lose significant amounts quickly. Consider whether you are willing to take this high risk before investing in a leveraged ETF.

What are the advantages of leveraged ETFs?

• You can potentially achieve high returns with leveraged ETFs
• You can use a leveraged ETF to bet on a declining price
• Leveraged ETFs are cheaper than many other leverage products
• Leveraged ETFs are suitable for short-term investments

What are the disadvantages of leveraged ETFs?

• Leveraged ETFs have a high risk of loss
• Leveraged ETFs are expensive: costs can add up significantly
• The returns can deviate significantly from those of the normal index
• Leveraged ETFs are not suitable for long-term investments

How to invest in emerging markets with an ETF

Investing in emerging markets can be very attractive. Emerging markets can still grow significantly and as an investor, you can benefit from this. In addition, by investing in emerging markets, you can diversify your portfolio.

What is an emerging markets ETF?

An emerging markets ETF is an investment product that allows you to invest in the price developments of emerging markets. For example, an emerging markets ETF invests in stocks from China, Brazil, and Russia. It is important to research in which markets the ETF invests: this can vary significantly.Do you want to read in more detail how ETFs work? Then read our comprehensive ETF explanation and start well-informed:

How to invest directly in emerging markets?

You can invest in emerging markets with an online broker. In the table, you see an overview of the best brokers with which you can invest in emerging markets:

Brokers	Benefits	Register
	Buy emerging markets ETF's without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of emerging markets ETF's! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of emerging markets ETF's with a free demo!	Register

What are good emerging markets ETF’s?

Before you can invest in emerging markets using an ETF, you must first select a fund. In this part of the article, I will discuss some attractive emerging market ETFs.

Xtrackers MSCI Emerging Markets ESG UCITS ETF 1C

This is a great ETF if you want to invest in large companies located in emerging markets at low costs. This ETF charges 0.25% in ongoing costs.The fund tracks the MSCI index, in which China is a heavyweight. In addition to China, the MSCI Emerging Markets also invests in Taiwan, South Korea, India, Ireland, and to a lesser extent in South Africa, Brazil, and Russia.This index also only follows companies that meet certain social standards, so there is no blood on your hands with this investment. You can find this ETF under ISIN IE00BG370F43.

Vanguard FTSE Emerging Markets

A great alternative to the MSCI Emerging Markets fund is the Vanguard FTSE Emerging Markets, which can be found under ISIN IE00B3VVMM84. This fund invests in more stocks than the MSCI Emerging Markets and also has slightly lower transaction costs: 0.22% annually.The fund invests mainly in Asia but also has positions in the Middle East, Latin America, and Emerging Europe.

iShares MSCI Brazil UCITS ETF USD (Distr)

You can also choose to invest in a specific region with an ETF. For example, with the iShares MSCI Brazil, you can invest in large and medium-sized companies in this large country.One disadvantage of the iShares MSCI Brazil is its higher ongoing costs, which amount to 0.74%.Be sure to do thorough research before investing in an ETF that focuses specifically on one region. Your investments will be less diversified, which makes your region-specific risk higher.

iShares MSCI China UCITS ETF

In an article about emerging markets, the giant China cannot be left out. An example of a good fund that allows you to invest in both mainland China and Hong Kong is the iShares MSCI China, which can be found under IE00BQT3WG13. The ongoing costs are only 0.4%, which makes it an attractive option.Do you want to learn more about investing in China? Read our extensive special about this region!

How can you buy an emerging market ETF?

Emerging market ETFs are traded on the stock exchange, just like stocks. This means you can buy or sell the securities at any time. However, you need to have an account with a reliable broker first. Use the button below to open an account with eToro  and take advantage of free transaction costs for funds included in the core selection:After opening an account and depositing funds, you can simply find the ETF by using the search bar. Then, press the buy button to place an order. Here, you enter how many shares of the ETF you want to buy and what type of order you would like to use. With a market order, you buy the ETF at the current price, and with a limit order, you set the price you are willing to pay.

Why can it be interesting to invest in emerging markets?

One argument for investing in emerging markets is the rapidly growing middle class. Prosperity is increasing worldwide, so more people have money to spend. This allows companies to sell their products to the domestic market, which is good for profitability.Investing in emerging markets can also add extra diversification to your portfolio. For example, if things go bad in America, they don’t necessarily have to go bad in China. By investing in many regions, you reduce the volatility of your investments.You can also achieve a nice return on investments in emerging markets. The American and European markets have already become “mature,” making significant growth difficult to achieve. This space is often available in emerging markets: for example, China’s GDP has grown by more than 7% on an annual basis year after year.

What are the risks of emerging market ETFs?

Despite these benefits, there are also risks associated with investing in emerging markets. Emerging markets are often less stable, so political problems can ruin the results of your investments.There is also a currency risk: the currencies used in emerging regions are less stable, which can greatly affect your returns.There is often a lack of transparency, making it difficult to determine how companies in emerging markets are actually performing. Quality standards for company publications are often lower, and there is also often corruption.

Is it wise to invest in emerging market ETFs?

Personally, I think it is certainly interesting to invest in emerging market ETFs. The IMF has already indicated that there will be stronger growth in emerging markets in the coming years compared to developed countries.However, some risk-taking is necessary, as emerging markets are less stable, and returns are not guaranteed. Spread your chances across different regions to improve your returns and don’t invest all your money in emerging markets.

Frequently asked questions about emerging market ETFs

How to invest in crypto with an ETF (2023)?

Cryptocurrencies are more popular than ever! Do you want to take advantage of this crypto market without buying cryptocurrencies yourself? Then a crypto ETF can be an interesting option. In this article, we discuss how and where to invest in crypto ETFs.

What is a crypto ETF?

An ETF is a fund traded on the stock exchange that attempts to replicate an index. ETFs can cover different investment products. A crypto ETF therefore has one or more cryptocurrencies as its underlying value. If you want to read more details about what ETFs are and how they work, read our comprehensive explanatory article:

How to buy a crypto ETF?

You can invest in a crypto ETF with a broker. Open an account with a broker directly to invest in a crypto ETF:

Brokers	Benefits	Register
	Buy Crypto ETF without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Crypto ETF! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Crypto ETF with a free demo!	Register

What are the best crypto ETFs to invest in?

The best crypto ETF for tracking the Bitcoin price is WisdomTree Bitcoin and for the Ethereum price, it is VanEck Vectors Ethereum ETN.

WisdomTree Bitcoin

With Wisdom Tree Bitcoin, you can invest in the price movement of Bitcoin reliably. The tracker attempts to track the price of Bitcoin, so a price increase of 1% in Bitcoin should also give the fund a boost of 1%. The costs are low for an ETF which follows the price movement of Bitcoin: 1% annually. There are no extra costs for entering and exiting the fund.You can find WisdomTree Bitcoin under ISIN GB00BJYDH287, and it falls under the jurisdiction of Jersey (the Channel Islands). I name WisdomTree Bitcoin as the best Bitcoin ETF because of the low transaction fees and the reliable brand behind it.

VanEck Vectors Bitcoin ETN

If you want to follow the price development of Bitcoin, the tracker issued by VanEck is also a good choice. You can find this fund under ISIN DE000A3GPSP7 since it is issued in Germany. The fund is listed in dollars and the new price is determined every day at 16:00 CET. You pay 1% in ongoing costs annually and to enter or exit, you pay 0.2%.

21Shares Bitcoin ETP

You can also invest in Bitcoin by investing in this tracker. You can find the 21Shares Bitcoin ETP under the ISIN code CH0454664001 and you invest in a share of Bitcoin. The ongoing costs of this tracker are a lot higher: 1.49% annually. Entering and exiting is somewhat cheaper, as this can be done at 0.11%. Therefore, this ETF is only interesting for more active investors who want to exit quickly.

21Shares Short Bitcoin ETP (SBTC)

21Shares Short Bitcoin ETP is an oddball, as you can use this tracker to take a short position on Bitcoin. With a short position, you make a profit when the price falls. Due to the high ongoing costs (which amount to 8.5%), this ETF is only suitable for short-term speculation. You can find this tracker under the ISIN code CH0514065058.

VanEck Vectors Ethereum ETN

You can find this tracker under the ISIN DE000A3GPSP7 and use it to track the price of Ethereum. The fund is tracked in dollars and the value is determined daily at 4:00 PM CET. The expense ratio on this fund is 1% annually and there are also entry and exit fees. Every time you enter or exit, you pay an extra 0.2%. This ETF is currently the best way to invest in the price movement of Ethereum on DEGIRO.

How does investing in a crypto ETF work?

You can invest in crypto ETFs through a broker. Crypto ETFs are traded on the stock exchange just like stocks, which means the price is constantly updated, allowing you to buy or sell at any time.For trading crypto ETFs, I would recommend DEGIRO. This reliable, Dutch-broker makes investing accessible to everyone:You can then easily find the crypto ETF in which you want to invest through the search bar. Then click on the green K button to place an order on the relevant ETF. Within the order screen, you can indicate the amount you would like to buy of the relevant ETF. You can use a market order or a limit order. With a market order, you open the position immediately at the best available price, while with a limit order, you can set the price at which you want to buy the ETF.After the order is executed, you can find the position under your open positions. Here you can also reduce your position at any time by selling it.

Which cryptos can you invest in with a crypto ETF?

The number of approved crypto ETFs or trackers is currently limited. The requirements for a fund are quite high before they are allowed on the market. Currently, you can only invest in the price movement of Bitcoin or Ethereum with an ETF. This will likely change in the future.It wouldn’t surprise me if, in a few years, you could invest in an ETF that buys dozens of cryptos. In this way, an ETF can become a useful tool to diversify your risks in this volatile market.At the time of writing, investing in crypto with ETFs has little advantage: the costs are higher than physically buying crypto and the supply is more limited. Therefore, crypto ETFs are only suitable for investors with little knowledge who are looking for a quick way to invest in Bitcoins.Do you want to buy crypto yourself? You can do this at eToro! Use the button below to open an account and receive a free demo:

What are the best ETFs from the core selection of DEGIRO?

When investing in ETFs, the core selection of DEGIRO can be helpful as you won’t have to pay transaction fees on these ETFs. But what is the best ETF from the core selection? How do you choose from the hundreds of options on the list? In this article, we explore the possibilities.

What is an ETF?

Before we examine the best ETF from the core selection, let’s briefly discuss what ETFs are. An ETF is a fund that is traded on the stock exchange. An ETF passively tracks a certain index, allowing you to diversify your risks across different investment categories with one investment.If you want to read more detailed information on what ETFs are, take a look at our comprehensive explanation:

What is DEGIRO Core Selection?

The DEGIRO Core Selection is a list of ETFs that you can buy and sell without transaction fees under certain conditions. This is only the case if you:

• Invest at least €1000 in the ETF
• Execute a maximum of one transaction on the ETF per month

Use the button below to open an account directly with DEGIRO & start investing in ETF’s directly:

What is the best ETF from DEGIRO’s core selection?

It is important to objectively determine the best ETF from DEGIRO’s core selection. What the best ETF is, is highly personal. Therefore, I have divided the overview into different categories so that you can quickly find what, in my opinion, is the best ETF in the relevant category.

Vanguard S&P500: Best for Investments in America

• Ticker: VUSA
• ISIN: IE00B3XXRP09
• Annual expenses: 0.07%

If you want to invest in America, the Vanguard S&P 500 is an excellent choice. With an annual expense ratio of 0.07%, you pay much less than with many other funds, and the S&P 500 has a proven track record of decades.One disadvantage of the Vanguard S&P 500 is that you are only investing in America. However, because it includes the 500 largest American companies, you do have sufficient diversification across different sectors. If you also want to invest in other regions, you can choose to buy other ETFs as well.All in all, the Vanguard S&P 500 is a suitable investment option for both novice and experienced investors.

Vanguard All-World: best for global investments

• Ticker: VWCE
• ISIN: IE00BK5BQT80
• Annual expenses: 0.22%

Many investors prefer a high dividend and therefore opt for a high dividend ETF. One of the best options in this category is the SDPR S&P USD Dividend Aristocrats. This ETF contains only American companies that have consistently increased their dividends for at least 20 years.This ETF is therefore very suitable for investors who like to invest in stable companies. By buying the ETF, you can build up a nice passive income. However, investing in high dividend ETFs is not necessarily the best choice: reinvesting your dividend can be more expensive due to dividend leakage, and diversification is limited as growth stocks are not included in the fund.Are you curious about other good dividend ETFs? In this article, we discuss which ETFs you can invest in if you value a high dividend.

iShares China Large Cap UCITS ETF: best ETF for investing in China

• Ticker: IQQC
• ISIN: IE00B02KXK85
• Annual costs: 0.74%

The iShares China Large Cap is one of the best options if you want to invest in China. This is definitely an interesting option: the country has a large, emerging middle class, making significant growth possible. At the same time, the unpredictable government is a risk factor that you should certainly take into account.In the iShares China Large Cap fund, you find the 25 largest Chinese companies that represent the Chinese stock market. With only 25 stocks, the diversification is limited, so it is wise to thoroughly research the specific companies in which you want to invest. In addition, with a cost of 0.74%, you pay significantly more than with other funds. However, an investment in iShares China Large Cap can be appealing if you are looking for more exotic investments.If you would like to learn more about investing in China, refer to this article where we delve deeper into the situation in the country.

Invesco EQQQ NASDAQ-100 UCITS: best for innovative companies

• Ticker: EQQQ
• ISIN: IE0032079012
• Annual expenses: 0.3%

The Invesco EQQQ NASDAQ-100 UCITS proves that innovation is profitable, as this ETF has consistently outperformed the market. As you may know, high returns and high risk are inherently linked. The fund’s diversification is limited, with the top 10 stocks accounting for about 50% of its weight.The technology sector is a driving force behind the fund’s performance. Technology stocks have performed well recently, making this ETF very profitable. If you have confidence in this trend continuing, investing in the Invesco EQQQ NASDAQ-100 UCITS can definitely be worth it.If you want to read more about how to invest in the NASDAQ, check out this article for more details.

iShares Automation & Robotics UCITS ETF: capitalizing on the latest trends

• Ticker: 2B76
• ISIN: IE00BYZK4552
• Annual expenses: 0.4%

If you don’t mind taking a big risk, investing in iShares Automation & Robotics can be an interesting option. With this ETF, you are capitalizing on a major trend: the rise and growth of automation and robotics.This ETF has performed very well, with a return of over 20% annually. However, it is important to note that this fund is very risky, and the diversification is limited. A high degree of volatility is therefore to be expected when you buy this ETF. It is therefore advisable to diversify your investments across multiple ETFs to limit your risk.

iShares Global Clean Energy UCITS ETF: best fund for green investments

• Ticker: IQQH
• ISIN: IE00B1XNHC34
• Annual expenses: 0.65%

The iShares Global Clean Energy ETF had a difficult start because the fund was launched just before the 2008 financial crisis. However, after that period, the fund has performed well, and with the increased attention to green energy, this trend could continue.With a cost percentage of 0.65%, the iShares Global Energy ETF is far from the most affordable option. One advantage of investing in this ETF is that you can do it with a clear conscience. After all, you’re putting your money into a better future, and that’s worth something too!

SPDR Russell 2000 US Small Cap UCITS: best ETF for investments in small companies

• Ticker: ZPRR
• ISIN: IE00BJ38QD84
• Annual costs: 0.3%

If you’re looking for a way to invest in small companies, the SPDR Russell 2000 US Small Cap ETF is an excellent choice. With over 1,600 small stocks, of which the top 10 only have a limited weight, the diversification is superb. However, with the SPDR Russell 2000 US Small Cap, you only invest in American companies.Over the long term, small companies have performed better on average than large companies. This makes sense, since it’s easier for a small company to grow significantly than for a large company. By investing in a broad ETF, you prevent putting all your money into a small company that may unexpectedly fail. With an annual cost percentage of 0.3%, this ETF is one of the best options for the investor who doesn’t mind taking some risks.

VanEck Vectors Semiconductor UCITS ETF: innovative fund

• Ticker: VVSM
• ISIN: IE00BMC38736
• Annual costs: 0.35%

Chips are indispensable for the future: they’re in our cars, phones, and even in our talking refrigerator. The demand for chips will only continue to rise: more and more people can afford expensive products, and more products require chips. The production process behind these chips is very precise, allowing the producers to earn a lot of money.However, these high expectations are already partly reflected in the price of the VanEck Vectors Semiconductor ETF. If you want to invest in this ETF, it’s wise to keep a close eye on developments. Shortages, for example, can give the price a boost, but negative news can also cause the price to drop significantly.Investing in this ETF is therefore only suitable for investors who are willing to embrace high risks with the prospect of high potential returns. It’s recommended to diversify your wealth over different ETFs since this is a very specialized fund.

What should you consider when choosing the best fund?

I hope the suggestions in this article can help you choose the best fund from DEGIRO core selection. The best fund for you depends largely on your preferences.

Risk tolerance

Consider for yourself whether you prefer a stable, lower return or a volatile, higher return. Investing in a broad ETF ensures that your losses are offset by profits in other funds, which means that your return will not be extremely high, but the chance of significant drops is also lower. If you invest in more innovative, risky markets, your return may be higher, but you must be able to accept strong fluctuations.

Costs

Once you have determined which market you want to invest in, you can compare the various funds. Be sure to pay attention to costs. ETFs are passive and follow a fund without analysts having to get involved. Therefore, it is not necessary to pick a more expensive fund; the cheapest fund is usually the best option.

Diversification

It is also recommended to investigate the diversification of the fund. Some ETFs invest in hundreds of companies, but in practice, the diversification may still be disappointing. This is the case when the weight of the largest companies in the fund determines a large part of the performance. Therefore, consider whether you prefer to spread as much as possible or whether you are looking for exposure to a certain sector or region.

Frequently asked questions

What is dividend leakage and how do you prevent it?

When you invest in ETFs, you may encounter dividend leakage. A portion of your dividend is lost, even though you are actually entitled to it. But what is dividend leakage, and how can you prevent it?

What is dividend leakage?

In the Netherlands, dividends are taxed at 15%. In other countries, this percentage can be much higher; for example, in the United States it is 30%. If you are unable to recover this higher percentage from the tax authorities, we speak of dividend leakage. Dividend leakage can therefore cause your returns to be lower.The three scenarios of dividend leakage in brief (in case of 15% dividend taxation in your country):

• There is a tax treaty and 15% is taxed at the source: You receive $0.85 in your account for a dividend of $1. You can reclaim the $0.15 to your account.
• There is a tax treaty, but no account is taken of this at the source: In this case, for example, you pay 30% dividend tax. You can offset 15% with your tax return and try to get the remaining 15% back from the relevant government.
• There is no tax treaty, and you pay more than 15%: In this case, there is dividend leakage.

How can you prevent dividend leakage?

The only way to completely prevent dividend leakage is to only trade in funds registered in your country. It is also important that the fund only invests in stocks listed on the stock exchange of your country.

How can you recover dividend leakage?

It is not always possible to recover dividend leakage. How easy this is, strongly depends on the tax treaties that exist between your country and the country in question.

How high is the dividend leakage?

The amount of dividend leakage depends on the fund in which you invest. If you invest in a foreign fund with shares that pay out many dividends, the dividend leakage can be much higher than if you invest in a technological ETF.Suppose you receive an average of 3% dividend and the dividend leakage is 10%: in that case, your return will be 0.3% lower on an annual basis due to the leakage of the dividend.

How do you calculate dividend leakage?

You can calculate the dividend leakage of a fund by looking at the amount of dividend the fund pays out and the taxes that are withheld on it. However, it remains difficult to calculate this percentage exactly, as dividend leakage can occur at different times.You may encounter dividend leakage when stocks pay dividends to the fund and when the fund pays dividends to you.

How important is dividend leakage?

Now that you have a better understanding of what dividend leakage is, you may be wondering how important it is. If you can choose a comparable fund with a lower level of dividend leakage, this is of course favourable. Your return can then be higher because less dividend leaks away.At the same time, your return can be higher when you also invest in more exotic regions. Emerging economies, in particular, have a lot of room for growth. Therefore, do not focus solely on dividend leakage; it is better to have a high level of dividend leakage and a high return than to have little dividend leakage and a low return.

Frequently Asked Questions about dividend leakage

  What is a W-8 form?

You can fill out a W-8 form to prove that you have no direct ties to America. By filling out this form with your broker, you can avoid dividend leakage on investments in America.

  What is dividend?

Dividend is a profit distribution. When a company makes a lot of profit, it may decide to pay a portion of it directly to the shareholder as cash. In this article, you can read more about dividends.