Can I sell my ETF in less than a year or a year?

Question

Dear All, generally, if I invest in an ETF and get a good return within the first year of investment, can I cash in on it or there is a minimum time requirement for which I need to keep my money in the fund?

Answer 1

Congratulations on using ETFs in stead of mutual funds; it's a wise choice to make.

Other than the normal tax implications mentioned by another answerer, ETFs trade essentially like stock. They just represent a basket of items.

Put the order to buy/sell just like stock. Can buy/sell it in seconds.

Hope that helps!

Answer 2

Some investors appear to believe that the liquidity of an ETF is dependent on the fund's average trading volume, or the number of shares traded per day. However, this is not the case. Rather, a better measure of ETF liquidity is the liquidity of the underlying stocks in the index. Understanding this fact requires a brief look into how ETFs function on a basic level.

Since ETFs TRADE LIKE STOCKS, market makers are the folks that order the creation and redemption of ETF shares. Market makers build an ETF share from the shares of the companies in the underlying index. They create or redeem shares depending on the market demand for the ETF shares.

It should also be noted that market makers and specialists can create and redeem shares to arbitrage premiums or discounts to the underlying net asset value (NAV). This activity is beneficial to ETF investors because it keeps the price of the fund in line with the NAV and prevents specialists from making unfair markets. Think of it as a mechanism that ensures retail investors like us will get a fair price as the APs step all over each other trying to make a buck. Pretty neat, huh?

So there you go! No year or more needed, but maybe a few days more than trading a stock.

Answer 3

You can daytrade ETFs.

There is no time restriction or requirement with ETFs.

Answer 4

no minimum time,but it will affect how you are taxed, keep it over a year and its a long term gain, 15% tax top, under a year and its like ordinary income