How Do You Invest In ETFs?

And is reinvesting gains from an ETF to your retirement account the best way or is there something else that's a better strategy?

Kiker answered:
Investing in ETFs whether from Powershares, iShares, or some other financial institution is done the same way as investing in regular stocks. These are considered close-ended funds, so they have a specific amount of shares on issuance, and they trade in the secondary market, completely UNLIKE mutual funds (open-ended funds).

Reinvesting gains, which I am assuming you are talking about capital gains (cause ETFs rarely issue dividends) would be just like reinvest gains from a stock. Once you sell, you can reinvest. Just think of them as a basket of stocks that trade JUST LIKE STOCKS.

I would encourage using these in a Roth IRA account over mutual funds. You get a direct sector or regional investment vehicle that will yield higher returns than a mutual fund. No matter what, I would look at actually investing in bonds as a portion of your account.

Bonds act as a capital insurance vehicle for short-term investors, and as a income-generator/capital preservation tool for the long-term investor. I would have at least 10% of your Roth in actual bonds (I like municipal bonds, as the interest income is federally tax exempt as well as State/local tax exempt). If your portfolio grows too much out of the 10% allotment to the bond, than you sell some of your ETFs (this process is called capturing your gains) and reallocate these gains into the bonds so that it is back at 10%.

Just remember that with ETFs you are looking at the P/E, like a stock, the sector/region and your forecast of what to expect the future growth will hold. Good Luck!

JSAL21 answered:
Most certainly reinvesting your gains is a good strategy, that's how your portfolio grows, but keep in mind you don't have to keep the same funds, you can sell and buy new funds but sell out the entire position but certainly reinvest your gains. Is your retirement account an IRA or Roth IRA? In other words are you getting tax benefits or is the account just a investment account.. if you know you're not going to need the money and that is really a retirement fund you best be in a tax benefited acct.