Stocks vs. ETFs?
Stocks vs. ETFs?
As one of the tastylive network's producers, Ryan Sullivan fields questions from listeners calling in to the live show all day long. Do you have a finance or trading question for our research team to answer in this column? Send it to ryan.sullivan@tastylive.com
- When choosing between stocks and ETFs, which should you include in your portfolio?
- Stocks offer the chance to actively manage a portfolio.
- ETFs offer instant diversity and a passive-investing approach.
Today's question was inspired by The Trader's Instinct.
Stocks vs. ETFs: Which should you include in your investment portfolio?
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?"
Response from Anton
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.For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
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