Shared under ten

You can follow our portfolio and take advantage of it. Our portfolio is not a buy recommendation.

Advantages of ETFs

The benefits of an ETF

ETFs have been on the market since 1993 and have been extremely popular ever since. In the US in particular, the product has become an indispensable part of the world of investors. In the Netherlands, more and more private investors are also investing with ETFs and their popularity is increasing. ETFs owe their popularity to a number of advantages, such as their large spread, low costs, high returns, transparency, flexibility and access to the global market. Discover which ETF suits you best !

Large spread thanks to one transaction

With an ETF it is possible to invest safely by means of a large spread of numerous securities. An ETF often consists of numerous composite companies, sectors and themes, which means that you are less dependent on a specific fluctuation. The advantage of a large spread is that you only have to invest once. By means of just one transaction you can invest in numerous shares, bonds or listed real estate and you benefit from a collection of strong sectors. In addition, there are also ETFs that offer a less broad spread because they follow specific sectors or markets. These forms may bring more return, but also entail more risks.

location costs

Another advantage of ETFs is that they are relatively cheaper than many other traditional investment forms. Low costs are of course ideal for successful investing. The lower the costs, the higher the return to be obtained. The reason why the costs of ETFs are so low is because they are passive products. This means that there are no expensive fund managers involved who charge high management costs.

Higher yield

A major advantage of ETFs is that they can yield high returns. For years, people have been looking at the best way to invest, and it has been consistently concluded that passive investing (index investing) is more efficient in the long term. Markets are difficult to predict, which is why active investing does not always yield returns and also results in losses.

Transparency

ETFs are very transparent. This is because ETFs are linked to the stock exchange listing, so that you can see how you are doing at any time of the day thanks to the stock exchange. Investment funds, on the other hand, have less transparency and offer less insight into the daily current performance and composition.

voordelen-etf

Flexibility

ETFs are flexible to trade on the stock exchange because of their listing. You can therefore enter and exit at any time of the day when it suits you. You can therefore decide for yourself when you want to react to something and can do this how you want.

Easily invest worldwide with an ETF

Finally, what makes ETFs so advantageous is that you can invest in multiple countries at the same time with just 1 ETF. This opens up a global market area with markets that are not yet open to many investors. The ETFs are therefore constantly tradable on exchanges all over the world, all in one transaction. But how do you invest in ETFs?

Compare brokers and start investing in ETFs

Are you excited about investing in ETFs after reading this article? Compare brokers that offer ETFs and find the broker that suits you best!

Verder lezen?

Dit artikel is alleen voor abonnees van Aandelen Onder Een Tientje. Indien u nog geen abonnee bent, overweegt u dan ook een abonnement.

Join thousands of others?

Become a member now and get instant access to our entire platform. 

The value we offer:

Lees ook

No posts found!

CFD short position

CFD Trading: Going Long CFD stands for Contract for Difference . This is a simple way to trade that allows you to make the most of your money. A Contract for Difference is a binding contract, where the seller or buyer will pay the difference between the current value of a share and a future value, to the other at the time the buyer chooses to close the contract. Is the value greater? Then the seller of the contract (the broker) pays the buyer. Has the value decreased? Then the buyer must pay more to the seller. A CFD is a derivative , meaning that it derives its value from an underlying asset, often a stock or a market index. As the buyer of a CFD, you do not own the underlying asset and are never entitled to it. It is only used to value the contract. Taking a long position with CFDs ‘ Going long ‘ is simply buying a CFD position when you expect  the stock price  to rise. A ‘long position’ is taken when an investor believes the market will rise. This is a common way to  trade CFDs . Going long in CFDs is similar to the position you would take when buying shares, for example. As a trader, you first buy the position and then sell it at a later date to close out the trade. The difference between the purchase price and the sale price is the profit or loss made on the trade. The opposite of ‘going long’ is ‘going short’ or taking a ‘short position’. In this case you assume a decrease in value from which you can profit. Buy CFD: margin When you go long with CFDs, you don’t need to have enough money to buy the asset you are trading. The amount of money you need, or ‘margin’, depends on  the broker  and what you are trading. For example, for shares you might need 10% and for other securities it might be even less. This leverage allows you to make the most of your money, as the contract still benefits from the amount the asset changes in value. Simply put, if you only put down 10% and the underlying share increases in price by 10%, you have doubled your money. We will illustrate this with an example in which we also include the necessary incidental costs that come with CFD trading. Suppose you expect the shares of company X, which currently cost €1.25, to increase in value. You want to take a long CFD position for 1000 shares. The value of this is €1500, but you do not need that much cash. CFDs of 10% require a deposit of only €150. You also pay a small commission ( a spread ) to the broker. Two weeks later, the shares have each risen to €1.35 and you decide to close the CFD position. For every day that you hold CFDs, interest is charged. In effect, you are borrowing money to maintain your position in the shares. This interest is related to the bank interest rate. For this example, we assume that the interest is €5. You close the position with a profit of 10 cents per share and have to pay a trading commission again. The net profit is 1000 x 10 cents, minus two commissions and the interest, which totals €95. This is a profit of more than 60% of the stake. Long CFD trading, a profitable example To open a long position, you will need to place an order to buy the CFD you want. Each broker will use a slightly different method to place orders, but if you have bought a stock before, it is very easy to make the transition to CFDs. To go short, you need to place an order to sell the CFD. The way the order is placed depends on the broker you use. Opening the position Let’s say company XYZ is listed at €4.24 / 4.25. You expect the price to rise and decide to buy 15,000 shares as a CFD at €4.24. This bid price gives you a position size of €63,600 (15,000 x €4.24). Next, we assume a margin requirement of 10%. When placing the order, €6,360 is allocated from your account to the trade as initial margin. Be aware that if the position moves against you, i.e. the price falls instead of rising, it is possible to lose more than this margin of €6,360. For the same amount, you could only buy 1,500 shares with a regular stockbroker. In this example, commission is charged at 10 basis points (one basis point is 0.01 percentage points). So the commission on this trade is only 0.1% or approximately €63 (15,000 shares x €4.24 x 0.1%). You now have a position of 15,000 XYZ CFDs worth €63,600. Close CFD position A month later, the price of XYZ has risen to €4.68 / 4.69. Your expectation that the price would rise proves correct and you decide to take your profit. You sell 15,000 shares at the bid price, €4.68. The commission of 10 basis points will also apply to the closing of the transaction and amounts to €70 (15,000 shares x €4.68 x 0.1%). The gross profit on the transaction is calculated as follows: Slot level: €4.68 Opening level: €4.24 Difference: 0.44 Gross profit on the trade: €0.44 x 15,000 shares = €6,600. After deducting the commission costs (€63 + €70) from the total turnover, you realise a profit of €6,467. To determine the total profit on the transaction, you must also take into account the commission you paid and interest and dividend adjustments. Long CFD trade, a loss-making example It is also possible that the CFD does not do what you expected in advance and decreases in value while you have opened a long position. With this calculation example we show what the financial consequences of this are. Shares in company ABC are traded for €8.33 / €8.34. You think the price

Lees verder >

What is a share?

Een aandeel is eigenlijk een stukje van een bedrijf. Met één of meerdere aandelen ben je voor dat deel financieel eigenaar van een bedrijf. Gaat het goed met een bedrijf, dan profiteer jij hiervan. Lees meer…

Lees verder >

Preferred shares

Preferente aandelen geven jou extra voordelen over gewone aandelen. Zeker als je graag een vast dividend ontvangt. Lees meer…

Lees verder >