What should you know before investing in ETFs? Here are essential facts and factors

An Exchange-Traded Fund is an investment fund that mirrors an index, a collection of assets, or a commodity. Bid/offer prices for the purchase/sale of ETFs To buy or sell ETF units using your online trading account, it’s essential to comprehend bid and offer prices. Before investing in ETFs, it's crucial to be aware of the following factors: Investment goals : Define your investment objectives, whether it's for retirement, a future purchase, or other financial milestones. Here are some additional tips to consider when investing in ETFs: Thorough research : Before committing to any ETF, conduct comprehensive research to understand its investment objective, fees, and associated risks. Here is a table summarizing the tax treatment of ETFs: Type of ETF Tax on short-term capital gains Tax on long-term capital gains Equity ETFs 15% + surcharge + cess Exempt from taxes up to Rs 1 lakh, then 10% + surcharge + cess Non-equity ETFs Added to investor’s income and taxed as per their tax rate Added to investor’s income and taxed as per their tax rate Investing in ETFs is simple and similar to investing in shares though you must consult a financial advisor to check which ETF would best suit your risk appetite and help you to reach your financial goals faster.