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How to Invest in ETFs in the UK

Companies / Exchange Traded Funds Feb 17, 2021 - 07:34 AM GMT

By: Dumitru_Midon


Exchange-Traded Funds (ETFs) are openly traded on a stock exchange and are different from mutual funds. You can buy and sell them throughout the day and not wait until the end of the day to determine the price like you would in mutual funds.

As the number of investors continues to increase globally in recent times, the UK has also been a spotlight, as it houses some of the best and highest paying investors today. This is one of the countries with the largest economies in the world with a GDP per capita recorded to be $42,330. 

If you reside in the UK and would like to invest in ETFs, this article will serve as a quick guide to help you get started.

Know the Different Kinds of Exchange-traded Funds

ETFs come in categories and you must know what they are as you decide. These categories include equities (stocks), bonds, commodities, money markets, precious metals, and real estate. You can also get an ETF based on geographical locations or a specific industry. This helps you choose what you want to invest in and can also aid in portfolio diversification. 

Open a Brokerage Account

To get started with trading ETFs, you’ll need a brokerage account, and thanks to advanced technology, you can access some of the best ETF brokers UK today. While there are numerous brokers available, you can still narrow down to choosing the best one for you. Start by considering geographical regulations, like the rules that may apply to you in the UK. Other things to consider include the security, which must have two-factor authentication enabled, transparency, trading fees and commissions, and most importantly if it tallies with your investment goals and needs. 

Pick the Right ETF

Picking the right ETF goes a long way in helping you reach your goals. When deciding which ETF to choose, you must consider key factors that play a role in the price movement and your gains over time. 

Start by checking the level of assets and how expensive it is to own; a viable choice of ETF should be inexpensive to own and have a minimum level of an asset. Check the level of liquidity and the trading activity, which would tell you how much of it is being traded daily and also helps determine the liquidity of the asset.

Check for ETFs with low or no commissions to save you some extra money. However, while choosing one with low commissions, ensure you also consider other important factors to be sure you’re opting for the best.

Reliable tracking is also a factor, as some ETFs are often not tracked as closely as they should, which could affect your trades. 

Bottom Line

The future of Exchange-Traded Funds looks great, considering its track record over the years, including the number of ETFs worldwide from 2003 to 2020 recorded to be 7,602. You can join the moving train of ETF investors in the UK today but you also don’t have to be completely clueless about where or how to start.

By Dumitru Midon

© 2021 Copyright Dumitru Midon - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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