{"id":34865,"date":"2025-08-04T13:22:01","date_gmt":"2025-08-04T13:22:01","guid":{"rendered":"https:\/\/financialrush.com\/?p=34865"},"modified":"2025-08-04T13:22:01","modified_gmt":"2025-08-04T13:22:01","slug":"two-factors-to-consider-when-investing-in-etfs","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=34865","title":{"rendered":"Two factors to consider when investing in ETFs"},"content":{"rendered":"

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Traders work on the floor of the New York Stock Exchange on July 23, 2025. <\/p>\n

NYSE<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\u2018The best thing about the ETF\u2019<\/h2>\n
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Similar to mutual funds, an exchange-traded fund is a basket of securities that closely track a broad index. Part of ETFs<\/a>\u2018 attraction for new investors<\/a> is lower associated costs<\/a> and tax advantages<\/a>, said Gloria Garcia Cisneros, a certified financial planner at LourdMurray, an investment and wealth management firm.<\/p>\n

\u201cThe best thing about the ETF is that it\u2019s not like old school mutual funds,\u201d said Garcia Cisneros.<\/p>\n

They also offer more flexibility. For instance, ETFs can be bought and sold throughout the day<\/a> and during extended hours. Mutual funds can only be traded once a day after the market closes.<\/p>\n

\u201cETFs have made it a lot easier,\u201d Garcia Cisneros said.<\/p>\n<\/div>\n

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More from ETF Strategist:<\/h2>\n
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Here\u2019s a look at other stories offering insight on ETFs for investors.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Despite that flexibility, it\u2019s important to approach ETF investing with a strategy, or a plan that guides your investments, said Lee Baker, a certified financial planner as well as the founder, owner and president of Claris Financial Advisors in Atlanta.<\/p>\n

Having a plan gives you something to stick to when \u201cthings inevitably get a little crazy,\u201d said Baker, a member of CNBC\u2019s Financial Advisor Council<\/a>.\u00a0<\/p>\n

Here are two things to consider when you\u2019re coming up with a plan.<\/p>\n<\/div>\n

1. Trading in the middle of the day is \u2018less frothy\u2019<\/h2>\n
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Everyday investors may want to avoid buying close to the U.S. stock market opening and closing <\/a>hours, or 9:30 a.m. ET and 4 p.m. ET, said Baker. Prices are typically the most volatile during those points of the day.<\/p>\n

The hours in the middle of day, or between 10 a.m. ET to 2 p.m. ET, are \u201cless frothy,\u201d he said.\u00a0<\/p>\n

However, Garcia Cisneros said that you also want to avoid \u201ctiming the market,\u201d or making trades based on predictions about price movements.<\/p>\n

Not only is it difficult to do, but there isn\u2019t much of a payoff.<\/p>\n

In a new study <\/a>by Charles Schwab that compared the performance of five hypothetical long-term investors with different strategies, the \u201cperfect market timer\u201d had just slightly better results than someone who simply invested their cash at the start of every year.<\/p>\n

\u201cBecause timing the market perfectly is nearly impossible, the best strategy for most of us is to not try to market-time at all,\u201d the report noted.<\/p>\n

Instead, investors can try \u201cdollar-cost averaging<\/a>,\u201d a strategy<\/a> that requires investing a certain amount of cash over regular intervals.<\/p>\n<\/div>\n

2. Limit orders are like \u2018waiting for a bag to go on sale\u2019<\/h2>\n
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One way to buy ETFs is by placing \u201climit orders,\u201d which give you more control in your investment, experts say.<\/p>\n

A limit order<\/a> is an order to buy or sell a security at a specific price or better, according to the U.S. Securities and Exchange Commission\u2019s Investor.gov<\/a>. A buy limit order can only be executed at the price you set or lower, and vice versa with a sell limit order.\u00a0<\/p>\n

It allows you to say, \u201cI only want to buy this ETF if it drops to $50,\u201d and not the current trading price, Garcia Cisneros said.\u00a0<\/p>\n<\/div>\n

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For example, if you want to buy multiple shares of a particular ETF, a limit order can help protect your exposure in case there\u2019s a lot of volatility happening with that fund, Baker said.<\/p>\n

However, you\u2019re practically relying on a prediction on what the market will do, which can be difficult, said Garcia Cisneros.<\/p>\n

\u201cIt\u2019s like if you\u2019re waiting for a bag to go on sale to buy it, you might be waiting forever,\u201d she said. \u201cI would hate to see if they wait forever and don\u2019t actually put any money to work.\u201d<\/p>\n<\/div>\n<\/div>\n\n
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