"Exchange Traded Funds (ETF) have quickly emerged over the past few decades as the investment asset class of choice for investors who prefer ETF real time pricing, lower expenses, and wide menu of choices over mutual funds or similar pooled investment platforms. Due to their real time market pricing, they can avail themselves of digital technology to create synthetic derivative high-dividend streams, such as with the YieldMax catalog of ETFs, something that is unavailable from mutual funds."
"The concept of portfolio risk mitigation through diversification has been a cornerstone of prudent fund management for centuries. In The Bible Old Testament Book of Ecclesiastes 11:2, it reads: " Divide your investments among many places, for you do not know what risks lie ahead ." (NLT) A diversified portfolio is a time tested risk mitigation strategy best encapsulated in the maxim: " Don't put all your eggs in one basket. ""
"Some may argue that, except for single stock ETFs such as those created by YieldMax, ETFs, by design, are already diversified, as their portfolios are assembled to proportionately mirror and track a designated index that is publicly followed. Though that is technically correct, an index is usually devised to group securities with common features and ranking them by criteria such as market capitalization size."
Exchange-traded funds offer real-time market pricing, lower expenses, and a wide selection compared with mutual funds. Real-time pricing enables digital strategies that create synthetic high-dividend streams, exemplified by the YieldMax ETF catalog. Diversification remains a fundamental risk mitigation approach, summarized by the maxim to avoid concentrating investments in one place. Broad indices provide built-in diversification by grouping securities with common characteristics, though indices are constructed using specific ranking criteria such as market capitalization. Risk tolerance varies by investor, and some individual investors, including DIY and FIRE adherents, actively engage on social media about portfolio choices.
Read at 24/7 Wall St.
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