Stocks vs. ETFs?
Sep 7, 2023
Today's question was inspired by The Trader's Instinct.
In the world of investing, there's no one-size-fits-all approach. Different investment vehicles cater to different financial goals, risk tolerances and time horizons. Two of the most popular investment options are stocks and exchange-traded funds (ETFs). But when it comes to choosing between the two, which should you include in your investment portfolio? This is a common question among both novice and seasoned investors, and this article aims to provide an answer.
The question "stocks vs. ETFs?" can be viewed from various angles. The risk perspective considers the higher risk of individual stocks versus the diversified nature of ETFs. The cost perspective weighs the potential higher transaction costs of stocks against the typically lower costs of ETFs. The management style perspective contrasts the active management of stocks with the more passive approach of ETFs. Also, the financial goals perspective assesses how well each option aligns with the investor's specific objectives.
In this context, we're seeking the expert opinion of Anton Kulikov, a member of the Research Team at tastylive, on the question "Stocks vs. ETFs: which should you include in your investment portfolio?"
The question of stocks vs ETFs can be summarized with some simple distinction: How many stocks do you want to own?
ETFs are tradable products that are multiple stocks traded as one “thing.” Say you wanted to invest in tech stocks, and you want to own a variety of them but do not have the money to buy all of them in one purchase nor do you have the time to manage that portfolio.
ETFs make it possible for you to invest in all major tech stocks wrapped up into one “stock.” QQQ or XLK are examples of this. Both are ETFs that are traded like a stock, except what you are buying is a group of stocks that each contribute a portion of the value of the ETF. The difference between owning an ETF and a single stock comes down to how many different stocks you want to own. If you want to own a variety of stocks, buy an ETF. If you want to own a specific stock, buy that specific stock.Ryan Sullivan is an active options and forex trader and programming producer for the tastylive network.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.