I was talking to one of my friends just getting into investing last night and we talked a bit about investing in individual stocks vs. ETF’s. I like individual stocks because I think, perhaps foolishly that I can choose the “winners,” that is those that are increasing dividends and earnings consistently over time and are the leaders in industries which are growing.
But, if you are someone who is not interested in putting the time and effort into choosing companies carefully, an EXCELLENT option to consider would be ETF’s. I’d use Vanguard because they’re a trusted name and have some of the lowest fees in the industry (low trading costs are a major factor in total returns). My portfolio would probably look something like this:
60%: VT (Total world stock-US and International)
10%: BND (Total Bond Market- US)
10%: BNDX (Total International Bond)
10%: VWO (FTSE Emerging Markets)
10%: VSS (FTSE All-World Except US Small Market)
If you want to buy ETF’s, it’s really easy since they trade like stocks. Just open up a discount brokerage account with a company like Sogotrade or Interactive Brokers or even Vanguard themselves if you’re only going to buy ETF’s and not individual stocks.
