Get ideas for investing as simple as using one ETF, to more advanced ideas using a blend of ETFs and stocks. Most important is to get started ASAP. Your portfolio can be as simple or advanced as you want. You can gradually develop your portfolio as it grows.
Investing in Stocks & Stock ETFs
Generally, investing in stocks or ETFs that own stocks suit long-term investors seeking to grow dividend income and grow wealth. Keep in mind, even high-quality stocks and diversified ETFs have risk that their values will go down at times.
Historically, investing in stocks of large companies has provided dividend income that tends to grow over time. In fact, the S&P 500 has an annualized return of nearly 12% over the past 40 years. But, every few years, an event occurs leading values to decline by as much as 10-20-30-40% even 50% before recovering to higher levels.
Investing in Bonds & Bond ETFs
Generally, investing in bonds or ETFs that own bonds fits investors seeking income and limited risk. Investing in a blend of stocks and bonds (or ETFs that own stocks, and ETFs that own bonds) is an approach used to reduce risk compared to owning just stocks or ETFs that own stocks. By limiting risk, investors may also limit potential to grow wealth. U.S. government and investment grade corporate bonds have an annualized return of more than 7% over the past 40 years. However, these bond values can decline and have by nearly 3% in their worst year.
Set a Goal. How long do you plan to invest?
As you get started, set a goal for how long you plan to invest your money (short-term results in stocks depends more on luck; longer-term gives your money time to work for you). Also, decide how much you will invest to start and how much you will add to your portfolio regularly, maybe 10% of every paycheck, which in the long-term can make you a multi-millionaire.
A one-minute portfolio? Is only one ETF too simple?
That depends. For many people it can be a great way to get started. There are ETFs that give you a way to own stocks of 500, 1000 or even more companies. Get lists of ETFs like this in the Beanstox Trade app, using the Stocks button. Get info in the Member Zone about these ETFs, including size, fees, performance, dividend income and more.
A two-minute portfolio? Can owning two ETFs make my portfolio that different?
Yes, blending an ETF owning stocks and an ETF owning bonds can be very effective at adjusting the risk level of your portfolio. In simple terms, a blend of 50-50 may have about half the risk and half the wealth growth potential of a pure stock ETF. Get more info below on how this works and how to choose.