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IS THERE A BEST
TIME TO PUT
YOUR MONEY
INTO AN ETF?
By www.ProfitableInvestingTips.com
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
ETFs (Exchange Traded Funds) have
become an increasingly popular means
of investing in stocks.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Today we consider this. Is there a best
time to put your money into an ETF?
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
But first, here is a little refresher about
ETFs.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Many investors have switched from
mutual funds to ETFs.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Investopedia explains the difference
between exchange-traded funds and
mutual funds.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
ETFs trade throughout the trading day,
like stocks, while mutual funds trade
only at the end of the day at the net
asset value (NAV) price.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Most ETFs track a particular index and
as a result have lower operating
expenses than actively-invested mutual
funds.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Thus, ETFs may improve your rate of
return on investments.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
In addition, ETFs have no investment
minimums or sales loads, unlike
traditional mutual funds, which often
have both.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
And there are tax benefits to ETFs
versus mutual funds.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
ETFs create and redeem shares with in-
kind transactions that are not
considered sales.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Thus, taxable events are not triggered.
Redemptions create tax events in
mutual funds, but they do not create tax
events in ETFs.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
When a forced sale of stock occurs,
mutual funds record and distribute
higher levels of capital gains than ETFs.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
In addition, ETFs have greater tax
efficiency due to a structure that allows
them to substantially decrease or avoid
capital gains distributions altogether.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
This difference can greatly affect the
overall rate of return, even if an ETF and
mutual fund both track the identical
index.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Passive investors have found that, all
too often, managed funds like mutual
funds do not do as well as the overall
market.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Because ETFs are typically index funds,
they track the market.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
So, ETFs may well be an ideal way to
invest.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
But, is there a best time to put your
money into an ETF? It turns out that
there is!
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Is There a Best Time to Put
Your Money into an ETF:
When Outflows Are High
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
Market Watch reports on a study by
Deutsche Bank in an article about why it
pays to be a stock market contrarian.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
According to Deutsche Bank, not only
can going against the current provide
dramatically better gains over time than
following the herd, but it also does
notably better than a simple buy-and-
hold plan.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
The investment bank conducted a study
examining how exchange-traded funds
performed following periods of high
inflows or outflows.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
While flow data can be messy – not only
are they extremely volatile for the
largest funds, but inflows can mean an
investor is building a short position,
which means he or she is betting the
fund will decline in price – the results
were dramatic.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
A portfolio that bought exchange-traded
funds with substantial outflows saw
significantly higher gains than one that
moved with the herd – buying funds
with heavy inflows.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
This is a simple example of the
investing maxim to buy low and sell
high and is the basis of contrarian
investing.
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
It is also typically consistent with the
use of intrinsic stock value analysis as
a guide to investing instead of simply
following the herd!
http://profitableinvestingtips.com/stock-investing/is-there-a-best-time-to-put-your-money-into-an-etf
According to the Deutsche Bank study,
an investor who always buys when
inflows are highest will earn less than
50% of what someone earns who
always buys when outflows are highest!

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Is There a Best Time to Put Your Money into an ETF?