ETF Revolution changes investing. Exchange Traded Funds are popular investing choices first created in Canada but now in investing markets around the world. Money Strategies That Manage Wealth, Lesson 11, covers Exchange Traded Funds (ETF) as low cost alternatives to mutual funds.  Links at the lesson end guide you to related content to learn more.

What’s in this lesson for me?

Using lower cost investments puts more money in your pockets. Lower costs always deliver more money for your pockets to grow your wealth and financial security.

ETF Revolution Changes Investing History

This Canadian investing innovation first appeared in 1990. In the following decades the idea spread around the investing world. What began as an investing ripple grew into a colossal tidal wave. Exchange Traded Funds emerged and listed on exchanges or trading just like stocks. That makes them distinctly different and more accessible than mutual funds. ETFs are essentially mutual funds created for the digital age.

Perhaps even more importantly,  ETFs dramatically lower costs for investors. ETFs have costs, structure and fees that give investors a very low-cost alternative to expensive mutual fund fees and trailing costs. As noted above, unlike mutual funds, the units or shares of ETFs list on exchanges. That lets investors buy and sell ETFs just like stocks. These basic differences are shaking the fund business to its core. It is no overstatement to say this ETF revolution changes investing history!

There are thousands of ETF choices for investors to pick from. Every imaginable market, sector and approach gets covered by these products. New and different ones regularly appear.

Too many mutual fund sellers obfuscate and purposely produce much misinformation to claim or suggest they offer a different and "better" product than ETFs. However, when you cut through the smoke, mirrors and noise, the story is clear. Compare apples with apples, an ETF tracking exactly what a mutual fund tracks, the ETF investor nets very substantially more. 

Any mutual fund owner should carefully investigate using ETFs as an alternative. Seek independent advice. Advice from someone selling only mutual funds can certainly not be taken as either independent or objective.

Exotic ETFs Arrive

Most ETFs are as basic as mutual funds. They are readily understood and simple to deal with. In contrast, understanding the exotic leveraged and inverse ETFs requires deep knowledge. In recent years exotic leveraged and inverse ETFs have emerged. They give investors ready access new complex strategies and alternative market approaches.

Also expanding the choices for investors are a new breed of specialized dealers. They offer investment programs built exclusively on an ETF strategy. Basic products can give complete market coverage and offer reasonable net returns.

In contrast using the exotics properly requires a complete understanding and advanced understanding of the market as well as how exotic ETFs manage their underlying operating formulas. These advanced products quickly pull investors into very advanced investing territory. Few financial industry representatives properly understand the use and risks of exotic ETFs.

Exercise great care when using exotic leveraged or inverse funds. Used improperly, they can quickly blow up a portfolio. Before touching them, do your homework. Learn before you try to earn, or you will burn!...real money that is! New or even investors at an intermediate level should never use exotic ETFs. Stay with the basic products and you will be fine.

Evolution Continues

We must acknowledge that there are many other developments, some of them significant, especially on the regulatory front. All markets including many not mentioned here or in this series also have a history, innovations and developments.

As needed, we can discuss the other factors and markets in the future. But now, for our purposes, this brief and slight account of market history brings us to our current digital, connected and flat world.

What innovation or development is next? I don’t know. I do know innovation and developments will continue and keep changing the market. We will also keep changing to accommodate and seize the opportunities that inevitably present themselves as a result.

When new to markets and investing or wanting to learn more about investing, take time to learn and time to think. Understanding some background on these most popular financial products can explain why they may have fit well in your father’s or grandfather's portfolio. Today there are many better choices for their sons and daughters.

Continuing developments and changes in the financial markets matter to your financial health. It pays very well to keep current and aware of the big picture.

Why this lesson matters

The lesson focuses on a major change in the investing landscape, ETFs. This Canadian innovation has spread across the investing world giving investors many low cost investment choices. All prudent investors now include ETFs in their research. The ever growing number of ETFs offer choices of every imaginable investing combination.

Takeaways from lesson 11, ETF Revolution changes investing, includes:

ETF Revolution changes investing. Exchange Traded Funds are popular investing choices first created in Canada but now in investing markets around the world.

• Become a better investor by knowing when to take profits.
• Let winners run when markets are rising.
• Don’t fall into the fear trap that makes you sell too soon.
• Think like the wise merchant the buys more winners.
• Sell your losers and buy more winners.
• Be exceptional - take the full ride with your winners.
• Trim the weeds, water the flowers.
• Take the lesson on portion control.

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Money Strategies That Manage Wealth, lesson links:

Introduction to Money Strategies - Planning & Managing Wealth Lesson 1 Investors and traders ride growth Lesson 2 8 Big money matters Lesson 3 Nelson Mandela touched investors Lesson 4 Market time grows money Lesson 5 Stock market dip opportunities Lesson 6 Investing strategies taking profits Lesson 7 5 Money making strategies Lesson 8 Investors can deposit and WAIT! Lesson 9 Change moves markets forward Lesson 10 ETF Revolution changes investing Lesson 11 Benjamin Graham market mix Lesson 12

Next lesson 12

Benjamin Graham market mix teaches us that investors, myths and mind games mix in stock markets. Investors and traders, amateurs and pros all buy and sell. Their actions are like votes or weights for and against each investment. Have a prosperous investor day! Bryan White Top Investor whitetop@WhiteTopInvestor.com WhiteTopInvestor.com Let’s connect, follow me; Twitter LinkedIn Facebook Image courtesy FreeDigitalPhotos.net

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