Best ETF For Buying || ETF Investment Guide

Summary

This video provides an in-depth guide on ETF (Exchange-Traded Fund) investing, focusing on strategies like dollar-cost averaging and selecting ETFs based on market movements. The speaker emphasizes the importance of compounding for long-term wealth creation, suggesting that small and consistent investments can lead to significant returns over time. They also highlight the risks of investing in small-cap stocks and the role of taxes and charges. Finally, the video encourages viewers to open a demat account to start investing, with a focus on making investing accessible and simple.

Takeaways

• 😀 ETFs are a great way to invest in the stock market for the long term, as they provide diversification and reduce risk.
• 😀 Small-cap stocks are more volatile and can experience significant price drops, making them a higher-risk investment.
• 😀 It's beneficial to buy more of a stock when its price falls, especially if it has dropped significantly (e.g., 5-10%).
• 😀 Daily or periodic investments, such as investing a fixed amount every day, help maintain steady growth in the long term.
• 😀 If the market rises one day, save the money and invest more when prices fall the next day to take advantage of lower prices.
• 😀 Choosing low-priced ETFs allows for smaller, more affordable investments, making it easier to participate in the market with less capital.
• 😀 MA Tech ETF, priced at ₹14 per share, offers exposure to top companies like China's top 30, providing international diversification.
• 😀 Compounding is key to growing wealth over the long term, and ETF investing allows you to benefit from this process.
• 😀 It's important to factor in taxes and charges when making ETF investments, as they can impact your returns.
• 😀 You can open a free Demat account and even refer others to open accounts, earning money in the process.
• 😀 Consistency is important in ETF investing, and following a regular investment schedule can yield significant returns over time.

Q & A

What is ETF investing, and why is it considered a good strategy for long-term growth?

ETF (Exchange Traded Fund) investing involves buying shares in a fund that tracks a specific index, sector, or asset class. It is considered a good strategy for long-term growth because it offers diversification, lower costs, and the potential for steady returns over time due to compounding. ETFs allow investors to invest in a broad portfolio of assets with relatively low risk compared to individual stocks.

How does the speaker approach buying stocks that are falling in price?

The speaker adopts a strategy of buying more of a stock when its price falls. If a stock or ETF experiences a significant drop, like 5-10%, they consider it an opportunity to purchase more, as they believe the market may eventually recover, allowing for greater long-term returns. This strategy is known as 'averaging down.'

What is the significance of small-cap stocks in the speaker's investment approach?

Small-cap stocks are seen as having higher volatility and potential for larger price fluctuations. The speaker notes that small-cap stocks can drop by as much as 10%, which is a significant move. This higher volatility presents both risks and opportunities for investors, especially when prices fall, as it may offer a chance to buy at a lower price for future growth.

Why are ETFs considered less volatile compared to individual stocks?

ETFs are considered less volatile because they represent a basket of stocks or assets, thus providing diversification. While individual stocks can experience sharp fluctuations, ETFs are less likely to see drastic changes in price because they are composed of multiple assets, reducing the overall risk.

What investment strategy does the speaker recommend for regular investing?

The speaker recommends committing to a fixed investment amount, such as ₹1000 per day. If stocks are up, the money can be saved for the next day, and if prices fall, it can be invested then. This approach ensures that an investor regularly invests, regardless of market conditions, allowing them to take advantage of price fluctuations.

What is the benefit of investing in low-cost ETFs like MA Tech?

Low-cost ETFs, like MA Tech, provide an affordable entry point for investors, especially those with limited capital. For example, MA Tech costs as little as ₹1 per unit, allowing people to invest in high-quality companies (such as China's top 30) with small amounts of money. This makes it easier for new investors to start and grow their portfolio without needing large amounts of capital.

What role does compounding play in ETF investing?

Compounding plays a crucial role in ETF investing by allowing earnings (from dividends, interest, or price appreciation) to be reinvested, generating further growth over time. The power of compounding can significantly increase the value of investments in the long term, which is why the speaker emphasizes long-term ETF investing.

What are the key considerations when choosing ETFs to invest in?

When choosing ETFs, it is important to consider factors like cost (expense ratios), the underlying assets the ETF tracks, the volatility of the fund, and the overall performance of the index or sector. Additionally, the investor should align their choice of ETFs with their financial goals and risk tolerance.

Why is it important to consider taxes and charges when investing in ETFs?

Taxes and charges can significantly affect the overall returns on an investment. Different ETFs may have varying tax implications, such as capital gains taxes or dividend taxes. Additionally, management fees and transaction costs can reduce the profitability of investments. The speaker promises to cover these aspects in a future video to help viewers make more informed decisions.

What is the speaker's recommendation for new investors looking to start investing?

The speaker recommends new investors to open a demat account, which is a necessary step for stock market investing. The demat account allows investors to hold and trade shares electronically. The speaker also encourages viewers to share the information with others and mentions the option to earn money through referral programs by opening demat accounts for others.