Master this stock market technique and unlock millionaire status

Mumbai (The Uttam Hindu) : Today, there are many investment options available in the stock market. One important option is ETFs, also known as exchange-traded funds. ETFs are an investment option that can be bought and sold on the stock market like stocks, but investments in them are made simultaneously in multiple stocks, commodities, or assets, similar to mutual funds.

An ETF reflects the value of an index, commodity, or property. For example, a Nifty ETF invests in stocks represented in the Nifty index. Similarly, a Gold-Silver ETF is based on the price of gold and silver. Investors can buy and sell ETFs through their demat accounts at the same time as trading on the stock market.

To invest in ETFs, investors must have a demat account and a trading account. ETFs can be purchased during the stock market hours, just like buying shares of a company. Their price fluctuates throughout the day, depending on the price of the relevant index or commodity.

According to market experts, investing in equities (stocks) involves investing in a single company, while investing in ETFs involves investing in multiple companies or assets simultaneously. Equities carry higher risk because a company's poor performance can lead to losses, while ETFs have comparatively lower risk because the investment is spread out.

Compared to mutual funds, investments in mutual funds are based on their end-of-day net asset value, while ETFs can be bought or sold at any time during the day. Mutual funds are actively managed, while most ETFs are passive and follow an index. Furthermore, ETFs have lower expense ratios.

Experts say the biggest advantage of ETFs is their transparency and low costs. Investors know exactly where their money is invested. Lower expense ratios offer the potential for better returns over the long term. Furthermore, ETFs offer high liquidity and can be bought or sold at any time.