Cheerful tidings to fellow members of this wonderful community,how are we fairing hope we are all pushing through.today I will be discussing on the factors which an investor or investors need to consider before investing in ETF(Exchange traded funds), basically since most of my posts has been about ETFs,in such essence I will not be highlighting much on the meaning and types of ETF but will be very straightforward to the course of discussion.

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Factors to consider

point one

One thing that is very essential to consider before making any investment in any particular ETF is;the funds objective and it's strategy.this is a very vital factor that is to be put into reasonable consideration before choosing an ETF.each and every ETFs has its separate objective or aim,which is outlined basically in the the fund prospectus.for example, a particular fund objective may be to track a specific index, achieve a particular return or to invest in a particular industry.that is why it is of very high importance that investors make that the objective of the ETF aligns or agree with their investment goal or the purpose of their investment.

Point two

Another factor to be considered before jumping in on investing on a particular ETF is fund expense ratio.what do we mean by this,when we talk about the expense ratio we simply are referring to how much one pay a mutual fund or an ETF per year,this can be expressed as 1% of ones investments. In essence, if a person is to have $10,000 investment in a certain ETF which has an expense ratio of 0.8%, that implies that you will pay the fund of $4 annually. This is an important factor to consider because it have a significant impact on the fund performance in general.so it better for an an investor to have a lower expense ratio as this results in more fund in return to him, that means profit.

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Point three

The the third factor is the fund liquidity,this simply means how tradable the asset is,to put it in simple terms it means how easily the asset acquired can be bought and also sold.this is very essential because ETF that are more liquid have a very high ratio of trading activities,in essence it means that they can be easily sold and easily bought.the issues of fund liquidity is also very vital because if a fund is illiquid,it will be very difficult to redeem shares of this fund.in other to make more profit,it is of high importance that we invest in funds that are liquid.

Point four

Lastly, another vital point to consider before making any investment into any particular ETF is ;the fund diversification, what is diversification ,when we talk about diversified fund we simply mean any investment fund that has a high investment ratio across different market sectors, and geographical regions.this also refer to the amount of assets that are held in the ETF.diversification is very vital because it aid in the reduction of risk,in the same time increase the Likelihood if achieving a positive results.n multiple asset classes.

conclusion

It is very essential and of high importance to consider this factor before making any investment in any of the ETF.the essence of the post is not to provide guidelines but keep you aware on the necessary factors that will increase your chances of higher profit in the Market .
Thanks for reading.