ETFs for the Long Run: What They Are, How They Work, and Simple Strategies for Successful Long-Term Investing

CHAPTER 10

Building Your Own ETF Portfolio

The best way to take advantage of the benefits of ETFs is to trade them and build a portfolio yourself. Hiring an investment adviser automatically adds a layer of fees. And sometimes, it can be very hard to determine what value or service you’re getting for your money. If you’ve gotten through this much of the book, you can definitely build a portfolio by yourself.

You’ve learned the difference between an ETF and a mutual fund. You know that investing in ETFs is better than investing in single stocks because you get broad-based diversification with the flexibility and tax efficiency of equities, but without the single-stock risk. Diversification in one trade makes ETFs less expensive than buying individual stocks, and usually cheaper and more tax efficient than mutual funds. You also know you can invest in alternative asset classes with the same ease as investing in stock or bond ETFs.

Now it’s time to put that information to good use and build your own investment portfolio. While I can recommend a certain investment strategy, readers will bring their own knowledge and preferences to how long they will hold ETFs and in what manner. You have to determine for yourself the amount of risk with which you feel comfortable. Like the title says, this book is about ETFs for the long run. The long run means buy and hold. Buy your investments, put them away, and let them grow; don’t watch the daily machinations of the stock market. The main benefit ...