When to Buy Etfs OVER Stocks (6 Times When Investing In Etfs Is Better Than Picking Stocks)


by the end of this video you will have such a better idea of when to invest in ETF’s exchange-traded funds versus investing in individual stocks let’s begin! When I first started investing this kind of stuff is something I had no clue about I had no idea and when to invest in one over the other the first sign to invest when you’re looking to invest in the ETF is when a sector has a narrow dispersion of returns sectors that have a narrow dispersion of returns from the mean do not offer stock pickers an advantage when trying to generate market beating returns for example let’s say you’re looking at the utility sector and there’s 100 utility companies you can look at but upon looking at the overall picture you determine that the average rate of return on those hundred companies is roughly around 4% because the performance in utility sectors is often very similar it doesn’t really do you any good to try to hunt down the best performing utility companies rather than just by the sector itself through an ETF an example would be if you’re looking at 100 utility companies it’s kind of like trying to figure out which McDonald’s do you go to no matter which one you go to the Hamburg faceook aliy gonna be the same so when you’re looking at a sector or a particular area of the market and you notice the the returns in that area are pretty similar across the board they’re very have a very narrow disbursement from the mean you might as well in my opinion just go with an ETF in that case rather than trying to spin all the time necessary to try to find out which or which are the best or which are the worse companies in that sector an ETF is your friend in this situation a second great time of when to and invest in an ETF over individual stocks is when you’re looking at getting into a market or a sector of the of the market and you have no industry knowledge or no idea of how that sector or industry works so for example let’s say let’s say that somebody believes that now is a good time to invest in the mining sector you may want to gain that person might want to gain specific industry exposure however they are going to be concerned that some stocks they encounter might have political problems harming the production within that mining mining company or minding the industry in this case it’s prudent to buy the sector rather than a specific stock since it’s going to reduce your risk over by investing in the ETF that takes advantage of that particular market a particular sector you’re still gonna reap the benefits are rewards of those investments without trying to figure out which is the best company to buy in that situation at the same time your ETF is gonna be very diversified and might hold dozens or even hundreds of different individual mining companies so you’re gonna narrow your risk that way as well the third sign a reason when you might want to choose an ETF over a stock is when you’re looking at a specific market sector and you realize that you do not understand the performance drivers of that particular sector like you don’t have the business works you don’t know you don’t know how they benefit or how they will might lose money that is a surefire sign that you might want to start off investing in that sector within an ETF so for example just give you guys an idea of what I mean these are companies that when you look at them they may possess complicated technology or processes that cause them to underperform or do well perhaps performance depends on the successful development and sell of new unproven technology however you find it difficult to understand that company or that industry so for example let’s say chipper tells me hey Mike there is a great opportunity in the pharmaceutical market but I go to look at those companies within the pharmaceutical industry or in pharmaceutical sector and I realize I have no clue of what’s going on or how they even work so unlike in the first example where the dispersion of investment returns were narrow in these examples this version of returns in this case are wide so it may be even more challenging to figure out which of those companies if there’s like hundreds of companies you can choose from in that sector which ones are actually going to be the winner who knows and I use pharmaceutical guys as an example because the biotechnology industry is a great example as many of these companies depend on the successful development and sale of a new drug if the development of the new drug does not meet the expectation in series of trials are with the you know the FDA does not approve of the drug application the company faces a bleak future to be honest on the on the other hand if the FDA approves the drug investors in the company may be highly rewarded so it’s really hard to pick the winner yeah I think like if you’re if you’re somebody who works in the pharmaceutical industry in our biotech industry then there are probably a that’s probably somebody who knows the industry well enough to pick the right stocks but for the average person who has no idea of how that industry works or how that sector works you should probably stick with an ETF the fourth reason when you might want an ETF is when you’re looking for instant diversification that’s right instant diversification etf’s provide instant diversification relative to individual stocks it would be challenging to have a properly diversified portfolio with only ten individual stocks but relatively simple with the same number of ETFs so in other words guides if you wanted to pick individual stocks just have 10 stocks it would be very challenging to actually be diversified but with ETFs you could pick 10 to ETFs or even fewer and you might be completely diversified enough to manage the risk within your portfolio the fifth reason to consider an ETF over a stock is when you want to invest in hard to access markets what the heck do I mean a great example of that is actually owning gold owning gold is a pain for most individual investors owning SPDR Gold shares or G or GL D is the ticker symbol which owns gold blends is simple not only does this ETF bypass the bid-ask spreads of retail gold in the expense of rolling over feature contracts but it has no storage or security requirements likewise investors can access commodities like copper precious metals timber lands in and so on and so forth through the convenient forms of elected funds or ETFs I’ll tell you guys I used to own actual gold bullion and some silver Bland’s and I do not miss them one bit it’s such a hassle to try to store them or if you want to store them outside of your house it becomes very expensive fast you’re instantly paying money every single month just to store your investment I am NOT somebody who’s a die-hard Gold Bug and I never plan to be going forward so when you have a hard to access market ETFs are your friend the sixth and final reason when to choose an ETF over a stock or at least consider it is when you want to save time and boy oh boy do I always love when I can save time if you look at some of the ETF in the market like Vanguard’s dividend appreciation fund for example you know it owns hundreds of stocks you know that should try to get that same level of difference of okay chin and do how much time would I have to spend if I were picking individual stocks and how much time when I have to spend researching it can be very time-consuming and if somebody nothing now and I’m saying I don’t buy individual stocks coz I actually have quite a few of individual stocks because I actually like researching investments but if you’re somebody who doesn’t like to sit there and spend your free time researching investments and learning about different sectors different industries and trying to stay in tune with what’s going on ETFs are one of your best friends those are six reasons to consider when to purchase an ETF over a stock in a future video I’ll cover you with you guys of when I would consider buying an individual stock over an ATF so in summary guys when you’re looking for instant diversification when you’re trying to invest in a sector where the returns are pretty much the same on average or when you’re trying to get into a market or sector where it’s really complicated and you don’t understand how it works or how the performance drivers work or when you’re trying to invest in an area of the market where it’s hard to access like gold or silver and you don’t want to store timber you don’t want to store Timberland in your house or you don’t want to store gold bullying’s in your house and have the fear of getting robbed and paying those expensive monthly storage fees then an ETF for those reasons guys is fantastic and I highly consider that you look at them and when you’re thinking about investing and best of all guys like I said it saves you time if you’re if you’re not trying to master every single stock pick ETFs can save you a lot of time and headache and so you can go about your life and and work and function from a more passive investing kind of strategy I’m gonna link up some cool links for you in articles for you guys to check out in the description section so make sure to go check it out there’s a load of information and those in those links that will take you to different website articles that I found to help me produce this video and it’s a wealth of information and I’m sure it will help you in your investing journey alright guys that is all the information I have for you today if you like the video let me know by smashing that like button down below make sure to share this information with a friend especially a friend who likes investing let me know if you have any questions on this and if I missed something I would love to hear from you guys down in the comment section down below are you somebody who likes investing in ETFs or somebody who likes that spend the time to pick individual stocks I would love to know I would love to hear what you guys are doing out there and what’s working for you in your portfolio also if you’re new to money and life TV well welcome to the channel folks on this channel every single week our mission and goal is to help you become fiscally fit and we do that by teaching you finances investing in taxes on a regular basis well guys thanks for hanging out with me and here again on YouTube I will see you in next week’s video have a great week everybody love you guys live life on gauged bye guys peace

18 Replies to “When to Buy Etfs OVER Stocks (6 Times When Investing In Etfs Is Better Than Picking Stocks)”

  1. I wouldn't want to hold physical gold/silver etc. I move around too much and too afraid of being robbed haha. You are right, if I feel like investing in these, I think investing in ETFs is the smart move.

    I like to pick individual stocks in general for my dividend experiment portfolio as I am trying out an 'experiment' to pick sotcks that fill specific income requirements. So although I beleive investing in ETFs is usually a smart move, for my dividend portfolio picking individual makes sense.

  2. Happy Sunday everybody. Thank you for the continued support everyone. I was pleased to be able to upload again. Last week we had a bunch of home renovations going on so I did not have time to produce a new for last Sunday. Luckily those renovations are complete. I want to clarify that although I am a big fan of etfs and I own about 4 or 5 different etfs, my portfolio mainly consists of individual stocks, because I enjoy researching companies. In a future video I'll flip the scenario of when to purchase stocks OVER etfs. Hope you all enjoy.

  3. **When do you find yourself investing in etfs over individual stocks? What factors help you decide of when to purchase one over the other?***

  4. Awesome video, yet again! Thank you so much! This added extra value, as often you do, by not just regurgitating common advice…. that (common advice) is ok too sometimes though… in all circumstance, what really matters is solid information and advice.

    Congrats on the remodel. No worries on posting schedule… the main thing that matters is something worthwhile when you do post… quality over quantity, and you always make the right choice.

    Have a great rest of your Sunday!

  5. Great video! again thanks for explaining about the ETF & Stocks. I always wanted to get a good understanding and you just did it for me.

  6. Awesome thoughts Mike! I think I'm going to load up on a couple ETFs. GLD is an interesting example. I think they are great options for smaller amounts and beginners. Could have a place in everyones portfolio! Even real estate with VNQ

  7. Well done, Mike! I never owned an ETF, always individual stock…like you, I enjoy the research, and also, the adrenalin rush 🙂 about being right. LOL

  8. Excellent video, the use of ETFs are one of the easiest ways for an investor to not make serious blunders. I understand the gold/silver attitude about ETFs, but there is generally 1) no promise they actually hold that bullion, 2) no guarantee they'll stay in business (and ETF/ETN liquidations do not always give 100% back to investors to say the least), and 3) no guarantee that you will have access to that stock and its liquidity. I suggest having at least a small amount of physical if this is a factor in your diversification.

  9. What a quality video, i am somebody that has barely considered investing due to lack of knowing where to begin; but i think i just found the right startpoint, thankyou!

  10. Good video Mike.

    Im considering again changing my strategy lol. I invested 95% of my m1 portfolio to these ETF sectors.

    Tech 30%
    Consumer Discretionary 20%
    Communication 15%
    Utilities 15%
    Health 15%
    and not etf but 5% to two cannabis stocks.

    Since I have almost half of the total market sector, do you think it's a better idea just to invest in VTI, VOO, or Spy?

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