As you craft your own exchange traded fund (ETF) investment strategy, keep in mind there are a number of factors coming together converge into success. ETFs can certainly help your portfolio, but there are a few other ideas to keep in mind, reports Carl Delfeld for Forbes.
- Think Globally In this day and age, the steady decline of the U.S. dollar is reason enough to want to invest foreign. Keep things in perspective though, as emerging markets have 85% of the world’s population, 25% of the world’s GDP, and more than 50% of the globes entire growth, and still only represents 11% total market value.
- Get Organized Explore your possibilities and think about your financial objectives and your risk tolerance.
- ETFs As Core Investment Tools Not only do they provide transparency, low costs, tax efficiency, they can give you access to sectors, asset classes and global markets.
- Look Under The Hood Take the time to look into an ETFs basket and know what you actually hold, don’t simply go by the title.
- Rifle or Shotgun? Broad based ETFs give you exposure to a large area, but the narrow focused ETFs can help fill in holes where you may want a more exposure.
- Look forward to beat benchmarks Looking at past performance doesn’t guarantee what will happen in the future. Think about the investments you want to make and how they may look in the future. If you have an exit strategy in place you can get out of the investment if the future doesn’t turn out as you expected.
- Politics Matter Take note of policy changes and reforms. Think, Reagan revolution of the 1980’s, Irish renaissance, Brazil’s reforms etc. Pay attention to foreign elections.
- Lead with momentum, Check valuation Surging markets are enticing, but will they continue upward? If you do get in, be sure to set a stop-loss so that you can get out if the tide changes.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.