Fintech investment tips: ETFs, CFD and beyond
When it comes to investments, financial technology is the sector to approach first. As one of the oldest and fastest-growing areas of innovation, its potential is vast and varied.
Opportunities for traders are no less diverse in the modern market.
To begin with, high-net worth investors are no longer the only ones who can enjoy a good deal. Even in volatile times as these, someone just venturing into the trade business can make a sound investment with the right tools and guidance. And there are plenty of these.
Look into the two most popular ways to deal with fintech stocks, but don’t forget to think about what the best product to invest in actually is. Also make a note of different factors that affect trade, especially things you could have some control over. The more care you put into planning your investment, the better the results will be for your finances and future.
Why invest in fintech?
This is what it all comes down to. If you appreciate PayPal, mobile payments, crowdfunding, cryptocurrencies, and other lifechanging innovations, you should be able to see the potential of investing in more financial technologies. The Internet of Things (IoT) is a great example. It’s attracting a lot of attention and investors, boosting its market share well towards the estimated £1.3 trillion by 2025. Explore valid and prominent sectors such as this, great and small, before settling on particular interests.
Exchange-Traded Funds (ETFs)
A popular instrument offered by hundreds of providers all over the world. As of 2019, the number of funds in existence globally rose to 6,970 and has shown no sign of decreasing. The cost and risk of ETFs largely depend on transactions, but this is generally one of the most cost-effective trade methods available, requiring one annual fee. While great for short-term profit, many investors today use ETFs in long-term strategies that change with the economic tide.
A key fact to be aware of is that they are only traded in stock exchanges. You can also customise them to achieve almost as much as more powerful instruments, while allowing you to invest in the fall as well as the rise of stocks. At the same time, ETF providers supply you with a huge range of financial management tools to help you stay in control of the trade.
Contract for Difference (CFD)
Another very popular instrument for fintech investment, but quite different from ETFs. Basically, instead of just trading a fund in the stock exchange, a CFD is an agreement between two parties. This guarantees the buyer of an asset the difference in value from the time of the contract. Several factors influence how successful your investment will be, including your strategy and the market’s performance over time.
The initial cost of a CFD is as low as an ETF, but the former is even more flexible and profitable. Keep in mind that this method comes with interest and needs greater involvement in the overall process. With careful planning and management, you can make the most of a CFD deal. So, there are two more important questions to ask yourself while preparing.
- What exactly do you want to gain from this investment?
- How much and what type of support do you need?
Whether you decide to buy a stock on your own or alongside other shareholders, you need to know what you have access to in terms of investment techniques and assistance. Research your interests, while getting expert advice from a fintech consultant. In the end, you can tailor that investment to fit your plans.