ETFs trade like stocks but offer instant diversification and cost efficiency, making them ideal core holdings for most investors.
ETF Structure
ETFs trade like stocks but offer instant diversification and often low fees.
They can track indices, sectors, or asset types, giving you exposure without selecting individual stocks.
Expense Ratios Matter
Compare total cost of ownership including tracking error and bid-ask spreads.
Even a small fee difference compounds over decades, so favor low-expense ETFs for your core holdings.
Use Core-Satellite Approach
Pair broad ETFs for core holdings with specialized satellites for themes or sectors.
This keeps your base diversified while letting you tilt toward areas you understand and believe in.
Action Steps
- Choose a broad-market ETF as your core holding.
- Add one or two thematic ETFs to capture conviction without overweighting.
- Review expense ratios annually to ensure you’re still using the most competitive funds.