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How to invest in the TSEC Taiwan Weighted Index
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Investing in the TSEC Taiwan Weighted Index allows you to profit from the performance of a wide variety of stocks listed on the Taiwan Stock Exchange. We’ve got a rundown of lots of different ways to invest below, keep reading to find out more.
Where can I buy into the TSEC Taiwan Index?
What is the TSEC Taiwan Weighted Index?
It is a stock market index for companies traded on the Taipei-based Taiwan Stock Exchange. The index was launched in 1967, and has become one of the most influential stock indices in Asia. Each stock in the TSEC index is given a weighted value based on its market capitalisation, and the index is widely used as an indicator for the health and strength of the Taiwanese economy.
Is it a good investment?
It definitely can be, but it depends on what you’re looking for. Taiwan is an emerging market economy that places a heavy emphasis on the technology industry. Semiconductor makers and electronics companies form some of the biggest pieces of the TSEC Weighted Index. So, if you’re looking to invest in a tech-focused economy with the potential for high growth, this index fits the bill.
How do I invest in the TSEC Taiwan Weighted Index?
Here are three steps you should take when considering an investment:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose investment type
The investment type you end up selecting should match up with your personal investment goals. Here are the most popular ways in which you can invest:
An Exchange-Traded Fund (ETF) is an investment fund that can be traded on a stock exchange during regular stock market hours, similar to the way you would trade an individual stock. ETFs offer the benefit of diversification, while also being inexpensive to trade compared to some other assets. TSEC ETFs can include various different groups of assets, such as bonds and commodities, or can be structured so as to follow the performance of a list of companies that make up an index.
Another investing option is to buy a bunch of individual TSEC stocks (or even all the stocks) tracked by the weighted index. You can then gradually sell the worst performers in the index one by one until you’re left with a small group of top performers. This is an expensive and time-consuming process, especially with indices that track a large number of stocks, so it’s only recommended for more selective investors who have time and money to spare.
An index mutual fund (also called an index fund) is an investment fund that attracts capital from many different investors, then combines that money to follow indices such as the TSEC Weighted Index. Mutual TSEC funds can only be bought at the end of the stock market’s trading day, and cost more to trade and to own than TSEC ETFs do. So if you’re going to buy a TSEC Weighted Index fund, it might make the most sense to try and buy and hold for a longer period of time – if you’re looking to invest in a diverse number of companies but also want to be able to trade at any point, it’s best to go with the TSEC ETF.
2. Use our top tips to be a successful investor
OK, you now have a better sense of which investment types you can use to invest in the TSEC Weighted Index, as well as where to invest. Here then are Invezz.com’s top tips for how to become a successful investor:
- Do your research. Take the time to compare the TSEC Weighted Index to other investment opportunities. Build a personal investment plan, so you can have a concrete sense of your goals when it comes to both potential gains and minimising losses. With a plan in place before you start investing, you can avoid emotions such as fear and greed clouding your judgment when you have to make investment decisions.
- Set a budget. Consider how much you can afford to lose before you invest. To manage your risk and limit the size of your losses, you can then set a stop-loss order after you make your investment. For example, if you don’t want to lose more than 10% on your trade, set your stop-loss price at 10% below your purchase price.
- Select the right platform. It’s important that you know your investment goals before you pick an investing platform, as those goals can affect which platform best suits your specific investing needs. If low transaction fees are your top priority, you should probably choose an online broker. For high-level investment advice, it might make more sense to choose a financial advisor.
- Grow your investments gradually. Beginner investors make lots of mistakes, that just comes with the territory. That’s why it makes sense to invest just a small amount of money at first. As you get better at investing, you can slowly start ramping up the size of the bets you make on the TSEC Weighted Index, or any other investment.
- Think long-term. Thinking long-term means maximising your gains, minimising your losses, and not losing sight of the big picture. It means not obsessing over one setback, since the future has yet to be revealed. By being patient and disciplined you can see beyond the small stuff and keep your eyes on the bigger picture.
3. Choose a platform to invest with
The platform you use to invest can make a difference to your results as well. Here are the most popular choices for where to invest with a brief explanation of the benefits of each:
- Brokers & TSEC trading platforms. Online brokers offer low transaction fees on trading activities and can be accessed anywhere through the internet. Combine this with brokers’ easy-to-use investment tools, and you have a great option for many investors. On the other hand, if you want more hands-on investment advice, you’ll find other options more to your liking than online brokers.
- Robo advisors. Robo advisors are automated platforms that use algorithms to execute trades automatically. Robo advisors are usually more expensive than brokers, but still charge reasonable fees. Also, some robo advisors will let you discuss investment strategy with an actual person to help you make better choices. That said, robo advisors don’t quite offer the same level of investment guidance that dedicated financial advisors provide.
- Financial advisors. Financial advisors offer the highest level of customer service and investment advice of any of your available options. They’ll help you set financial goals, explain many different investment options, and help you build an investment plan that makes sense for you. Financial advisors charge a premium for this high level of service, however, and can sometimes not be worth the price. Because investing in the TSEC Taiwan Weighted Index is fairly simple, the services of a financial advisor shouldn’t be necessary unless you’re planning on making other investments.
- Banks. For investors seeking convenience, investing with your bank enables you to keep all your financial activities in the same place. However, this level of convenience comes at a price and you also won’t have access to the same level of service that top financial advisors provide. Banks are rarely the best option when it comes to investing and trading.
Ready? Here’s our top recommended broker
What should I do now?
Ready to invest in the TSEC? Great! Go to your online broker’s website, select your chosen way of investing and click buy.
Try some of our investment courses for beginners
Not feeling ready to invest in the TSEC index? No worries. You can improve your investing skills by reading our easy-to-understand investing courses and perusing our frequent news updates, all offered right here at Invezz.
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