The holidays are here and there's no doubt that you have somebody to buy for that seems to have everything or doesn't want anything. Cash may seem a little too impersonal and you know that if you try to purchase something, it will probably be money wasted. For decades, enterprising gift givers have used their knowledge of the investment markets to give a gift that keeps giving for many years.
TUTORIAL: Exchange-Traded Funds: Introduction
Purchasing shares of stock is the perfect gift, but the practice has since been modernized. Now, exchange-traded funds (ETFs) are the hottest investment vehicle of the 21st century, and may be the equity purchase of choice for this holiday season. If you're looking for the perfect gift, consider these ETFs.
When the wrapping paper is peeled away, you're going to have some explaining to do. ETFs can be complicated and difficult to understand by young people or those with very little knowledge of the investment markets. For that reason, stick with ETFs that are easy to understand. An index ETF that tracks the performance of one of the common indexes like the S&P 500 or the Dow Jones Industrial Average is a great choice. Also, look at ticker symbols like SPY, DIA and QQQ. (For related reading, see ETFs Vs Index Funds: Quantifying The Differences.)
You have probably heard that bonds are safer than stocks and, although that's the subject of debate, the consistent dividend (called a coupon in bond terms) makes a bond a fine choice for long-term investors. There is a large amount of bond ETFs spanning all sectors of the bond world. Consider bond ETFs like LQD, TIP and HYT. Not all bond funds are technically ETFs, but they trade in the equities markets just like traditional ETFs.
If you want to be a little more personal, consider an ETF in the industry where the person works. If they work in healthcare, try PHP or XPH. If the gift is for a child, what do they want to be when they grow up? If they want to be a pilot, consider FAA or FLYX. If they work in retail, XRT or RTH are worth your research time.
If the person you're buying for has an eye for jewelry, consider a precious metals ETF. For a pure play on gold, GLD is the ETF of choice. For an ETF that tracks the performance of a wider range of precious metals like silver and palladium, DBP is worth a look.
Some investors believe that an ETF that follows a commodity isn't a good choice for long-term investing because of the way the ETF may track the performance of that commodity, but this isn't an issue when a small amount of shares are purchased. (For related reading, see Using ETFs To Build A Cost-Effective Portfolio.)
The Bottom Line
Purchasing stocks as gifts is still a fine way to make your gift last through the years, but considering an exchange-traded fund that offers more diversification and safety makes sense in difficult economic times.
In order to gift a stock or ETF purchase, you will have to transfer the purchased shares to the person receiving the gift. Your broker can help you with that.
Chart AdvisorBased on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
Mutual Funds & ETFsOnce you're living off the money you've saved for retirement, is it invested in the right assets? Here are some from PIMCO that may be good options.
Chart AdvisorTrying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
Mutual Funds & ETFsLearn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
Mutual Funds & ETFsLook out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
EconomicsMany investors are bullish on India for all the right reasons. Does it present an investing opportunity?
Chart AdvisorWeekly technical summary of the major U.S. indexes.
Investing BasicsFind out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
InvestingAs world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
Chart AdvisorThe charts of these three exchange traded funds suggest that commodities are stuck in a downtrend and it doesn't look like it will reverse any time soon.
Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
You May Also Like