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You Should Only Buy ETFs
People spend too much time trying to pick stocks and increase the value of their portfolios. A significant proportion of day traders struggle to achieve profitability. Studies reveal that only a small percentage of day traders consistently make profits. For instance, a University of California study found that just about 1% of day traders manage to earn consistent profits over five years or more.
Another study conducted on Brazilian day traders showed a mere 3% turned a profit after a year, with only 1.1% earning above the minimum wage. The situation is similar in Taiwan, where less than 1% of day traders consistently profit after covering fees (Quantified Strategies, Moneyzine).
Why is that ? Because day traders often don’t understand the fundamentals of the businesses they are investing in. They are just following trends and they eventually lose more money than they initially invested, while spending a lot of time doing “research”.
The day trading landscape is dominated by male traders, with men outnumbering women 7-to-1. Most traders are under the age of 35, with a significant number of them venturing into cryptocurrency trading. Interestingly, women, though fewer in number, have been shown to make fewer trades and avoid highly risky assets, often leading to better results compared to their male counterparts
ETFs are all you need
ETFs, or Exchange-Traded Funds, are investment funds that are traded on stock exchanges, similar to stocks. They are designed to track the performance of a particular index, sector, commodity, or other assets, but can be bought and sold like individual stock shares. ETFs offer investors a way to gain exposure to a diverse range of assets, making them a tool for risk management through diversification.
One of the key advantages of ETFs is their lower expense ratios compared to traditional mutual funds. This is because most ETFs are passively managed; they aim to replicate the performance of an index, rather than trying to outperform it. This passive management style typically requires less research and fewer transaction costs.
