Exchange-traded Funds for Dummies

by Russell Wild

It seems like every week Wall Street comes up with some new, exotic investment idea that puts your money at risk. Thankfully, exchange-traded funds (ETFs) are less volatile than individual stocks, cheaper than most mutual funds, and subject to minimal taxation. But how do you use this wonderful product to diversify your investments in today’s fast-growing and ever-changing market? Exchange-Traded Funds For Dummies shows you in plain English how to weigh your options and pick the exchange-traded fund that’s right for you. It tells you everything you need to know about building a lean, mean portfolio and optimizing your profits. This hands-on guide will give you the power to use ETFs In addition, this book covers commonly asked questions about ETFs and mistakes that many investors, even the experienced ones, make. It provides forecasts of the future for ETFs and personal spending and also provides a complete list of ETFs and Web resources to assist your investment. With Exchange-Traded Funds For Dummies, you’ll soon discover what makes ETFs the hottest investment on the market!

Genres: Nonfiction, Business, Finance, Economics

338 pages, Paperback

First published October 11, 2006

Reviews

[Jean · Rating 3 out of 5]

This is the only book that I found easily about Exchange-Traded Funds at my local bookstore, so I bought it, even though it was published in 2007. Interesting to read an investing book written prior to the big crash of 2008... I hope there is a newer edition of this book out now, as there are so many more ETF's than there were in 07.
This book answered my questions about ETF's and included a lot more general investing advice. So it's pretty good, does what it should do, and is helpful in many ways. It includes some websites, to help the reader get more up-to-date information in this rapidly expanding investment category.

[Javier HG · Rating 3 out of 5]

Suele pasar con bastante frecuencia. Estás en algún evento, te presentan a alguien, y cuando se enteran que trabajas en Bolsa te preguntan: “¿Y en qué invierto?”

Me tomo la pregunta bastante en serio y doy una respuesta larga, hablando de las diferentes clases de activos, preguntando con qué bancos trabaja, qué tolerancia al riesgo tienen… Y una de las ideas que recomiendo siempre son los fondos índices o ETFs (por Exchange-Traded Funds). La gran mayoría de la gente no tiene ni idea de lo que les hablo cuando diferencio la gestión activa y la pasiva, y siempre te piden más información para poder conocer mejor este tipo de producto.

Para mí las ventajas de los ETFs son varias:

1) Liquidez: al estar cotizados, los ETFs no tienen un valor liquidativo tal y como lo entendemos. Se pueden ver y comprar durante la sesión.

2) Claridad: la cesta que compone el fondo índice suele ser muy estable. Cuando compramos un ETF, sabemos qué compañías estamos comprando. En un fondo de inversión de gestión activa hay que estar más atento para seguir su cartera.

3) Menores costes: al ser un fondo que replica una cesta estable de valores, los costes de gestión son muy reducidos (la media es de menos del 0,44% según el Wall Street Journal), mientras que en los fondos de gestión activa es superior al 0,80%.

Este es un libro perfecto para adentrarse en el mundo de los ETFs. Para los que no la conozcan la serie “…for Dummies” es una colección que trata diferentes temas (no solo financieros) con un lenguaje llano y claro. El autor explica todos los conceptos, desde qué es una acción hasta lo que es la volatilidad y cómo tenerla en cuanto a la hora de invertir en varios ETFs y construir una cartera, poniendo numerosos ejemplos.

Ojo, que recomiende este libro no significa que quiera unirme a la animada discusión sobre qué es mejor, si la gestión activa o la gestión pasiva. Que lo recomiende significa que cuanto más sepamos sobre productos de inversión, mejor. Aquí lo tienen.

[Daniel · Rating 4 out of 5]

A very good book but dated ironically. Wild did not anticipate the level of inflationary rise we experienced though his advice regarding of having Inflation protected TIPS ETFs was very wise. Wild has some good and sober investing advice and information as to how ETFs can diversify your portfolio. He also answered many questions I had about retirement accounts. The advice is mostly sound but Wild’s big miss on inflation demonstrates how nobody can totally predict the future, as market changes can be dramatic and volatile.

[Dörthe · Rating 5 out of 5]

Reading this book is the best investment into your financial future you can ever make. Entertaining to read (what?) and provides you with the knowledge to strategically and effectively invest. Well done, Russell! P.S. the 2021 edition is out and I bought it again to update and refresh my knowledge.

[Clifford Stanfield · Rating 4 out of 5]

Basic information on options. Good starter book.
Look online for more in-depth information.

[Kerri · Rating 3 out of 5]

3 stars only because a lot of this is not relevant to me in Australia. Easy to read and very informative, wish there was an Aussie version

[Linda · Rating 3 out of 5]

This book should really be called "Retirement Planning Using Exchange-Traded Funds For Dummies" or even "Applying Modern Portfolio Theory for Retirement Planning Using Exchange-Traded Funds For Dummies" but I suppose those are a bit unwieldily.

This does a good job of explaining how to go about it and gives a good overview of various ETF's that might be appropriate for each role in your portfolio (though this sort of information becomes stale quickly so if you apply his ideas check to see if better choices exist today).

I'd say the only real weakness is in the justification for his viewpoints. While I largely agree with him he doesn't supply much justification for his views (not that they are controversial but I think it would be useful for the skeptical).

Overall a pretty decent introduction and overview.

[Natali · Rating 4 out of 5]

I learned a lot from this book but it desperately needs a second edition. The author writes about Lehman Brothers and an up economy, post 2008 market crash. It is interesting that he predicts the US credit will show itself to be unstable sooner rather than later but now that credit has been downgraded, Lehman is a market alumni, and the housing crisis makes REITs far less desirable, it is high time for this book to be updated. Still a great read if you want to learn the fundamentals of ETFs though.

[Damien Ayers · Rating 4 out of 5]

Pretty good, although frustratingly US centric. Would have preferred less information on specific funds and information that quickly goes out of date, and a better explanation of how you can find out correlation between different funds/indexes and more detail on asset allocation.

[Lyn Fong · Rating 5 out of 5]

Enlightening. Also in response to other reviews' main gripe, this book has been updated around 2011- 2012.

[Natali · Rating 5 out of 5]

Great! Well presented and organized introduction to these nascent and useful funds.