Exchange-Traded Funds For Dummies, 3rd Edition

Exchange-Traded Funds For Dummies, 3rd Edition

by Russell Wild
Released December 2021
Publisher(s): For Dummies
ISBN: 9781119828839

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Book description

Become an ETF expert with this up-to-date investment guide

Want to expand your portfolio beyond stocks and mutual funds? (Of course you do, you smart investor you.) Then take a look at exchange-traded funds (ETFs)! A cross between an index fund and a stock, they're transparent, easy to trade, and tax-efficient. They're also enticing because they consist of a bundle of assets (such as an index, sector, or commodity), so diversifying your portfolio is easy. You might have even seen them offered in your 401(k) or 529 college plan.

Exchange-Traded Funds For Dummies is your primer on ETFs. It gives you an insider (the legal kind!) perspective on the investment process, starting with an overview of ETFs and how they differ from stocks and mutual funds. The book also helps you measure risk and add on to your portfolio, and offers advice on how to avoid the mistakes even professionals sometimes make. Throughout, you'll also find plenty of tips, tricks, and even sample portfolios to set you up on the right path for investment success.

With Exchange-Traded Funds For Dummies, you will:

  • Find out exactly what exchange-traded funds are and why they make good investments
  • Mix and match stock portfolios to diversify yours
  • Go beyond stocks for maximum diversification: bonds, real estate, and commodity ETFs
  • Maintain your portfolio for future growth

With the tricks of the trade in Exchange-Traded Funds For Dummies, you can easily apply the knowledge you gain to turn good investments into great ones. Happy earning!

Table of contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Introduction
    1. Since the First Edition…
    2. About This Book
    3. Foolish Assumptions
    4. Icons Used in This Book
    5. Beyond the Book
    6. Where to Go from Here
  5. Part 1: The ABCs of ETFs
    1. Chapter 1: No Longer the New Kid on the Block
      1. In the Beginning
      2. Fulfilling a Dream
      3. Not Quite as Popular as the Beatles, But Getting There
      4. Ready for Prime Time
    2. Chapter 2: What the Heck Is an ETF, Anyway?
      1. The Nature of the Beast
      2. Choosing between the Classic and the New Indexes
      3. Preferring ETFs over Individual Stocks
      4. Distinguishing ETFs from Mutual Funds
      5. Why the Big Boys Prefer ETFs
      6. Why Individual Investors Are Learning to Love ETFs
      7. Getting the Professional Edge
      8. Passive versus Active Investing: Your Choice
      9. Do ETFs Belong in Your Life?
    3. Chapter 3: Getting to Know the Players
      1. Creating an Account for Your ETFs
      2. Introducing the Shops
      3. Presenting the Suppliers
      4. Familiarizing Yourself with the Indexers
      5. Meeting the Middlemen
      6. Meeting the Wannabe Middlemen
  6. Part 2: Building the Stock (Equity) Side of Your Portfolio
    1. Chapter 4: Risk Control, Diversification, and Some Other Things You Need to Know
      1. Risk Is Not Just a Board Game
      2. Smart Risk, Foolish Risk
      3. How Risk Is Measured
      4. Meet Modern Portfolio Theory
      5. Mixing and Matching Your Stock ETFs
    2. Chapter 5: Large Growth: Muscular Money Makers
      1. Style Review
      2. Big and Brawny
      3. ETF Options Galore
    3. Chapter 6: Large Value: Counterintuitive Cash Cows
      1. Six Ways to Recognize Value
      2. Looking for the Best Value Buys
    4. Chapter 7: Small Growth: Sweet Sounding Start-ups
      1. Getting Real about Small-Cap Investments
      2. Your Choices for Small Growth
      3. Smaller than Small: Meet the Micro Caps
    5. Chapter 8: Small Value: Diminutive Dazzlers
      1. It’s Been Quite a Ride
      2. What About the Mid Caps?
    6. Chapter 9: Going Global: ETFs without Borders
      1. The Ups and Downs of Different Markets around the World
      2. Finding Your Best Mix of Domestic and International
      3. Not All Foreign Nations — or Stocks — Are Created Equal
      4. Choosing the Best International ETFs for Your Portfolio
    7. Chapter 10: Sector Investing: ETFs According to Industry
      1. Selecting Stocks by Sector, not Style
      2. Speculating on the Next Hot Industry
      3. Doing Sector Investing Right
      4. Sector Choices by the Dozen
    8. Chapter 11: Real Estate Investment Trusts: Becoming a Virtual Landlord
      1. Considering Five Distinguishing Characteristics of REITs
      2. Calculating a Proper REIT Allocation
      3. Picking REIT ETFs for Your Portfolio
    9. Chapter 12: Dividend Funds: The Search for Steady Money
      1. Your High-Dividend ETF Options
      2. Promise of Riches or Smoke and Mirrors?
  7. Part 3: Adding Bonds (Fixed Income) to Your Portfolio
    1. Chapter 13: For Your Interest: The World of Bond ETFs
      1. Bond Investing in the Modern Era
      2. Tracing the Track Record of Bonds
      3. Tapping into Bonds in Various Ways
      4. Determining the Optimal Fixed-Income Allocation
    2. Chapter 14: Your Basic Bonds: Treasuries, Agency Bonds, and Corporates
      1. Tapping the Treasuries: Uncle Sam’s IOUs
      2. Bread at $15 a Loaf? Getting Inflation Protection in a Flash
      3. Treasuries’ Cousins: U.S. Agency Bonds (Mortgage-Backed Securities)
      4. Banking on Business: Corporate-Bond ETFs
      5. The Whole Shebang: Investing in the entire U.S. Bond Market
    3. Chapter 15: Moving Beyond Basics into Municipal and Foreign Bonds
      1. Municipals for Mostly Tax-free Income
      2. Foreign Bonds for Fixed-Income Diversification
      3. Emerging-Market Bonds: High Risk, High Return
  8. Part 4: Specialized ETFs
    1. Chapter 16: All That Glitters: Gold, Silver, and Other Commodities
      1. Gold, Gold, Gold!
      2. Silver: The Second Metal
      3. Oil and Gas: Truly Volatile Commodities
      4. (Somewhat) Safer Commodity Plays
      5. Playing the Commodity Market Indirectly
    2. Chapter 17: Investing for a Better World
      1. What Are “Sustainable Investing” and “ESG”?
      2. Which Sustainable ETFs Are Best for Your Portfolio?
    3. Chapter 18: Going Active with ETFs
      1. Not Exactly Setting the World on Fire
      2. Do You Want to Get Active?
      3. Let’s Get Practical
      4. A Look at Some of the Most Popular Actively Managed ETFs
      5. Time to Swap Out Your Active Mutual Funds?
    4. Chapter 19: All-In-One ETFs: For the Ultimate Lazy Portfolio
      1. Buying into the World’s Stock Markets in a Flash
      2. Putting the World’s Bond Markets at Your Fingertips
      3. Buying Stocks and Bonds in One Shot
    5. Chapter 20: Proceed-with-Caution ETFs
      1. Funds That (Supposedly) Thrive When the Market Takes a Dive
      2. Funds That Double the Thrill of Investing (for Better or Worse)
      3. Alphabet Soup: MLPs, SPACs, and IPOs
      4. Investing in one-horse towns
      5. Get Rich (or Not) in Crypto- or Other Currencies!
      6. Take a Whiff of These Cannabis ETFs
      7. Copycat ETFs
  9. Part 5: Putting It All Together
    1. Chapter 21: Sample ETF Portfolio Menus
      1. So, How Much Risk Can You Handle and Still Sleep at Night?
      2. Keys to Optimal Investing
      3. Finding the Perfect Portfolio Fit
    2. Chapter 22: Exercising Patience: The Key to Any Investment Success
      1. The Tale of the Average Investor (A Tragicomedy in One Act)
      2. The Value Line Paradox
      3. “Investment Pornography” Everywhere
      4. Patience Pays, Literally
    3. Chapter 23: Exceptions to the Rule (Ain’t There Always)
      1. Rebalancing to Keep Your Portfolio Fit
      2. Contemplating Tactical Asset Allocation
      3. Harvesting Tax Losses, and the IRS’s Oh-So-Tricky “Wash Rule”
      4. Revamping Your Portfolio with Life Changes: Marriage, Divorce, and Babies
      5. Are Options an Option for You?
    4. Chapter 24: Using ETFs to Fund Your Fun (Retirement) Years
      1. Aiming for Economic Self-Sufficiency
      2. Curing the 401(k) Blues
      3. Strategies for the Self-Employed
      4. Ushering Your Portfolio into Retirement Readiness
      5. Withdrawing Funds to Replace Your Paycheck
    5. Chapter 25: Marrying ETFs and Non-ETFs to Make an Optimal Portfolio
      1. Tinkering with an Existing Stock or Mutual Fund Portfolio
      2. Looking Beyond the Well-Rounded ETF Portfolio
  10. Part 6: The Part of Tens
    1. Chapter 26: Ten FAQs about ETFs
      1. Are ETFs Appropriate for Individual Investors?
      2. Are ETFs Risky?
      3. Do I Need a Financial Professional to Set Up and Monitor an ETF Portfolio?
      4. How Much Money Do I Need to Invest in ETFs?
      5. With Hundreds of ETFs to Choose From, Where Do I Start?
      6. Where Is the Best Place for Me to Buy ETFs?
      7. Is There an Especially Good or Bad Time to Buy ETFs?
      8. Do ETFs Have Any Disadvantages?
      9. Does It Matter Which Exchange My ETF Is Traded On?
      10. Which ETFs Are Best in My IRA, and Which Are Best in My Taxable Account?
    2. Chapter 27: Ten Mistakes Most Investors (Even Smart Ones) Make
      1. Paying Too Much for an Investment
      2. Failing to Properly Diversify
      3. Taking on Inappropriate Risks
      4. Selling Out When the Going Gets Tough
      5. Paying Too Much Attention to Recent Performance
      6. Not Saving Enough for Retirement
      7. Having Unrealistic Expectations of Market Returns
      8. Discounting the Damaging Effect of Inflation
      9. Not Following the IRS’s Rules
      10. Failing to Incorporate Investments into a Broader Financial Plan
    3. Chapter 28: Ten Forecasts about the Future of ETFs and Personal Investing
      1. ETF Assets Will Continue to Grow…for Better or Worse
      2. More Players May Enter the Field, but Only a Few
      3. Investors Will Get Suckered into Buying Packaged Products
      4. ETF Investors Will Have No Need for Anything but ETFs
      5. The Markets Will (Unfortunately) See Greater Correlation than in the Past
      6. Asset Class Returns Will Revert toward Their Historic Means
      7. Taxes Will Rise
      8. Inflation Will Remain Tame
      9. Private Pensions (of Sorts) May Emerge from the Rubble
      10. Hype Will Prevail!
  11. Part 7: Appendixes
    1. Appendix A: Great Web Resources to Help You Invest in ETFs
      1. Independent, ETF-Specific Websites
      2. Websites of ETF Providers
      3. Financial Supermarkets
      4. Stock Exchanges
      5. Specialty Websites
      6. Regulatory Agencies
      7. The People Who Create the Indexes
      8. Good Places to Go for General Financial News, Advice, and Education
      9. Yours Truly
    2. Appendix B: Glossary
  12. Index
  13. About the Author
  14. Connect with Dummies
  15. End User License Agreement

Product information

  • Title: Exchange-Traded Funds For Dummies, 3rd Edition
  • Author(s): Russell Wild
  • Release date: December 2021
  • Publisher(s): For Dummies
  • ISBN: 9781119828839