1 00:00:00,000 --> 00:00:01,600 Okay, you know that feeling, right? 2 00:00:01,600 --> 00:00:03,000 When the market takes a quick dip 3 00:00:03,000 --> 00:00:05,560 and suddenly your stomach just drops with it. 4 00:00:05,560 --> 00:00:08,040 Yeah, we all love a good bull market, of course, 5 00:00:08,040 --> 00:00:10,800 but those inevitable downturns, 6 00:00:10,800 --> 00:00:12,200 well, they can be pretty stressful, right? 7 00:00:12,200 --> 00:00:13,040 Definitely. 8 00:00:13,040 --> 00:00:17,080 So how do we make those drops a little less, well, scary? 9 00:00:17,080 --> 00:00:20,440 Today, we're diving into ETFs, Exchange Traded Funds, 10 00:00:20,440 --> 00:00:22,520 and how they can be a really powerful tool 11 00:00:22,520 --> 00:00:24,800 for managing risk in a portfolio. 12 00:00:24,800 --> 00:00:26,040 Absolutely. 13 00:00:26,040 --> 00:00:27,880 Think of ETFs like the seatbelts, 14 00:00:27,880 --> 00:00:31,280 you know, on this crazy investment roller coaster 15 00:00:31,280 --> 00:00:32,120 we're all on. 16 00:00:32,120 --> 00:00:34,920 Have you ever felt that, that stomach dropping feeling? 17 00:00:34,920 --> 00:00:37,960 I think ETFs can really help to smooth out that ride. 18 00:00:37,960 --> 00:00:40,080 They're basically a basket of different assets 19 00:00:40,080 --> 00:00:42,000 like stocks or bonds bundled together, 20 00:00:42,000 --> 00:00:44,680 and this built-in diversification, that's key. 21 00:00:44,680 --> 00:00:45,520 You know the old saying, 22 00:00:45,520 --> 00:00:46,880 don't put all your eggs in one basket. 23 00:00:46,880 --> 00:00:47,720 Right. 24 00:00:47,720 --> 00:00:49,200 But with ETFs, the basket itself, 25 00:00:49,200 --> 00:00:51,400 well, it's already designed to spread out that risk. 26 00:00:51,400 --> 00:00:53,560 So instead of worrying about one single stock, 27 00:00:53,560 --> 00:00:55,040 you know, taking a nosedive, 28 00:00:55,040 --> 00:00:57,440 I've got this built-in safety net, right? 29 00:00:57,440 --> 00:01:00,080 But why is having all these different asset classes 30 00:01:00,080 --> 00:01:02,280 within a single ETF so important? 31 00:01:02,280 --> 00:01:05,240 Imagine you have an ETF and it holds stocks 32 00:01:05,240 --> 00:01:07,080 from different sectors, right? 33 00:01:07,080 --> 00:01:11,440 Like tech and energy, healthcare, let's say. 34 00:01:11,440 --> 00:01:15,040 When tech stumbles, you know, like it did in 2022, 35 00:01:15,040 --> 00:01:17,360 energy, well, that might be surging 36 00:01:17,360 --> 00:01:19,080 because of global events. 37 00:01:19,080 --> 00:01:19,920 Makes sense. 38 00:01:19,920 --> 00:01:21,360 So holding both in your ETF, 39 00:01:21,360 --> 00:01:22,840 well, it means you're not completely exposed 40 00:01:22,840 --> 00:01:24,120 to just one sector. 41 00:01:24,120 --> 00:01:27,160 Ah, so it's like having a diversified portfolio, 42 00:01:27,160 --> 00:01:29,760 but on autopilot, I kind of like the sound of that, 43 00:01:29,760 --> 00:01:33,520 but hold on, I've also heard that you can trade ETFs, 44 00:01:33,520 --> 00:01:35,840 just like individual stocks, like in real time. 45 00:01:35,840 --> 00:01:36,680 Is that true? 46 00:01:36,680 --> 00:01:37,500 Absolutely. 47 00:01:37,500 --> 00:01:39,640 That's actually one of the biggest advantages of ETFs. 48 00:01:39,640 --> 00:01:42,360 Let's say you see tech starting to weaken a little bit, 49 00:01:42,360 --> 00:01:44,480 but then energy is gaining some momentum. 50 00:01:44,480 --> 00:01:46,920 You can actually sell some of that tech sector ETF 51 00:01:46,920 --> 00:01:48,520 and buy more of that energy ETF. 52 00:01:48,520 --> 00:01:50,400 And you can do it all in the same trading day. 53 00:01:50,400 --> 00:01:51,240 Wow. 54 00:01:51,240 --> 00:01:54,280 So it's like you can actively manage your own risk, 55 00:01:54,280 --> 00:01:57,000 but you don't have to juggle all those individual stocks 56 00:01:57,000 --> 00:01:57,880 and sign me up. 57 00:01:57,880 --> 00:01:59,880 And this is where things get really fascinating for you. 58 00:01:59,880 --> 00:02:01,160 The whole idea of advanced hedging. 59 00:02:01,160 --> 00:02:03,480 Like ETFs, they offer some really cool tools here, 60 00:02:03,480 --> 00:02:04,320 don't they? 61 00:02:04,320 --> 00:02:05,440 They do. 62 00:02:05,440 --> 00:02:09,640 Let's start with a type of ETF called an inverse ETF. 63 00:02:09,640 --> 00:02:12,200 These are ETFs designed to move in the opposite direction 64 00:02:12,200 --> 00:02:13,040 of the market. 65 00:02:13,040 --> 00:02:14,640 So if the market goes down, 66 00:02:14,640 --> 00:02:17,960 well, an inverse ETF could potentially go up. 67 00:02:17,960 --> 00:02:20,680 Wait, so I could actually make money during a downturn? 68 00:02:20,680 --> 00:02:22,600 That sounds almost too good to be true. 69 00:02:22,600 --> 00:02:24,840 There's a reason I emphasize potential there. 70 00:02:24,840 --> 00:02:27,600 Inverse ETFs, they use derivatives to achieve 71 00:02:27,600 --> 00:02:29,000 that inverse correlation. 72 00:02:29,000 --> 00:02:31,960 They require some very careful timing to get right. 73 00:02:31,960 --> 00:02:33,520 They're not a magic bullet for sure 74 00:02:33,520 --> 00:02:36,560 and definitely not a long-term strategy by any means. 75 00:02:36,560 --> 00:02:38,400 Think of them more as a tactical tool 76 00:02:38,400 --> 00:02:39,920 for an experienced investor. 77 00:02:39,920 --> 00:02:42,720 You have to be really precise with how and when you use them. 78 00:02:42,720 --> 00:02:43,040 Got it. 79 00:02:43,040 --> 00:02:44,600 Precision is key. 80 00:02:44,600 --> 00:02:46,800 So what about those more stable options? 81 00:02:46,800 --> 00:02:49,680 Where do bond ETFs fit into all of this? 82 00:02:49,680 --> 00:02:52,800 Bond ETFs, especially those holding high grade 83 00:02:52,800 --> 00:02:54,480 or government backed bonds, 84 00:02:54,480 --> 00:02:57,080 they kind of act like an anchor for your portfolio. 85 00:02:57,080 --> 00:02:59,040 When stock prices are going up and down like crazy, 86 00:02:59,040 --> 00:03:01,080 bonds tend to be more stable, 87 00:03:01,080 --> 00:03:03,440 so they can help smooth out those bumps 88 00:03:03,440 --> 00:03:05,040 for your whole portfolio. 89 00:03:05,040 --> 00:03:06,960 So it's all about balancing that risk. 90 00:03:06,960 --> 00:03:08,480 Having some assets move one way 91 00:03:08,480 --> 00:03:10,120 and others move the other way. 92 00:03:10,120 --> 00:03:14,480 OK, now I'm a little curious about these volatility ETFs. 93 00:03:14,480 --> 00:03:16,960 They're connected to market fear, right? 94 00:03:16,960 --> 00:03:18,320 But what does that actually mean? 95 00:03:18,320 --> 00:03:18,960 Good question. 96 00:03:18,960 --> 00:03:21,920 Volatility ETFs are actually linked to something called 97 00:03:21,920 --> 00:03:24,920 the VIX, sometimes called the fear index. 98 00:03:24,920 --> 00:03:27,640 It basically measures how anxious the market is 99 00:03:27,640 --> 00:03:29,560 at any given time, 100 00:03:29,560 --> 00:03:32,280 essentially how much prices are expected to swing. 101 00:03:32,280 --> 00:03:32,720 OK. 102 00:03:32,720 --> 00:03:35,320 Think of it as a barometer for how much fear is out there. 103 00:03:35,320 --> 00:03:39,400 So when volatility is high, meaning the market's super jittery, 104 00:03:39,400 --> 00:03:41,040 these ETFs tend to go up. 105 00:03:41,040 --> 00:03:42,880 So it's like you're betting on fear itself. 106 00:03:42,880 --> 00:03:44,280 That sounds kind of intense, 107 00:03:44,280 --> 00:03:46,280 even for someone who doesn't mind a little bit of a thrill 108 00:03:46,280 --> 00:03:47,240 when it comes to investing. 109 00:03:47,240 --> 00:03:48,840 Who would actually use something like that? 110 00:03:48,840 --> 00:03:50,280 They're definitely not for everyone, 111 00:03:50,280 --> 00:03:53,160 and they can be pretty complex to actually understand. 112 00:03:53,160 --> 00:03:55,280 Volatility ETFs are generally more suitable 113 00:03:55,280 --> 00:03:57,520 for experienced investors 114 00:03:57,520 --> 00:04:00,200 who really understand the risks involved. 115 00:04:00,200 --> 00:04:03,200 Think of it like having a financial umbrella. 116 00:04:03,200 --> 00:04:05,440 When you know there's a storm coming, not foolproof, 117 00:04:05,440 --> 00:04:07,960 but potentially helpful in the right hands. 118 00:04:07,960 --> 00:04:10,040 Speaking of real-world scenarios, 119 00:04:10,040 --> 00:04:14,400 wasn't there a surge in those gold-backed ETFs recently? 120 00:04:14,400 --> 00:04:16,520 I think I read something about inflation concerns. 121 00:04:16,520 --> 00:04:17,280 Absolutely. 122 00:04:17,280 --> 00:04:19,840 When inflation worries started making headlines, 123 00:04:19,840 --> 00:04:23,160 a lot of investors turned to gold-backed ETFs, 124 00:04:23,160 --> 00:04:24,760 sort of as a safe haven. 125 00:04:24,760 --> 00:04:27,680 It's a classic example of how ETFs can really reflect 126 00:04:27,680 --> 00:04:30,200 what's happening out in the world almost in real time. 127 00:04:30,200 --> 00:04:32,000 And didn't we see something similar happen 128 00:04:32,000 --> 00:04:36,320 with energy ETFs during those crazy oil price spikes? 129 00:04:36,320 --> 00:04:38,160 It seemed like everyone wanted to get in on that action. 130 00:04:38,160 --> 00:04:40,200 Exactly, sector-specific ETFs, 131 00:04:40,200 --> 00:04:42,400 like those focused on energy, yeah. 132 00:04:42,400 --> 00:04:44,760 They saw huge spikes in popularity 133 00:04:44,760 --> 00:04:47,000 during those periods of high oil prices. 134 00:04:47,000 --> 00:04:50,120 It highlights how adaptable ETFs can be, you know, 135 00:04:50,120 --> 00:04:52,440 allowing investors to quickly adjust their portfolios 136 00:04:52,440 --> 00:04:53,480 based on what's happening. 137 00:04:53,480 --> 00:04:55,720 It's like having this super flexible toolkit 138 00:04:55,720 --> 00:04:57,360 for managing your investments. 139 00:04:57,360 --> 00:04:58,920 Honestly, a lot of people get intimidated 140 00:04:58,920 --> 00:05:01,080 by other hedging tools, you know, 141 00:05:01,080 --> 00:05:02,960 like options or futures contracts. 142 00:05:02,960 --> 00:05:05,680 But ETFs, they seem much more approachable. 143 00:05:05,680 --> 00:05:06,520 Why is that? 144 00:05:06,520 --> 00:05:08,880 You're right, they are generally more accessible. 145 00:05:08,880 --> 00:05:11,560 ETFs typically have lower expense ratios 146 00:05:11,560 --> 00:05:13,400 compared to some other hedging tools. 147 00:05:13,400 --> 00:05:15,480 And there aren't as many barriers to entry 148 00:05:15,480 --> 00:05:16,720 for everyday investors. 149 00:05:16,720 --> 00:05:19,160 It's like the difference between, say, 150 00:05:19,160 --> 00:05:23,600 a sleek hybrid car and then a clunky gas guzzler, right? 151 00:05:23,600 --> 00:05:25,080 Both can get you where you need to go, 152 00:05:25,080 --> 00:05:26,720 but one is definitely more efficient. 153 00:05:26,720 --> 00:05:27,560 Yeah, okay. 154 00:05:27,560 --> 00:05:28,400 And probably more cost-effective. 155 00:05:28,400 --> 00:05:30,200 So if we were to zoom out a bit, 156 00:05:30,200 --> 00:05:33,560 what's the key takeaway here when it comes to ETFs? 157 00:05:33,560 --> 00:05:35,800 I'd say the key is that ETFs give you options. 158 00:05:35,800 --> 00:05:37,560 They empower you to navigate 159 00:05:37,560 --> 00:05:40,000 the ups and downs of the market, you know, 160 00:05:40,000 --> 00:05:42,960 with more control and potentially a lot less stress. 161 00:05:42,960 --> 00:05:44,360 But, and this is important. 162 00:05:44,360 --> 00:05:45,720 Hold on, I sense a butt coming. 163 00:05:45,720 --> 00:05:47,640 There's always a butt when it comes to investing, right? 164 00:05:47,640 --> 00:05:48,560 You got it. 165 00:05:48,560 --> 00:05:50,240 And that's where we'll pick things up in part two. 166 00:05:50,240 --> 00:05:51,200 We've covered a lot of ground, 167 00:05:51,200 --> 00:05:53,440 but there's much more to explore. 168 00:05:53,440 --> 00:05:55,360 You're right, there's always a butt, right? 169 00:05:55,360 --> 00:05:58,080 And ETFs can be really powerful tools, 170 00:05:58,080 --> 00:06:00,920 but they don't eliminate risk entirely, not at all. 171 00:06:00,920 --> 00:06:04,360 It's about managing that risk, you know, effectively. 172 00:06:04,360 --> 00:06:06,200 And that starts with understanding, 173 00:06:06,200 --> 00:06:08,600 I guess, your own comfort level, 174 00:06:08,600 --> 00:06:10,480 how much fluctuation can you actually handle 175 00:06:10,480 --> 00:06:13,360 in your portfolio without losing sleep at night? 176 00:06:13,360 --> 00:06:15,600 Right, because everyone's roller coaster tolerance 177 00:06:15,600 --> 00:06:16,600 is different. 178 00:06:16,600 --> 00:06:18,960 Some people, they love the adrenaline rush, 179 00:06:18,960 --> 00:06:22,040 and then others just want that smooth scenic ride. 180 00:06:22,040 --> 00:06:25,280 So how do you figure out where you fall on that spectrum? 181 00:06:25,280 --> 00:06:27,640 That's where this whole idea of risk tolerance comes in. 182 00:06:27,640 --> 00:06:28,800 It's just a fancy way of saying, 183 00:06:28,800 --> 00:06:31,120 how much are you willing to lose, you know? 184 00:06:31,120 --> 00:06:32,920 Once you kind of know that comfort level, 185 00:06:32,920 --> 00:06:34,760 you can start building an ETF strategy 186 00:06:34,760 --> 00:06:36,160 that aligns with your own goals. 187 00:06:36,160 --> 00:06:37,480 Are you in it for the long-term, 188 00:06:37,480 --> 00:06:39,000 that slow and steady growth? 189 00:06:39,000 --> 00:06:40,960 Or are you more interested in like, 190 00:06:40,960 --> 00:06:44,120 shorter-term, potentially higher risk opportunities? 191 00:06:44,120 --> 00:06:45,280 That makes sense. 192 00:06:45,280 --> 00:06:48,200 But I gotta admit, the sheer number of ETFs out there, 193 00:06:48,200 --> 00:06:50,880 it can be kind of overwhelming, you know? 194 00:06:50,880 --> 00:06:52,480 Where do you even begin to choose? 195 00:06:52,480 --> 00:06:55,280 It definitely can be, it's like, information overload. 196 00:06:55,280 --> 00:06:57,200 That's where good research comes in. 197 00:06:57,200 --> 00:06:59,400 A great starting point is just looking 198 00:06:59,400 --> 00:07:01,680 at the ETF's underlying holdings. 199 00:07:01,680 --> 00:07:04,000 What assets is it actually tracking? 200 00:07:04,000 --> 00:07:06,480 Does it align with your investment philosophy? 201 00:07:06,480 --> 00:07:09,040 And that risk tolerance that we talked about. 202 00:07:09,040 --> 00:07:12,640 Okay, so it's like peeking under the hood of the car, 203 00:07:12,640 --> 00:07:15,320 making sure you understand what's actually in the ETF 204 00:07:15,320 --> 00:07:16,640 before you buy it. 205 00:07:16,640 --> 00:07:18,040 What else should I be looking for? 206 00:07:18,040 --> 00:07:19,560 Fees are important too. 207 00:07:19,560 --> 00:07:22,040 Pay close attention to something called the expense ratio. 208 00:07:22,040 --> 00:07:25,200 This is the annual fee that you pay to the ETF provider, 209 00:07:25,200 --> 00:07:27,440 and obviously the lower the expense ratio. 210 00:07:27,440 --> 00:07:30,320 The more of your money stays invested and working for you. 211 00:07:30,320 --> 00:07:31,760 Those sneaky fees. 212 00:07:31,760 --> 00:07:32,600 Yeah. 213 00:07:32,600 --> 00:07:34,280 It's like the fine print you always have to check. 214 00:07:34,280 --> 00:07:35,520 But at least with ETFs, 215 00:07:35,520 --> 00:07:38,160 those costs are usually pretty transparent, right? 216 00:07:38,160 --> 00:07:40,800 Much more so than with some other investment vehicles out there. 217 00:07:40,800 --> 00:07:42,600 You can usually find the details you need 218 00:07:42,600 --> 00:07:44,120 in the ETF's prospectus. 219 00:07:44,120 --> 00:07:45,640 Okay, prospectus checked. 220 00:07:45,640 --> 00:07:46,800 Fees understood. 221 00:07:47,720 --> 00:07:49,320 Anything else that should be keeping an eye on. 222 00:07:49,320 --> 00:07:51,840 Trading volume can make a difference. 223 00:07:51,840 --> 00:07:54,200 ETFs with higher trading volume, 224 00:07:54,200 --> 00:07:55,520 they tend to be more liquid, 225 00:07:55,520 --> 00:07:57,840 meaning it's easier to buy and sell them, 226 00:07:57,840 --> 00:08:00,080 without those big price swings. 227 00:08:00,080 --> 00:08:02,080 So it's like checking how busy the highway is 228 00:08:02,080 --> 00:08:03,400 before you merge, right? 229 00:08:03,400 --> 00:08:05,000 You don't wanna get stuck in a traffic jam. 230 00:08:05,000 --> 00:08:05,840 Yeah. 231 00:08:05,840 --> 00:08:06,680 When you're trying to make a move. 232 00:08:06,680 --> 00:08:07,520 Exactly. 233 00:08:07,520 --> 00:08:10,640 And finally, don't forget to consider the ETF's track record. 234 00:08:10,640 --> 00:08:13,360 How's it performed in different market conditions? 235 00:08:13,360 --> 00:08:16,520 Has it consistently met its stated objectives? 236 00:08:16,520 --> 00:08:18,200 So it's like checking those online reviews 237 00:08:18,200 --> 00:08:19,800 before you book a hotel. 238 00:08:19,800 --> 00:08:20,840 Or try a new restaurant. 239 00:08:20,840 --> 00:08:22,600 You wanna see what other people's experiences 240 00:08:22,600 --> 00:08:23,440 have been like. 241 00:08:23,440 --> 00:08:24,260 Exactly. 242 00:08:24,260 --> 00:08:26,280 Past performance doesn't guarantee future results, 243 00:08:26,280 --> 00:08:29,600 of course, but it can offer some valuable insights. 244 00:08:29,600 --> 00:08:30,960 Okay, let's say I've done my research, 245 00:08:30,960 --> 00:08:32,560 picked out my ETFs, 246 00:08:32,560 --> 00:08:34,280 and I'm ready to ride this volatility wave. 247 00:08:34,280 --> 00:08:36,480 How do I actually use these things to my advantage? 248 00:08:36,480 --> 00:08:37,800 Now the fun begins. 249 00:08:37,800 --> 00:08:40,120 Let's talk about some practical strategies. 250 00:08:40,120 --> 00:08:42,080 For using ETFs to manage risk 251 00:08:42,080 --> 00:08:44,040 and hopefully boost your returns. 252 00:08:44,040 --> 00:08:48,120 One popular approach is called Core Satellite Investing. 253 00:08:48,120 --> 00:08:49,520 Imagine building a house. 254 00:08:50,480 --> 00:08:51,520 I like where this is going. 255 00:08:51,520 --> 00:08:53,120 You start with that foundation, 256 00:08:53,120 --> 00:08:54,800 the core of your portfolio, 257 00:08:54,800 --> 00:08:58,680 which would be like your broad market ETFs. 258 00:08:58,680 --> 00:09:00,920 These provide that baseline stability 259 00:09:00,920 --> 00:09:02,920 and diversification we've been talking about. 260 00:09:02,920 --> 00:09:04,400 Okay, so that's like the foundation 261 00:09:04,400 --> 00:09:06,580 of my investment house, nice and solid. 262 00:09:06,580 --> 00:09:08,400 Then you add the satellite holdings. 263 00:09:08,400 --> 00:09:10,520 These are those more targeted ETFs, 264 00:09:11,560 --> 00:09:14,360 focusing on specific sectors or themes, 265 00:09:14,360 --> 00:09:17,120 or even investment styles that you think are, 266 00:09:17,120 --> 00:09:18,760 I don't know, promising. 267 00:09:18,760 --> 00:09:21,840 Ah, so these are like the rooms in the house. 268 00:09:21,840 --> 00:09:24,160 They had the personality and maybe a bit of excitement. 269 00:09:24,160 --> 00:09:25,120 Precisely. 270 00:09:25,120 --> 00:09:28,000 By adjusting your satellite holdings strategically, 271 00:09:28,000 --> 00:09:30,160 you can tilt your portfolio towards areas 272 00:09:30,160 --> 00:09:31,520 that you believe will outperform. 273 00:09:31,520 --> 00:09:33,600 So if I'm feeling really bullish on clean energy, 274 00:09:33,600 --> 00:09:36,660 for example, I could add a clean energy ETF to my mix. 275 00:09:36,660 --> 00:09:37,500 You got it. 276 00:09:37,500 --> 00:09:40,600 Or if you think emerging markets are poised for growth, 277 00:09:40,600 --> 00:09:42,600 you could add an emerging market ETF. 278 00:09:42,600 --> 00:09:44,360 The key is to be selective 279 00:09:44,360 --> 00:09:46,080 and make sure that your choices align 280 00:09:46,080 --> 00:09:47,560 with your overall strategy. 281 00:09:47,560 --> 00:09:49,440 So it's all about being proactive, right? 282 00:09:49,440 --> 00:09:50,880 And making those decisions 283 00:09:50,880 --> 00:09:52,600 based on what's happening out in the market. 284 00:09:52,600 --> 00:09:54,640 But markets change, what about those times 285 00:09:54,640 --> 00:09:56,280 when you need to adjust your strategy? 286 00:09:56,280 --> 00:09:57,120 You're absolutely right. 287 00:09:57,120 --> 00:09:58,800 Markets are constantly changing. 288 00:09:58,800 --> 00:10:01,520 And that's where this idea of rebalancing comes in. 289 00:10:01,520 --> 00:10:04,440 Even with a really diversified portfolio, 290 00:10:04,440 --> 00:10:07,440 things can drift from their original allocation. 291 00:10:07,440 --> 00:10:11,120 As different asset classes perform differently over time. 292 00:10:11,120 --> 00:10:12,720 Right. So even if you start out balanced, 293 00:10:12,720 --> 00:10:14,520 things can get kind of out of whack. 294 00:10:14,520 --> 00:10:15,360 Exactly. 295 00:10:15,360 --> 00:10:17,120 Rebalancing involves periodically selling 296 00:10:17,120 --> 00:10:20,440 some of your winners and then buying more of your laggards. 297 00:10:20,440 --> 00:10:22,640 Essentially, you're bringing your portfolio back 298 00:10:22,640 --> 00:10:24,400 into alignment with your goals. 299 00:10:24,400 --> 00:10:25,800 It's like pruning a garden, 300 00:10:25,800 --> 00:10:28,240 making sure everything stays healthy and balanced. 301 00:10:28,240 --> 00:10:29,600 Perfect analogy. 302 00:10:29,600 --> 00:10:33,280 Rebalancing helps maintain your desired level of risk. 303 00:10:33,280 --> 00:10:36,520 And it prevents you from getting overexposed to any one area. 304 00:10:36,520 --> 00:10:39,600 Okay, core satellite investing, rebalancing, got it. 305 00:10:39,600 --> 00:10:40,960 Any other tricks up your sleeve? 306 00:10:40,960 --> 00:10:43,320 What about those inverse ETFs we talked about earlier? 307 00:10:43,320 --> 00:10:45,640 They can play a role in all of this, right? 308 00:10:45,640 --> 00:10:47,840 They can, but they're not for everyone. 309 00:10:47,840 --> 00:10:49,840 Remember, those are the ETFs designed to profit 310 00:10:49,840 --> 00:10:51,280 when the market goes down. 311 00:10:51,280 --> 00:10:54,360 They can be used as a kind of portfolio insurance. 312 00:10:54,360 --> 00:10:57,080 Right, the profit from the downturn ETFs. 313 00:10:57,080 --> 00:10:58,840 But didn't you say they were tricky to use? 314 00:10:58,840 --> 00:11:01,280 They require really precise timing, don't they? 315 00:11:01,280 --> 00:11:04,240 They do, but if you use them strategically, 316 00:11:04,240 --> 00:11:07,760 they can potentially offset losses in your core holdings 317 00:11:07,760 --> 00:11:09,080 during a market decline. 318 00:11:09,080 --> 00:11:11,080 So it's like having that backup generator 319 00:11:11,080 --> 00:11:13,720 that kicks in if the power goes out, 320 00:11:13,720 --> 00:11:15,640 provides some peace of mind. 321 00:11:15,640 --> 00:11:17,800 But when would I know it's actually time to use it? 322 00:11:17,800 --> 00:11:21,120 That's where careful monitoring and evaluation come in. 323 00:11:21,120 --> 00:11:23,920 You need to stay informed about what's happening in the market 324 00:11:23,920 --> 00:11:27,360 and the economy and even like geopolitics. 325 00:11:27,360 --> 00:11:30,200 All those things can have an impact on your investments. 326 00:11:30,200 --> 00:11:33,160 So it's not a set it and forget it kind of thing with ETFs. 327 00:11:33,160 --> 00:11:34,400 You have to actually pay attention 328 00:11:34,400 --> 00:11:35,680 to what's going on in the world. 329 00:11:35,680 --> 00:11:38,480 The market's always changing, it's dynamic. 330 00:11:38,480 --> 00:11:40,880 So your strategy should evolve too, right? 331 00:11:40,880 --> 00:11:43,160 Regularly review your portfolio's performance, 332 00:11:43,160 --> 00:11:44,440 make those adjustments as needed 333 00:11:44,440 --> 00:11:47,480 to stay aligned with your goals and your risk tolerance. 334 00:11:47,480 --> 00:11:50,400 Okay, so stay informed, be proactive, 335 00:11:50,400 --> 00:11:52,120 and don't be afraid to make changes. 336 00:11:52,120 --> 00:11:53,760 Sounds like a plan. 337 00:11:53,760 --> 00:11:56,080 But I'm also sensing another but coming. 338 00:11:56,080 --> 00:11:58,200 Always a but, right? 339 00:11:58,200 --> 00:11:59,520 And this one's important. 340 00:11:59,520 --> 00:12:01,960 The reality is that no investment strategy 341 00:12:01,960 --> 00:12:03,680 is completely foolproof. 342 00:12:03,680 --> 00:12:06,280 Even one using ETFs, you know, 343 00:12:06,280 --> 00:12:08,120 you can't eliminate risk entirely. 344 00:12:08,120 --> 00:12:10,080 Of course, even with the best laid plans, 345 00:12:10,080 --> 00:12:11,880 there are always surprises in the market. 346 00:12:11,880 --> 00:12:14,480 Exactly, so it's important to approach investing 347 00:12:14,480 --> 00:12:16,240 with a realistic mindset. 348 00:12:16,240 --> 00:12:20,000 There will be ups and downs, the key is to be prepared. 349 00:12:20,000 --> 00:12:22,360 So it's like riding that roller coaster. 350 00:12:22,360 --> 00:12:25,360 But wearing a helmet and a safety harness, right? 351 00:12:25,360 --> 00:12:26,520 You can enjoy the ride, 352 00:12:26,520 --> 00:12:28,920 but you've got to be prepared for those twists and turns. 353 00:12:28,920 --> 00:12:31,200 Precisely, and you don't have to do it alone. 354 00:12:31,200 --> 00:12:32,360 There are resources out there 355 00:12:32,360 --> 00:12:34,160 to help you make informed decisions. 356 00:12:34,160 --> 00:12:37,080 Financial advisors, reputable online resources, 357 00:12:37,080 --> 00:12:38,720 and even podcasts like this one 358 00:12:38,720 --> 00:12:40,720 can provide some valuable insights. 359 00:12:40,720 --> 00:12:43,200 Speaking of which, looks like we're just about out of time 360 00:12:43,200 --> 00:12:44,880 for this part of our deep dive. 361 00:12:44,880 --> 00:12:45,800 But don't go anywhere, 362 00:12:45,800 --> 00:12:47,600 we'll be right back with more insights 363 00:12:48,640 --> 00:12:50,720 on how to make ETFs work for you 364 00:12:50,720 --> 00:12:52,360 in the final part of this episode. 365 00:12:55,600 --> 00:12:58,360 Welcome back to our deep dive on ETFs. 366 00:12:58,360 --> 00:13:00,440 And you know, as we've been talking about all these strategies 367 00:13:00,440 --> 00:13:02,720 for managing risk, it strikes me that 368 00:13:02,720 --> 00:13:04,880 knowledge is really the key here. 369 00:13:04,880 --> 00:13:06,040 The more you understand these tools, 370 00:13:06,040 --> 00:13:07,520 the more confident you'll be using them, right? 371 00:13:07,520 --> 00:13:09,040 Absolutely, knowledge is power, 372 00:13:09,040 --> 00:13:10,640 especially when it comes to investing. 373 00:13:10,640 --> 00:13:13,480 The more you learn about different types of assets, 374 00:13:13,480 --> 00:13:15,560 market trends, and investing strategies, 375 00:13:15,560 --> 00:13:16,720 well, the better equipped you'll be 376 00:13:16,720 --> 00:13:18,200 to make those smart decisions. 377 00:13:18,200 --> 00:13:20,520 It's not just about picking the right ETF then, 378 00:13:20,520 --> 00:13:23,440 it's about understanding the why behind it. 379 00:13:23,440 --> 00:13:26,240 Why am I adding this specific ETF to my portfolio? 380 00:13:26,240 --> 00:13:28,720 What role does it play in my overall strategy? 381 00:13:28,720 --> 00:13:32,400 Exactly, each ETF should have a purpose in your portfolio, 382 00:13:32,400 --> 00:13:34,480 whether it's providing that diversification, 383 00:13:34,480 --> 00:13:36,440 acting as a hedge against risk, 384 00:13:36,440 --> 00:13:39,720 or targeting a specific area that you think will grow. 385 00:13:39,720 --> 00:13:40,920 You should be able to explain 386 00:13:40,920 --> 00:13:42,760 why that ETF earned its spot. 387 00:13:42,760 --> 00:13:46,200 So it's like each ETF is a player on my investment team. 388 00:13:47,960 --> 00:13:51,040 And I need to understand their strengths and weaknesses. 389 00:13:51,040 --> 00:13:53,120 Okay, let's say I'm feeling pretty confident 390 00:13:53,120 --> 00:13:55,480 about my ETF knowledge now. 391 00:13:55,480 --> 00:13:57,360 What are some common mistakes that people make 392 00:13:57,360 --> 00:13:59,200 when they're first starting out? 393 00:13:59,200 --> 00:14:02,760 One of the biggest pitfalls I see is chasing performance. 394 00:14:02,760 --> 00:14:04,320 You know, it's tempting to see an ETF 395 00:14:04,320 --> 00:14:05,840 that's done really well recently, 396 00:14:05,840 --> 00:14:08,040 and you jump right in without really understanding 397 00:14:08,040 --> 00:14:09,840 what's driving those returns. 398 00:14:09,840 --> 00:14:13,520 The classic buy high, sell low scenario. 399 00:14:13,520 --> 00:14:15,600 We've all been tempted by that shiny object. 400 00:14:15,600 --> 00:14:17,120 The problem is that past performance 401 00:14:17,120 --> 00:14:19,320 is never a guarantee of future results. 402 00:14:19,320 --> 00:14:22,320 What's hot today could easily cool down tomorrow. 403 00:14:22,320 --> 00:14:24,760 So instead of chasing the latest trends, 404 00:14:24,760 --> 00:14:27,040 I should focus on ETFs that actually align 405 00:14:27,040 --> 00:14:28,600 with my long-term souls. 406 00:14:28,600 --> 00:14:30,680 And that risk tolerance we were talking about earlier. 407 00:14:30,680 --> 00:14:32,240 Exactly, another common mistake 408 00:14:32,240 --> 00:14:34,040 is just forgetting about diversification. 409 00:14:34,040 --> 00:14:35,680 Some investors get so excited 410 00:14:35,680 --> 00:14:37,680 about a particular sector or theme, right? 411 00:14:37,680 --> 00:14:40,320 And then their entire portfolio ends up overloaded 412 00:14:40,320 --> 00:14:42,280 with ETFs in just that one area. 413 00:14:42,280 --> 00:14:44,000 Well, even if it's a basket of ETFs, 414 00:14:44,000 --> 00:14:46,040 it's still putting all my eggs in one basket. 415 00:14:46,040 --> 00:14:48,120 Diversification is key no matter what. 416 00:14:48,120 --> 00:14:50,600 Absolutely, a well-diversified portfolio 417 00:14:50,600 --> 00:14:54,360 should include ETFs across different asset classes, 418 00:14:54,360 --> 00:14:57,020 different sectors, and even geographic regions. 419 00:14:57,020 --> 00:15:00,160 This helps spread that risk and it reduces the impact. 420 00:15:00,160 --> 00:15:03,040 If any one investment performs poorly. 421 00:15:03,040 --> 00:15:06,120 Okay, diversify, don't chase performance, 422 00:15:06,120 --> 00:15:08,240 anything else I should be watching out for. 423 00:15:08,240 --> 00:15:10,560 Just keep an eye on those trading costs. 424 00:15:10,560 --> 00:15:13,360 While ETFs generally have lower expense ratios 425 00:15:13,360 --> 00:15:14,740 than some other investments, 426 00:15:14,740 --> 00:15:15,960 remember that frequent trading 427 00:15:15,960 --> 00:15:17,920 can really eat into your returns. 428 00:15:17,920 --> 00:15:19,240 Those pesky fees. 429 00:15:19,240 --> 00:15:20,080 Yeah. 430 00:15:20,080 --> 00:15:21,600 It seems like they always find a way to sneak in there. 431 00:15:21,600 --> 00:15:24,000 Right, so it's important to have a clear strategy 432 00:15:24,000 --> 00:15:26,240 and only trade when it's really necessary 433 00:15:26,240 --> 00:15:27,640 to adjust your portfolio. 434 00:15:27,640 --> 00:15:29,180 Don't let those emotions 435 00:15:29,180 --> 00:15:32,360 or every little market fluctuation dictate your decisions. 436 00:15:32,360 --> 00:15:34,920 Okay, stay focused, stick to the plan, 437 00:15:34,920 --> 00:15:37,320 and try not to get rattled by every little blip. 438 00:15:37,320 --> 00:15:38,160 Got it. 439 00:15:38,160 --> 00:15:40,120 But what about those times when I do need to make a change? 440 00:15:40,120 --> 00:15:42,520 How do I know when it's the right time to rebalance? 441 00:15:42,520 --> 00:15:45,120 Or maybe adjust my ETF strategy a little bit. 442 00:15:45,120 --> 00:15:46,680 That's a great question. 443 00:15:46,680 --> 00:15:49,240 There are a few key indicators to watch for. 444 00:15:49,240 --> 00:15:52,520 One is just significant changes in market conditions. 445 00:15:52,520 --> 00:15:55,680 For example, if interest rates suddenly rise sharply, 446 00:15:55,680 --> 00:15:58,920 you might need to adjust those bond ETF holdings. 447 00:15:58,920 --> 00:16:00,680 So it's like checking the weather forecast 448 00:16:00,680 --> 00:16:02,760 before you head out for a hike. 449 00:16:02,760 --> 00:16:04,000 You wanna make sure you're prepared 450 00:16:04,000 --> 00:16:06,600 for any conditions you might encounter along the way. 451 00:16:06,600 --> 00:16:08,520 That's a great analogy. 452 00:16:08,520 --> 00:16:10,740 Another thing to consider is any changes 453 00:16:10,740 --> 00:16:13,200 to your own personal financial situation 454 00:16:13,200 --> 00:16:15,040 or your investment goals. 455 00:16:15,040 --> 00:16:17,520 For example, as you get closer to retirement, 456 00:16:17,520 --> 00:16:20,240 you might wanna shift to a more conservative portfolio. 457 00:16:20,240 --> 00:16:22,280 Right, my risk tolerance and my needs 458 00:16:22,280 --> 00:16:23,800 are gonna change over time. 459 00:16:23,800 --> 00:16:25,360 What worked for me five years ago 460 00:16:25,360 --> 00:16:26,680 might not work for me today. 461 00:16:26,680 --> 00:16:29,360 Exactly, and finally, never underestimate 462 00:16:29,360 --> 00:16:31,480 the value of professional advice. 463 00:16:31,480 --> 00:16:33,840 A good financial advisor can help you create 464 00:16:33,840 --> 00:16:36,420 that personalized ETF strategy, 465 00:16:36,420 --> 00:16:39,440 one that truly aligns with your own circumstances and goals. 466 00:16:39,440 --> 00:16:42,240 So if I'm feeling a little lost in the world of ETFs, 467 00:16:42,240 --> 00:16:43,600 it's okay to call in a guide. 468 00:16:43,600 --> 00:16:45,120 Absolutely, they can help you navigate 469 00:16:45,120 --> 00:16:46,760 the market's complexities. 470 00:16:46,760 --> 00:16:48,560 And make sure you're on the right path. 471 00:16:48,560 --> 00:16:50,240 I think we've covered a lot of ground today. 472 00:16:50,240 --> 00:16:51,720 We went from the basics of ETFs 473 00:16:51,720 --> 00:16:55,280 to some pretty sophisticated strategies for managing risk, 474 00:16:55,280 --> 00:16:58,000 and it's clear that these are powerful tools, 475 00:16:58,000 --> 00:17:00,480 ones that can benefit investors of all levels. 476 00:17:00,480 --> 00:17:03,480 But I keep coming back to that importance of knowledge. 477 00:17:03,480 --> 00:17:05,720 I agree, the more you learn about ETFs, 478 00:17:05,720 --> 00:17:07,440 the more comfortable you'll become 479 00:17:07,440 --> 00:17:09,600 using them to reach your financial goals. 480 00:17:09,600 --> 00:17:11,800 And as your knowledge grows, 481 00:17:11,800 --> 00:17:13,460 so will your ability to handle 482 00:17:13,460 --> 00:17:16,240 those inevitable market ups and downs 483 00:17:16,240 --> 00:17:19,840 with more skill and a lot more composure. 484 00:17:19,840 --> 00:17:23,080 So instead of fearing that market volatility, 485 00:17:23,080 --> 00:17:25,200 we can actually learn to embrace it 486 00:17:25,200 --> 00:17:28,040 as an opportunity to make informed decisions, 487 00:17:28,040 --> 00:17:29,760 ones that could benefit us in the long run. 488 00:17:29,760 --> 00:17:30,640 That's the goal. 489 00:17:30,640 --> 00:17:33,280 Volatility is a natural part of the market cycle 490 00:17:33,280 --> 00:17:35,120 by learning how to manage it effectively. 491 00:17:35,120 --> 00:17:37,120 You can turn it from a source of anxiety 492 00:17:37,120 --> 00:17:38,920 into a potential source of profit. 493 00:17:38,920 --> 00:17:39,920 I love that. 494 00:17:39,920 --> 00:17:41,760 It's like transforming that roller coaster 495 00:17:41,760 --> 00:17:44,840 from a scary ride into a thrilling one, 496 00:17:44,840 --> 00:17:47,080 where we actually have the tools and the knowledge 497 00:17:47,080 --> 00:17:51,000 to not just stay safe, but to potentially come out ahead. 498 00:17:51,000 --> 00:17:51,900 That's a great way to put it. 499 00:17:51,900 --> 00:17:53,680 Investing doesn't have to be stressful. 500 00:17:53,680 --> 00:17:55,640 You know, that white knuckle experience. 501 00:17:55,640 --> 00:17:58,600 With the right knowledge and a well thought out strategy, 502 00:17:58,600 --> 00:18:01,720 it can actually be an exciting and rewarding journey. 503 00:18:01,720 --> 00:18:03,560 And on that note, we're gonna wrap up 504 00:18:03,560 --> 00:18:06,040 this deep dive into ETFs. 505 00:18:06,040 --> 00:18:07,760 But remember, this is just the beginning 506 00:18:07,760 --> 00:18:09,720 of your ETF education. 507 00:18:09,720 --> 00:18:11,840 Keep learning, keep asking questions, 508 00:18:11,840 --> 00:18:14,120 and most importantly, keep striving 509 00:18:14,120 --> 00:18:16,880 to become a more informed and confident investor. 510 00:18:16,880 --> 00:18:18,880 And who knows, maybe one day you'll be the one 511 00:18:18,880 --> 00:18:21,120 sharing your ETF expertise with the world. 512 00:18:21,120 --> 00:18:23,200 No, that's a goal worth striving for. 513 00:18:23,200 --> 00:18:25,440 Until next time, happy investing, everyone.