How new, average and experienced investors should incorporate ETFs into a portfolio

Exchange-traded funds, or ETFs, can provide you with valuable benefits and, when purchased with some research, offer distinct advantages such as low upfront costs, ease of purchase, and the ability to acquire shares in indices that might interest you such as technology, pharma, housing or even sustainable development companies.

ETFs are a basket of securities that you can buy or sell through a stock brokerage firm.

“Investors of all levels of experience, whether they’re just starting out or have been investing for decades, are well served by creating low-cost, broadly diversified mutual fund and ETF portfolios that fit their unique circumstances,” said said the Vanguard spokesperson. Michael W. Nolan. “It’s important for investors to focus on the things they can control, such as keeping investment costs low, establishing an asset allocation that suits their investment goals and risk tolerance, and stick to their plan despite the ups and downs of the market.”

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For reference, Nolan said investors can build low-cost, diversified long-term portfolios with four core Vanguard ETFs: Total Stock Market ETF, Total International Stock ETF, Total Bond Market ETF, and Total International Bond ETF. Another straightforward alternative for market-cap-weighted global equity exposure, Nolan says, is Total World Stock ETF.

Teleprinter Security Last Switch Switch %
TIV VANGUARD INDEX FUNDS VANGUARD TOTAL ETF STK MKT 195.32 -0.87 -0.44%
VXUS VANGUARD STAR FD TOTAL INTL STOCK INDEX FD E 54.91 +0.36 +0.67%
BND VANGUARD BD INDEX FUND INC TOTAL BOND MARKET ETF 76.09 +0.16 +0.21%
BNDX VANGUARD CHARLOTTE FUNDS TOTAL INTL BOND ETF 50.70 -0.01 -0.02%
Vermont VANGUARD TOTAL GLOBAL EQUITY ETF 89.10 +0.23 +0.26%

Plus, FOX Business asked a financial expert how to choose the right ETFs for new, medium and qualified investors.

“Overall, ETFs have arguably leveled the playing field by giving all investors access to a wide variety of asset classes and market segments,” says DJ Tierney, senior portfolio strategist at Schwab.

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For new investors, ETFs with broad, low-cost, diversified exposure to U.S. and international stocks can be a good first step, suggests a Schwab strategist. (Stock)

Novice investors

For new investors, Tierney said ETFs with broad, low-cost, diversified exposure to U.S. and international stocks could be a good first step.

“The Schwab US Broad Market ETF provides broad exposure to the US stock market,” he said.

Teleprinter Security Last Switch Switch %
SCHB SCHWAB STRATEGIC TR US BROAD MKT ETF 45.79 -0.18 -0.39%

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Average investors

For typical investors, Tierney said they can bundle multiple ETFs together to create a diversified portfolio with stocks, US and international, fixed income and real assets in one portfolio.

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Experienced investors

Accredited investors might be interested in diversifying equity exposure among factor exposures, Tierney said.

“Fundamental indexing is an example of going beyond traditional indexing and weighting companies based on their economic footprint,” Tierney added.