4 Reasons This ‘Safe Investment’ Isn’t Always a Good Bet, According to an Expert

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0;switch(e){case"expanded_panel":o='{promoMarkup}{notifMarkup}',r=n._store.getNotifications(),a=n._generatePanelMarkup(o,r),i.innerHTML=a;break;case"error_panel":a=(o='{errorMsg}').replace("{errorMsg}",n._config.panel.errorMsg),i.innerHTML=a}t&&t()}else t&&t(new Error("No panel parent"))}},{key:"createPanelParentNode",value:function(e){e&&(e.innerHTML='',this._panelNode=document.getElementById(D))}},{key:"updateBadgeNode",value:function(e){if(e){var t=this._store.getNotifications().newCount,n=this._config.badge.maxCount;if(t){var o=t>n?n+"+":t;e.innerHTML=o}else e.innerHTML=""}}},{key:"addStyles",value:function(e){if(e&&"undefined"!=typeof window){var t=document.getElementById(this._config.panel.styleTagId);t||((t=document.createElement("style")).type="text/css",t.id=this._config.panel.styleTagId,t.innerText=e,document.head.appendChild(t))}}}]),e}(),U=function(){function e(t,n,o){L(this,e);var i=this;i._store=n,i._view=o,i._config=t;var 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Minimize Taxes and Help Boost ReturnsNoah Hamman, founder and CEO of AdvisorShares, spoke to GOBankingRates as part of our Top 100 Money Experts series to share his expertise. He broke down what makes ETFs appealing, how to choose the right kind and what to watch out for when investing.So what is an ETF, exactly? In a nutshell, “An ETF is a pooled investment vehicle — basically a mutual fund that trades on an exchange like a stock,” Hamman said.Their appeal comes from low-cost, diversified access for investors at nearly any income level. “Historically, ETFs have given smaller investors a cost-effective way to build diversified portfolios through both index-based and actively managed strategies,” Hamman noted.However, not all ETFs are created equal — and understanding the difference, especially between index and active ETFs, is key to making informed decisions.“An ETF is the next evolution of the mutual fund — but much easier to buy and sell in a brokerage account,” Hamman said. ETFs also offer more control than traditional mutual funds, including the ability to place limit orders and buy or sell intraday like stocks.More recently, you can trade ETFs without paying a trading fee or commission (formerly about $5 to $10 per trade). This makes them cheaper and easier to buy, and in smaller amounts, without worrying about losing money to fees.Understanding risk begins with understanding the different types of ETFs. Index (passive) ETFs track a specific market index and are known for their low cost and transparency. Active ETFs, by contrast, are professionally managed with the goal of outperforming the market.“With index ETFs, you have to decide when and how to manage risk yourself. If you trust an active manager’s approach and experience, you may feel more confident in their ability to outperform,” Hamman said.One way to look at the difference is to compare driving yourself versus hiring a driver. Index ETFs require investors to take the wheel; active ETFs offer professional guidance, which some investors may find helpful, especially in volatile markets.Read Next: How To Start Investing With Less Than $1,000However, as with any investment product, ETFs do carry a certain level of risk. It would be a mistake to assume that diversified equals safe.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,615.28 +30.99 (+0.47%)Dow 3045,883.45 +49.23 (+0.11%)Nasdaq22,348.75 +207.65 (+0.94%)Russell 20002,405.13 +8.07 (+0.34%)VIX15.69 +0.93 (+6.30%)Gold3,717.50 -1.50 (-0.04%)PortfolioSign in to access your portfolioSign inTop gainersUUUU Energy Fuels Inc. 13.82 +1.89 (+15.84%)OKLO Oklo Inc. 95.68 +12.97 (+15.68%)FIGR Figure Technology Solutions, Inc. 37.33 +4.83 (+14.86%)RZLV Rezolve AI PLC 7.72 +0.96 (+14.20%)DGNX Diginex Limited 10.50 +1.10 (+11.70%)Top losersMENS Jyong Biotech Ltd. 51.82 -9.68 (-15.74%)LRN Stride, Inc. 139.76 -18.60 (-11.75%)ABTC American Bitcoin Corp 7.08 -0.82 (-10.33%)RNA Avidity Biosciences, Inc. 40.22 -4.52 (-10.10%)RELY Remitly Global, Inc. 16.67 -1.49 (-8.20%)Most activeOPEN Opendoor Technologies Inc. 9.50 +0.43 (+4.69%)TSLA Tesla, Inc. 410.04 +14.10 (+3.56%)NVDA NVIDIA Corporation 177.75 -0.07 (-0.04%)SNAP Snap Inc. 7.46 +0.12 (+1.63%)GRAB Grab Holdings Limited 6.14 +0.14 (+2.33%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersOKLO Oklo Inc. 95.68 +12.97 (+15.68%)GOOG Alphabet Inc. 251.76 +10.38 (+4.30%)GOOGL Alphabet Inc. 251.61 +10.81 (+4.49%)UBER Uber Technologies, Inc. 98.85 +2.96 (+3.09%)ASML ASML Holding N.V. 867.30 +53.43 (+6.56%)Top economic events