The most beginner friendly securities every investor needs to start with

Stocks vs ETFs

Disclaimer: This information is for educational purposes only, it’s not financial advice, the reader should make their own financial decision.

Good evening, tonight I want to continue my rant on ETFs. I have been studying ETFs now for nearly a month and I can say, I have been impressed with what I found out.

Most times if you start on this journey of investing you often are in a situation of not knowing what to invest in, so you tend to just wing it. You are not sure which stock to choose or which ones are likely to give you a good return on your investment

But in my research, I found out the beauty of ETFs, and that it is the most beginner-friendly, now I have not gotten yet into bonds, that’s a later subject but for me, bonds aren’t really that impressive looking at their returns but maybe not for you if you are more risk averse.

ETFs otherwise known as Exchange Traded Funds are investment funds that own financial assets such as stocks, bonds, currencies, debts, futures, contracts, and commodities like gold bars.

But let me make a quick comparison between ETFs and stocks.

I promise you tonight’s article will be insightful for you, if you have already started investing but don’t know which asset will bring you good returns if you invest.

Look at the table below and see the difference between stocks and ETFs

Check this infographic out.

I wish I had known this earlier, because when I look at my journey on the stocks I invested and researched I made mistakes and had to sell all of my stocks.

Buying into individual stocks needs deep research and understanding of the business you’re investing in. You don’t just put money into it and think you’ll get returns, you need to understand a lot about that business.

If you remember the article about Stocks not being good for 10 years of holding, you will remember that most of the stocks didn’t perform well over 10 years, only one; Sefalana.

But this is not in any way to discourage you from buying shares, all I am saying is one must understand the business they’re putting money in, so if you hear me say I’m investing in a company just know I did my research.

In Botswana, we have 7 ETFs in the market, NEWGOLD, NEWGOLD Platinum, NewGold Palladium, Cloud Atlas African Bonds, African Domestic Bond Fund, Cloud Atlas Big 50, and NewFunds.

But I know a lot of you are not very deep into knowing stocks so from my research I realized I should have started with ETFs due to them needing little research because in just an ETF you are getting a diversified portfolio.

With ETFs what you need to do is to invest over a long period let’s say, more than a decade to grow exponentially.

So what do I conclude by saying? After doing research, for me and beginner investors, ETFs are a great option to start with, stocks or shares are good when you have your skin in the game and understand businesses and the stock market behavior better. But in the end, you make up your mind, which do you choose to go with?