Top 5 benefits to investing in ETFs

Top 5 benefits to investing in ETFs

Over $9.2 trillion is invested worldwide in ETFs, but they are relatively unknown in the UK. The InvestEngine team have pulled together 5 reasons why ETFs are soon to be the go-to investment type in the UK.

But before we share the benefits, what is an ETF?

An ETF is a type of investment fund that can be purchased or sold on a stock exchange. An ETF typically tracks the performance of an index, which can provide exposure to many different asset classes (including stocks, bonds, and commodities), and also to different regions and sectors.

The iShares S&P 500 ETF, for example, tracks 500 of the biggest US companies including the likes of Apple, Amazon and Tesla, also known as the S&P 500 Index.

ETFs are bought and sold on the stock market like shares, hence their full name of exchange‐traded funds.

Benefit #1 ETFs are low cost

ETFs have some of the lowest investment costs around — as little as 0.05% — so more of what you make goes in your pocket rather than someone else’s.

Benefit #2 ETFs have zero stamp duty

With most share purchases in the UK, investors have to pay 0.5% stamp duty. But with ETFs there’s no stamp duty.

Benefit #3 ETFs are diversified

ETFs often hold hundreds of individual shares or bonds, helping reduce risk and making them ideal for a long-term portfolio.

Benefit #4 ETFs offer a wide investment choice

You can choose to invest globally, across specific regions or in individual stock markets. There are also ETFs for bonds, commodities and themes such as ESG or tech.

Benefit #5 ETFs are simple!

ETFs let you invest in an entire market, quickly and in a single transaction, by tracking the performance of an index.

InvestEngine specialise in ETF investing, and offer over 550 commission-free ETFs to invest in on their platform.

If you want to find out more about investing in ETFs, or how you can get started commission free with InvestEngine’s DIY account click here.

When investing, your capital is at risk

InvestEngine is currently offering a £25 welcome bonus for Reader’s Digest customers which you can access here. (Ts&Cs apply)

Also, if you set up a Savings Plan to regularly autoinvest with InvestEngine before 31 August 2023, you’ll be in with a chance of winning £1,000 (Ts&Cs apply). Remember that when investing, your capital is at risk.

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