The Seesaw Between Interest Rates and Bond Prices Bond ETF prices move in the opposite direction to interest rates. When rates rise, the bonds a fund holds become less valuable, so the ETF’s price falls; when rates fall, its price rises. How much it...
The Document That Tells You What You Are Really Buying An ETF prospectus is the legal document that explains what the fund invests in, how it works, what it costs and what could go wrong. To read one, start with the summary prospectus, a short...
Why Last Year’s Winner Is Rarely Next Year’s Chasing the best-performing ETFs means buying funds because they have recently gone up the most. It feels logical, but it usually backfires. By the time a fund tops the performance tables, much of its...
Your ETF Falls Because What It Owns Falls In a stock market crash, your ETF falls in value because the stocks it holds fall in value. A broad stock market ETF will drop roughly in line with the market, while sector, leveraged and smaller-company...
The Real Minimum Is Lower Than Most People Think You can start investing in ETFs with very little money. Most major US brokers have no minimum to open an account, and many let you buy fractional shares, so you can invest as little as $1 to $5 in an...
Where an ETF’s Dividend Really Comes From An ETF dividend is your share of the income the fund’s holdings earn. When the companies inside a stock ETF pay dividends, or the bonds inside a bond ETF pay interest, the fund collects that money, deducts...
Small Savings That Compound Into Large Sums You can cut the cost of investing in ETFs in four main ways: pay less to own the fund, pay less when you trade it, pay less tax on what it earns and pay less for any help you use. Each saving looks small...
What Every ETF Investor Pays, Seen and Unseen ETF fees reduce your returns every single year, and because that money is no longer invested, you also lose everything it would have earned. The main fee is the expense ratio, charged as a percentage of...
The Three Moments an ETF Can Create a Tax Bill In the United States, ETFs are taxed in three main ways: on the dividends or interest they pay you, on any capital gains they distribute, and on your own profit when you sell. How much you pay depends...
The Number That Looks Like a Return but Often Isn’t A high ETF dividend yield can be misleading because yield only measures income against today’s price. It does not tell you whether the price is falling, whether the payout can last, or whether part...
Two Ways to Get Paid by the Stock Market Growth ETFs own companies that reinvest their profits to expand, so your return comes mainly from rising share prices. Dividend ETFs own companies that pay out part of their profits in cash, so more of your...
Five Funds, One Bet: Finding the Duplication Hiding in Your Portfolio ETF overlap is how much two or more of your ETFs own the same stocks. To check it, compare the funds’ full holdings lists, add up the weight they share, and then work out your...
