One of the advantages of investing in Exchange Traded Funds (ETFs) is that most of them are cheap.  By that I mean they have very low expenses.  Which means more of your money is working for you.

So how do the EFT providers do that?  To answer that question, we have to look at how they pick what’s in a fund, and how they manage it.

And there are a couple of ways.  I think of them as the traditional way and the newer, cheaper way. And we’re about to look at both of them.

In recent posts, we’ve been looking at ways to diversify our investments with ETFs focused in different areas. And here is another interesting one for you.

So, to diversify our investments even further, we can invest in emerging markets with the VWO Vanguard Emerging Markets Stock Index Fund. Investing in the VWO is investing in stocks of the emerging markets around the world, including China, Brazil, Mexico, Russia, South Africa and others. It has 4694 stocks, so buying VWO is buying a very large part of all of the emerging market stocks.

You can think of emerging markets as Read the rest of this entry »

To diversify our ETF investments further, lets look at the VPL – Vanguard Pacific Stock Index Fund.  As the name implies, investing in the VPL is investing in the stocks of the Asia-Pacific region.  It has 2497 stocks, so buying VPL is buying a large part of all of the Asia-Pacific stocks.

People invest in international stocks like the Asia-Pacific fund to further increase their diversification.  Because, like we said, when the US stock market is down, the Asia-Pacific stocks may be up.  And that’s where Read the rest of this entry »

Okay, so in prior posts we’ve just looked at US stocks.  But there’s a whole world out there, and it has many profitable businesses, and stocks, as well.

And we know that diversification within our US stocks can lower risk.  Because it kind of evens out the ride, i.e. when some stocks go down, others may go up.

Similarly, adding international stocks can increase our diversification.  Because sometimes when the Read the rest of this entry »

After looking at large companies stocks ETFs in recent posts, we have started looking into small company stock ETFs.  So why would we do that?  After all, large companies typically have well established products and a well-established financial history.

However, their big growth days may be behind them.  So investing in them is less risk, but perhaps less reward.  And so the value of their stock may be less volatile, swing up and down less, be more stable and less heart stopping.

On the other hand, people can invest in small, newer companies.  And they do that because their big growth days could still be ahead of them.  Of course, they don’t have as much Read the rest of this entry »

Here’s another sample chapter from my latest book Exchange-Traded Funds Investing For Beginners.  The book has been well received, so I’ll, post a number of excerpts for your review in future posts.

And if it interest you, you can review the book for free right here.

We’ve been previewing the chapter entitled Different Types Of ETF Investments.  And in our latest posts we have looked at ETFs holding large companies stocks (large caps).  These companies typically have well established products and a well-established financial history.

However, their big growth days may be behind them.  And so the value of their stock may be less volatile, swing up and down less, be more stable and less heart stopping.  So investing in them is less risk, but perhaps less reward.

Small US Companies Stock ETFs (Small Cap)
On the other hand, people can invest in smaller, newer companies.  And they do that because their big growth days could still be ahead of them. Read the rest of this entry »

Here’s our last large stock ETF sample chapter from my latest book Exchange-Traded Funds Investing For Beginners.  The book has been well received, so I’ll post a number of other excerpts for your review in future posts.

And if they interest you, you can review the book for free right here.

That said, here’s an excerpt from the chapter entitled Different Types Of ETF Investments.  It begins like this…

VTI Vanguard Total Stock Market Index Fund ETF
Investing in the VTI is investing in the total stock market.  So instead of investing in 30 large key industry stocks, like the DOW, or 500 large company stocks, like the S&P 500, you are investing in 3948 stocks. That’s pretty much all of the Read the rest of this entry »

Here’s a continuation of a sample chapter from my latest book Exchange-Traded Funds Investing For Beginners.  The book has been well received, so I’ll post a number of other excerpts for your review in future posts.

And if they interest you, you can review the book for free right here.

That said, here’s an excerpt from the chapter entitled Different Types Of ETF Investments.  It begins like this…

VOO – Vanguard S&P 500 ETF
Here’s another S&P 500 ETF which is also like investing in a large, established part of the stock market.  It’s also made up of 500 prominent, US blue chip companies. These are nationally recognized, financially sound and well-established.

And VOO is one of the world’s most popular ETFs.  It’s one of the best ways for investors to get exposure to Read the rest of this entry »

Here’s a continuation of a sample chapter from my latest book Exchange-Traded Funds Investing For Beginners.  The book has been well received, so I’ll post a number of other excerpts for your review in future posts.

And if they interest you, you can review the book for free right here.

That said, here’s an excerpt from the chapter entitled Different Types Of ETF Investments.  It begins like this…

SPY – SPDR® S&P 500 ETF
Investing in the S&P 500 ETF is also like investing in the overall stock market, but even more so.  Because the fund is made up of 500 prominent, blue chip companies in the US.  Blue chip companies are nationally recognized, financially sound and well-established companies. They typically sell high-quality, widely accepted products and services, many of which you will probably recognize.

This ETF will also sound familiar to you from our discussion on diversification in Chapter 3.  It’s not as old as DIA, but it is the largest ETF with Read the rest of this entry »

Here’s a sample chapter from my latest book Exchange-Traded Funds Investing For Beginners.  The book has been well received, so I’ll, post a number of other excerpts for your review in future posts.

And if it interest you, you can review the book for free right here.

That said, here’s an excerpt from the chapter entitled Different Types Of ETF Investments.  It begins like this…

We’re going to continue with our focus on stock-based ETFs for now just to keep things simple and get the overall concept down.  And that basic concept is that these stock-based ETFs are made up of a bunch of stocks.

But just another note that ETFs can be made up of other things besides stocks, and the concept is still the same.  So here’s a quick preview.  There are bond ETFs, which are made up of a bunch of bonds like municipal bonds, treasury bonds, corporate bonds, etc.

Or precious metals commodities ETFs that are made up of a bunch of metals like gold, silver, platinum and palladium.  Or even real estate ETFs, made up of a bunch of Read the rest of this entry »