Selecting a profitable ETF is a full-plan process. It’s a structured approach to help make the right choice. Now, we discuss step by step.
1) Investment goal- First, decide why you want to invest in ETF for growth, income stability, time horizon, and risk capacity.
2) Past performance- As an in-stock selection, we analyzed past performance, the same we need to do in selection of ETF in past performance analysis process check amount, return, volatility, and comparison with peers ETF
3)Know ETF index- Before investing in ETF, a person should select an Index, its nifty 50 S&P 500, or any sector-specific wisely growing index.
4) free ( expenses ratio)- always select low expenses ratio ETF, the ratio should be 0.5%. A high ratio will eat your return.
5) Assets allocation -Always choose high AUM ETF; it will be more liquid and truly worth it.
6) Liquidity & Vloume- Daily check volume click to bid-ask spread leads to a better opportunity.
7)Dividend- If you want consistent income check dividend history, check consistent payout.
8) Tax efficiency- Check tax rate normally ETF tax efficient, but intermediate bonds may have higher tax liabilities.