An exchange-traded fund is some sort of security. ETF is very much similar to the mutual funds. ETFs contain many types of investments like including stocks, bonds, commodities, a mixture of investment types. In simple language, ETF can be defined as a security of the market which allows a one to buy and sell easily, as it has an easy association with the price of that thing. Many suggest to invest in ETF as it is profitable and sometimes give benefits to the holders. Whereas penny stocks are the small public companies where trading happens at a very low price.
ETF is better than penny stocks and some of the points are here to prove the statement and also talks about the benefits given by the ETF.
ETF versus penny stocks
- The exchange-traded fund is a cluster of securities while investing anywhere in the market. It is just like a stock. But penny stocks are very small public companies and never assure you about the security.
- Fluctuation in the ETF happens throughout the day, as the ETFs are bought and sold at such a fast speed. But in the penny stocks, chances are more of loosing all your investments in one go.
- An ETF has all types of investments procedure like stocks, commodities, bonds, having national and international holdings. But penny stocks are quite problematic as they are easy to buy, but at the time of their selling, one has to suffer.
- The expense ratio of the ETF is comparatively low and fewer. No broker commission is there in the ETF as an individual can buy it independently. But while investing in the penny stocks, the investor would be in doubt forever that whether his money would come back or not.
The share market has its versions coming from time to time. A smart decision can lead to a lot of profit, whereas a bad decision or a decision made in haste can lead to a massive loss. ETF is a new process and can be a good decision to invest as it is full of security and an investor can have complete surveillance over the complete procedure. Penny stocks are there for those who are small investors and they have a very small amount to invest. Penny stock never gives any type of security. So investing in ETF can be a better option.