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How to Invest in Euros ETF

Original post by Diane Perez of Demand Media

Investors buy ETFs in several currencies, including the euro.

Investors choose to invest in a euros exchange-traded fund, or ETF, when they prefer to park money in a sector rather than an individual stock, or believe the euro will strengthen against the dollar. ETFs consist of a group of securities, and this helps to diversify risk without lowering the return. An ETF that tracks the index of a sector is less volatile than choosing individual stocks within that sector.

Basics

Euros ETFs do not require a minimum investment. Investors purchase them as shares, the same as stock. A euro ETF trades in euros rather than dollars. You can buy them to track the currency or a specific industry, such as energy or transportation. The ETF follows a group of stocks within an industry. This adds stability against one company’s stock plummeting in value. An ETF that follows the euro increases in value when the dollar weakens.

Buying and Selling

Locate a stockbroker in your community or online with whom you wish to develop a professional relationship. ETFs trade on the stock exchange and must go through a licensed broker. If you are new to investing and not sure of what to buy, choose a full-service broker to advise you. While fees are more expensive than a discount broker, you are paying for the broker's knowledge and expertise to help increase your wealth.

Investing

After researching the different sectors, choose one or more that you believe will increase in value. You can buy ETFs that follow one sector or several sectors. If you track the euro currency, then any catastrophic events within the European Union could cause the ETF to lose value against the dollar. Similarly, if you believe the dollar will decline further in value, then euro-denominated funds are more attractive. Decide how much you want to invest in each sector, such as one-third in metals, one-third in euro currency and one-third in coffee. Check the current selling price to calculate how many shares your chosen investment amount will purchase. Add the broker’s fee for buying and selling to calculate how much the shares must increase in value to earn a profit.

Tracking

Track the price fluctuation of your preferred ETF so you can sell at the most profitable time. Prices update several times during the trading day to reflect changes within the sector. Experienced investors might engage in day trading, which is buying and selling within a short period, frequently during the same trading session. This can be expensive since you also pay broker fees when you sell shares. Deduct the fees from the potential profit before making a decision.

                   

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About the Author

Diane Perez is a writer who contributes to various websites, specializing in gardening and business topics, and creates sales copy for private clients. Perez holds a Bachelor of Science in education from the University of Miami.

Photo Credits

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