Investment

Too Stressed to Invest? Experts Weigh In on Finding Safety in Volatility

Published

1 year ago

August 11, 2023

Anne Joseph

Image source: Getty Images

Written by Amy Legate-Wolfe at The Motley Fool Canada

The TSX today remains a stressful place for many investors. The volatility that continues to weigh on the minds of investors hasn’t gone away. And it’s leaving many out of the opportunities in the market.

If you’re one of these stressed investors, then there is an answer to your woes. Invest in safe exchange-traded funds (ETFs).

ETFs: Safety in volatility

In an interview with Jonathan Needham, vice president and director, and Lead of ETF Distribution at TD Asset Management, the director pointed out that ETFs have remained popular during volatile economic environments. This mainly comes down to the diversification provided by these ETFs, which provide strong, risk-adjusted returns for investors. This allows investors to continue receiving positive returns and reach long-term goals.

And just like stocks, investors have the flexibility to see how their investments are doing in real time, along with the flexibility to trade an ETF at any time of day.

“Most importantly, with ETFs, investors can gain instant diversification to a portfolio of different securities,” Needham said. “And the power of buying a basket of securities versus betting on a single horse is certainly a lot smoother ride for that investor, especially during a volatile economic environment.”

Getting professional

That diversification certainly counts. But the reason it’s so successful is because there is a team of professionals managing how each ETF invests. Instead of managing a portfolio of equities, an ETF can provide you with the security of knowing that your money is being managed professionally.

This doesn’t mean you don’t have a choice in how you invest in an ETF. Instead, you can look at themes, asset classes, industries, geographic regions, and even highly specialized strategies that can align with an investor’s own beliefs. From there, investors can receive a basket of assets based on what they feel is important to their own personal financial growth. Moreover, it’s far less expensive than going with a broker.

“Compared to other investment funds, ETFs tend to have lower management fees and operating costs. Lower fees mean more of your savings are invested, which — with the benefits of compounding — can improve your return,” Needham said.

Make it easy

As mentioned, choosing an ETF doesn’t mean you have no choice. In fact, there are thousands of ETFs out there to choose from. Yet when it comes to finding the best one, perhaps go with the simplest.

One option to consider is investing in the S&P 500 through a high-yield, low-cost ETF. These types of ETFs are exactly what Warren Buffett, financial guru and billionaire, has long recommended to investors. Over time, returns on the S&P 500 have been enormous, and there are Canadian ETFs that can allow you to get in on that action.

One example is Vanguard S&P 500 Index ETF, with a 1.24% dividend yield and year-to-date returns of 16.25% as of writing. This provides you with the top companies on the S&P 500 today, along with passive income through dividends.

Bottom line

This easy solution is exactly what Needham points to, as ETFs continue to be a strong driver for investors looking for a low cost and easy access to the markets — all while counting on professional help rather than trusting your gut instincts.

“The ease of use is ETF’s biggest draw for consumers — investors can easily build a diverse and robust portfolio with a low cost of entry and transparent reports,” Needham said. “Adjustments, on the margin, depending on the market environment we are in or going into, can also help to improve outcomes for clients, not to mention the experience or better put, emotions or bad behaviours that investors can sometimes display during market volatility.”

The post Too Stressed to Invest? Experts Weigh In on Finding Safety in Volatility appeared first on The Motley Fool Canada.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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