Finding the Best Cheap Stocks to Buy Now - ETFs and Index Funds
What is an ETF? Well, it’s kind of like an index fund — that is, a mutual fund that just passively tracks an index like the S&P 500. But ETFs have several advantages over mutual funds. For one thing, they boast the lowest fees you can find — a key consideration when searching for the best cheap stocks to buy now. After all, management fees erode returns.
ETFs have a lot of other things going for them. Mutual funds price once a day, but ETFs trade all day long on an exchange, just like a stock. So it’s easy to get in and out at the prices you want. In other words, they are highly liquid.
Furthermore, they are transparent. Since the ETF just tracks an index, you always know what stocks you own through the ETF. An actively managed mutual fund only discloses its holdings once every three months. Best of all, if you own a broad ETF, you are automatically diversified — and a diversified portfolio is your first line of defense against risk.
So how do you find the best cheap stocks to buy now through ETFs? Well, there are scores of ETFs specializing in value stocks. They automatically give you exposure to a wide range of cheap stocks to buy now — even if it might take a while for their true value to be recognized by the broader market.
A great example of this hidden-gem phenomenon are small-cap value stocks, which just happen to be the single best-performing asset class over long periods of time. If you’re looking for the best cheap stocks to buy now, you could do a lot worse than being patient with top ETFs like the iShares Russell 2000 Value Index Fund (IWN) or the Vanguard Small-Cap Value ETF (VBR).
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As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.