Planning to start investing as a beginner, but not ready for the hassle of analysing individual stocks? The process demands significant time, knowledge, and effort. You need to monitor the market continuously, analyse stock performance, make comparisons, and stay updated with news that could impact your investments. Exchange-Traded Funds (ETFs) provide a solution by offering diversification through a single instrument.
Learn below the benefits of ETF investing and how to begin your journey via a trading app.
What are ETFs? Top benefits of investing in ETFs
An ETF is a marketable security that is designed to track an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, ETFs trade on stock exchanges just like shares. You can purchase or sell them at real-time prices during market hours.
Look at the key benefits of investing in ETFs:
- Diversification: A single ETF can provide exposure to a wide range of securities.
- Lower costs: As ETFs have a lower expense ratio, there are fewer recurring costs to reduce returns.
- Transparency: Most ETFs disclose their holdings on a daily basis, which enables smarter and more precise decisions.
- Liquidity: ETFs can be bought or sold anytime the stock market is open.
All these benefits highlight the value ETFs bring to building a well-rounded portfolio.
Starting ETF investments with a trading app
ETFs are available only on stock exchanges. Hence, you need to open a demat account first with a reliable trading app. The process hardly takes more than 15 minutes, and the only essentials required are your Aadhaar, PAN, and bank details. After opening the demat account:
- Log in to the trading orETF app and go to the ‘Stocks’ section.
- Scroll down to find the ‘ETF’ category.
- Decide on the type of ETF you wish to invest in (e.g., equity, debt, gold, commodity, etc).
- Select an ETF from your chosen category.
- Click on ‘Buy’.
- Enter the quantity (number of ETF units).
- Select the order type (e.g., market or limit).
- Add funds if your account balance is insufficient.
- Finalise the transaction.
You can track your ETFs, including profits and losses, in the ‘Portfolio’ tab.
Tips to use a trading app for smarter ETF investing
Use these methods to approach ETF investing more strategically with a trading app:
- Compare ETFs: Use the app’s filters to check expense ratios, liquidity, and tracking error.
- Leverage in-built tools: Track live prices, create watchlists, and enable alerts for timely decisions.
- Set up SIPs: Use Systematic Investment Plans (SIPs) to invest regularly, benefit from rupee-cost averaging, and prevent the risks of trying to time the market.
- Use insights: Go through learning resources like FAQ sections and video tutorials available in your ETF app to invest confidently.
- Review regularly: Check your portfolio’s performance routinely via the app’s dashboard and modify strategies as needed to stay on track with your goals.
These strategies can help you build a disciplined, cost-efficient, and well-balanced ETF portfolio.
To sum up
ETF investing through trading apps gives investors a simple and affordable way to diversify across markets. By downloading the right app, comparing ETF options carefully, and using built-in tools like watchlists, alerts, and learning resources, you, as a beginner, can avoid common pitfalls and build disciplined strategies. The basics are simple, i.e., set clear goals, track your performance, and stay committed to your strategy.
You can choose MO Riise by Motilal Oswal to begin your ETF investing journey. Backed by the legacy of a SEBI-registered public entity, over 40 lakh users trust MO Riise. You get access to multiple ETF categories, expert-backed research, UPI-based payment options, and helpful portfolio management tools. Educational resources, along with 24/7 support, make your investing experience even better.
Download MO Riise today and start building a strong ETF portfolio!