Editor: Crass Cash
For those of you who don't know, an Inverse ETF is an ETF that moves in the opposite direction of whatever it is trying to mimic.
So let's say you think the stock market is going to drop and you want to protect yourself or make money. You could buy an inverse ETF for the S&P500. This will allow for you to make money while the rest of your investments are losing. It can either be a hedge or if you're sitting in cash you can use it to profit. Think of it like you're shorting the entire stock market.
Caution: only very experienced investors should use this! When you short an individual stock you can theoretically lose an infinite amount of money (this has never happened). There are also some inverse ETFs that use leverage to exaggerate the gains or losses. This is even more dangerous! Know what you're investing in!
So let's say you think the stock market is going to drop and you want to protect yourself or make money. You could buy an inverse ETF for the S&P500. This will allow for you to make money while the rest of your investments are losing. It can either be a hedge or if you're sitting in cash you can use it to profit. Think of it like you're shorting the entire stock market.
Caution: only very experienced investors should use this! When you short an individual stock you can theoretically lose an infinite amount of money (this has never happened). There are also some inverse ETFs that use leverage to exaggerate the gains or losses. This is even more dangerous! Know what you're investing in!
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