ETFs Can Be Risky Business

Forget Gold, these precious metals ETFs have returns of over 30% in the past six months. Sounds investment-worthy… So why do we rate all of them as a “sell”?

Although these funds can offer substantial returns, they performed poorly in the long term (over the last five years), and the fact that all of their eggs are in one basket makes them riskier than diversely invested funds.

The funds experienced major losses over the five-year period resulting in weaker reward rating and single type of investing--precious metals in this case--exposing them to the market forces that can wipe them out quickly.

The advantage precious metals ETFs have over physical ownership is they can be traded much faster in reaction to the market’s ups and downs. But, on the downside, they may have added expenses.

Be sure to evaluate your options carefully before considering any type of investment.

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