ETFs

Someone emailed me asking on ETFs. So here's it:

ETFs are Exchange-traded funds and comprises of either a basket of stocks or follows closely to the performance of an Index. They behave like any other stocks & are traded over an exchange.

Eg. S&P 500 (SPY), DJIA (DIA)

Advantages are that it provides us with diversification although we only have 1 counter on hand. The diversification could be through different asset class, geographical location etc depending on the ETF purchased.

For now, I advise only buying ETFs on the U.S market as the ETFs in Singapore are still rather illiquid. It is quite pointless should you wish to sell & can't (due to illiquidity) or selling at loss (below Market Price) so as to liquidate it. For those who wish to buy into the STI may consider EWS.