6/ Follow for more personal finance topics.

Sources:
• Morningstar (t.co/TCCGohXFzu)
• Wisdomtree (wisdomtree.com/-/media/us-m...)

5/ But they’re not for a lot of people, including
• Aggressive growth seekers
• Long-term investors seeking compounding growth over many years.

4/ Buffer ETFs may be worth considering if you’re:
• Risk-averse
• Looking for a safe place to park money for a year or so
• Near retirement and looking for growth while still being protected from downturns

3/ Buffer ETFs are actively managed, which means they tend to have higher maintenance fees.

First Trust’s, for example, comes tagged with a 0.85% fee, meaning the upside is effectively 8.39% after costs incurred.

2/ For example, First Trust’s buffer ETF offers investors 100% downside protection with an upside cap of 9.23% annually.

So if the S&P 500 drops 10%, great — but if it gains 23%, you’ve exchanged certainty for a 14% gain.

Source: ftportfolios.com/Retail/Etf/E...

1/ Buffer ETFs seek to insure investors against losses — which sounds great, but there’s a catch.

By reducing risk, the tradeoff is that there’s also a ceiling on gains (thanks to financial mechanisms called put and call options).