Which ETF is best to invest?
If you're looking for an easy solution to investing, ETFs can be an excellent choice. ETFs typically offer a diversified allocation to whatever you're investing in (stocks, bonds or both). You want to beat most investors, even the pros, with little effort.
- ProShares Bitcoin Strategy ETF (BITO)
- Invesco QQQ Trust (QQQ)
- Vanguard Information Technology ETF (VGT)
- VanEck Semiconductor ETF (SMH)
- Invesco S&P MidCap Momentum ETF (XMMO)
- SPDR S&P Homebuilders ETF (XHB)
- Invesco S&P 500 GARP ETF (SPGP)
- Vanguard S&P 500 ETF (VOO 0.87%) -- Large U.S. companies.
- Schwab U.S. Mid-Cap ETF (SCHM 0.93%) -- Midsize U.S. companies.
- Vanguard Russell 2000 ETF (NYSEMKT:VTWO) -- Smaller U.S. companies.
- Schwab International Equity ETF (SCHF 1.13%) -- Larger non-U.S. companies.
Fund (ticker) | YTD performance | Expense ratio |
---|---|---|
Vanguard S&P 500 ETF (VOO) | 10.4 percent | 0.03 percent |
SPDR S&P 500 ETF Trust (SPY) | 10.4 percent | 0.095 percent |
iShares Core S&P 500 ETF (IVV) | 10.4 percent | 0.03 percent |
Invesco QQQ Trust (QQQ) | 8.6 percent | 0.20 percent |
Symbol | Name | 5-Year Return |
---|---|---|
IUS | Invesco RAFI Strategic US ETF | 14.75% |
OEF | iShares S&P 100 ETF | 14.73% |
SPHB | Invesco S&P 500® High Beta ETF | 14.58% |
SPYG | SPDR Portfolio S&P 500 Growth ETF | 14.40% |
- Vanguard S&P 500 ETF (VOO 0.87%) ...
- Vanguard High Dividend Yield ETF (VYM 0.87%) ...
- Vanguard Real Estate ETF (VNQ 0.89%) ...
- iShares Core S&P Total U.S. Stock Market ETF (ITOT 0.96%) ...
- Consumer Staples Select Sector SPDR Fund (XLP 0.95%)
If you're looking for an easy solution to investing, ETFs can be an excellent choice. ETFs typically offer a diversified allocation to whatever you're investing in (stocks, bonds or both). You want to beat most investors, even the pros, with little effort.
You expose your portfolio to much higher risk with sector ETFs, so you should use them sparingly, but investing 5% to 10% of your total portfolio assets may be appropriate. If you want to be highly conservative, don't use these at all.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
Market risk
The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.
Is it OK to just buy one ETF?
The one time it's okay to choose a single investment
You wouldn't ever want to load up your portfolio with a single stock. But if you're buying S&P 500 ETFs, this is the one scenario where you might get away with only owning a single investment. That's because your investment gives you access to the broad stock market.
Symbol | Name | AUM |
---|---|---|
SPY | SPDR S&P 500 ETF Trust | $498,848,000.00 |
IVV | iShares Core S&P 500 ETF | $432,543,000.00 |
VOO | Vanguard S&P 500 ETF | $422,749,000.00 |
VTI | Vanguard Total Stock Market ETF | $372,115,000.00 |
Instead of buying individual ETFs for the US, Europe, China, and emerging markets, you can simplify by purchasing one ETF that covers all these countries.
Ticker | Name | Annual dividend yield |
---|---|---|
RDIV | Invesco S&P Ultra Dividend Revenue ETF | 4.87% |
SPYD | SPDR Portfolio S&P 500 High Dividend ETF | 4.49% |
FDL | First Trust Morningstar Dividend Leaders Index Fund | 4.36% |
DJD | Invesco Dow Jones Industrial Average Dividend ETF | 4.25% |
A single ETF can contain dozens or hundreds of different stocks, or bonds or almost anything else considered an investable asset. Since ETFs are more diversified, they tend to have a lower risk level than stocks.
- iShares® ESG Advanced MSCI USA ETF.
- Vanguard Growth ETF.
- Direxion NASDAQ-100® Equal Wtd ETF.
- JPMorgan US Momentum Factor ETF.
- Vanguard Mega Cap Growth ETF.
- iShares Morningstar Growth ETF.
- Fidelity Momentum Factor ETF.
For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.
Mutual funds and ETFs may hold stocks, bonds, or commodities. Both can track indexes, but ETFs tend to be more cost-effective and liquid since they trade on exchanges like shares of stock. Mutual funds can offer active management and greater regulatory oversight at a higher cost and only allow transactions once daily.
ETFs can be safe investments if used correctly, offering diversification and flexibility. Indexed ETFs, tracking specific indexes like the S&P 500, are generally safe and tend to gain value over time. Leveraged ETFs can be used to amplify returns, but they can be riskier due to increased volatility.
Stock-picking offers an advantage over exchange-traded funds (ETFs) when there is a wide dispersion of returns from the mean. Exchange-traded funds (ETFs) offer advantages over stocks when the return from stocks in the sector has a narrow dispersion around the mean.
How long should you stay invested in ETF?
Hold ETFs throughout your working life. Hold ETFs as long as you can, give compound interest time to work for you. Sell ETFs to fund your retirement. Don't sell ETFs during a market crash.
- Open a brokerage account. You'll need a brokerage account to buy and sell securities like ETFs. ...
- Find and compare ETFs with screening tools. Now that you have your brokerage account, it's time to decide what ETFs to buy. ...
- Place the trade. ...
- Sit back and relax.
It's relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation.
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
To make $1,000 per month on T-bills, you would need to invest $240,000 at a 5% rate. This is a solid return — and probably one of the safest investments available today. But do you have $240,000 sitting around? That's the hard part.
References
- https://www.fidelity.com/learning-center/investment-products/etf/risks-with-etfs
- https://etfdb.com/compare/market-cap/
- https://www.schwab.com/learn/story/beyond-4-rule-how-much-can-you-spend-retirement
- https://www.canstar.com.au/investor-hub/buy-sell-hold-etfs/
- https://money.usnews.com/investing/articles/best-etfs-to-buy
- https://www.fool.com/investing/how-to-invest/index-funds/safest-index-funds/
- https://www.nerdwallet.com/article/investing/how-to-invest-in-etf-exchange-traded-fund
- https://www.justetf.com/en/academy/is-it-possible-to-invest-in-omly-one-etf.html
- https://www.fool.com/the-ascent/buying-stocks/articles/heres-what-happens-when-you-only-invest-in-sp-500-etfs/
- https://www.bankrate.com/investing/best-etfs/
- https://www.investopedia.com/financial-edge/0113/7-easy-to-understand-etfs-to-replace-a-savings-account.aspx
- https://www.investopedia.com/articles/investing/020916/etfs-can-be-safe-investments-if-used-correctly.asp
- https://www.bankrate.com/investing/stocks-vs-etfs/
- https://time.com/personal-finance/article/stocks-vs-etfs/
- https://money.usnews.com/funds/etfs/rankings/large-growth
- https://www.investopedia.com/articles/stocks/09/buying-stock-or-etf.asp
- https://www.trackinsight.com/en/education/how-many-etfs-should-you-own
- https://etfdb.com/compare/highest-5-year-returns/
- https://www.titan.com/articles/etf-drawbacks
- https://www.investopedia.com/articles/investing/110314/key-differences-between-etfs-and-mutual-funds.asp
- https://www.nerdwallet.com/article/investing/high-dividend-etfs
- https://www.fool.com/investing/how-to-invest/etfs/
- https://finance.yahoo.com/news/invested-1000-p-global-decade-133005715.html
- https://www.nasdaq.com/articles/passive-income:-7-ways-to-make-an-extra-$1000-a-month