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Avraham "AY"  Rappaport, CLTC

President, Financial Professional

 

Yaniv "Jay" Natanov

President, Financial Planner

 

Eli Rappaport

Vice President, Financial Planner

 

Shlomo Rosenstein

Financial Professional

 

Ozzie Marizan

Financial Planner

 

Joseph Greer

Employee Benefits Administrator

 

Dylan Pinsky

Client Relations Manager

 

Premier Financial

6395 Dobbin Road, Suite 102

Columbia, MD 21045

 

Phone:  240-309-6001

 

Email: dylan.pinsky@prudential.com

Website: premierfinancial1.com

July/August 2023

Understanding ETF Considerations

Understanding ETF Considerations

Investors who are looking for a low-cost investment that offers diversification and tax efficiency may want to consider exchange-traded funds (ETFs)*. ETFs consist of a diversified basket of securities that typically track an index, such as the S&P 500. Purchasing an ETF can give you exposure to an entire industry or sector of the economy. There are many considerations to understand before investing in this or any particular investment.

Sounds Like a Mutual Fund
Both ETFs and mutual funds are managed by SEC-registered investment companies that allow investors to pool their money to buy a professionally managed fund consisting of stocks, bonds, or other assets. Both require a low minimum investment. Investors make money through dividend payments, capital gains distributions and increases in the value or market price of the fund, less sales charges, fees, and expenses.


A Major Difference
The biggest difference between ETFs and mutual funds is in the way they’re bought and sold. ETFs trade on a stock exchange at market prices throughout the trading day. As with individual stocks, you must have an account with a brokerage firm to buy and sell ETF shares. Investors are not charged a fee to purchase or sell ETF shares; however, there may be other transaction costs, such as brokerage commissions.


Mutual fund shares are purchased from and sold back to the fund at their net asset value (NAV), which is calculated at the end of the trading day. You won’t know the exact share price until after the markets close. Fees and expenses for buying, selling, or exchanging shares are charged directly to investors.


An ETF Drawback
Since they’re traded like stocks, ETFs typically can’t be held in an automatic investment account, such as a 401(k). Your financial professional can help you determine if investing in an ETF makes sense for you.


*Investors should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. Contact the issuing firm to obtain a prospectus which should be read carefully before investing or sending money. Because fund values fluctuate, redeemed shares may be worth more or less than their original value. Past performance won’t guarantee future results. An investment in ETFs may result in the loss of principal.

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Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
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