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 VPL fits in.

It follows the FTSE Developed Asia Pacific Index All Cap Net Tax (US RIC) Index.  And it pays a healthy 2.75% dividend, which is not quite double the average dividend of US stocks.  It also has a fairly low net expense ratio of 0.07%.

So it pretty much represents a large section of the Asia-Pacific stocks, is quite low in cost, and pays a fairly nice dividend.  And it’s been around for quite a while, since 1990, so it’s very well established.

You’ll recognize a few of the top stocks in the VPL holdings.  These include Sony, Samsung, Toyota and Mitsubishi.  So adding an Asia-Pacific fund to a stock portfolio can further increase your diversification.

Indexed to: Holds stocks from the Asia-Pacific region

Expense Ratio: 0.07%

Total Assets: $8.69 billion

Annual Dividend Yield: 2.75%

P/E ratio: 11.78

Fund Inception: 06/18/1990

Top Holdings:

• n/a                Slcmt1142
• 005930.KS  Samsung Electronics Co Ltd
• 7203.T         Toyota Motor Corp
• BHP.AX       BHP Group Ltd
• 1299.HK      AIA Group Ltd
• CBA.AX       Commonwealth Bank of Australia
• 6758.T         Sony Group Corp
• CSL.AX        CSL Ltd
• 6861.T         Keyence Corp
• 8306.T         Mitsubishi UFJ Financial Group Inc

So that’s the VPL – Vanguard Pacific Stock Index Fund.

In our next post, we’ll continue to look abroad, but at the emerging markets around the world. These are countries without fully developed economies.  But they can have much potential ahead of them, as well as a number of potentially profitable companies too.  And we just might want to invest in them.

So you’ll want to check it out when we post it.

And if you found this sample chapter from our latest book interesting, you can check it out at Exchange-Traded Funds For Beginners for free right here.

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 stocks in the US market are down, stocks may be doing better in Europe, or Asia or somewhere else in the world.

So we’ll look at international stock ETFs, and we’ll also look at emerging markets, which are countries starting to develop which may have a promising future.

But let’s start off with a well-established group of countries stocks, and that leads us to look at a European Stock Fund.

VGK – Vanguard European Stock Index Fund
Investing in the VGK is investing in the European stock market.  It has 1370 stocks, so buying VGK is buying a large part of all of the European stocks.

People invest in international stocks like the European fund because these are well developed markets with a long history, overall political stability and well trained workforce.

The VGK follows the FTSE Developed Europe All Cap index.  Also, “All Cap” tells us the stocks in this ETF are of large, medium and small European companies.  The VGK also pays a healthy 3.08% dividend, which is about double the average dividend of US stocks.  And it has a fairly low net expense ratio of 0.11%.

So it pretty much represents a large section of the European stock markets, is low cost, and pays a nice dividend.  And it’s been around since 2001, so it’s well established.

You’ll recognize a few of the top stocks in the VGK holdings.  There’s Shell, the large British multinational oil and gas company headquartered in London, England.  And my favorite, Swiss company Nestle, with their chocolate, because, well, who doesn’t love chocolate.

Adding a European fund like VGK to a US stock portfolio will increase your diversification and lower your risk.  But like all stock based diversification, it will not eliminate risk entirely.

Indexed to: Tracks an all-cap, market-cap-weighted index of developed European securities.

Expense Ratio: 0.11%

Total Assets: $23 billion

Annual Dividend Yield: 3.08%

P/E ratio: 13.13

Fund Inception: 08/13/2001

Top Holdings:

• NESN.SW    NESTLE SA-REG
• ROG.SW     ROCHE HOLDING AG-GENUSSCHEIN
• AZN.L          ASTRAZENECA PLC
• ASML.AS    ASML HOLDING NV
• SHEL.L        SHELL PLC-NEW /GBP/
• NOVN.SW    NOVARTIS AG-REG
• NOVO B.CO    Novo Nordisk A/S
• MC.PA        LVMH MOET HENNESSY LOUIS VUI
• HSBA.L        HSBC HOLDINGS PLC
• 1TTE.PA      Total SA

So that’s the VGK – Vanguard European Stock Index Fund ETF.

In our next post, we’ll look abroad to an international stock fund for Asia.  Because they have a number of profitable companies too.  And we just might want to invest in them.

So you’ll want to check it out when we post it.

And if you found this sample chapter from our latest book interesting, you can check it out at Exchange-Traded Funds For Beginners for free right here.

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 of an established track record yet, and some may eventually go out of business.  Also, their stock price will be more volatile, which reflects this real risk.

So why would anyone put up with that?

Well, because the future payoff for some of them may be great.  After all, think of Apple and Google, because they were small companies once.  And early investors that bought and held on to their stocks made a fortune.

So small cap stocks offer higher growth potential.  And better yet, small cap ETFs have outperformed the S&P 500 (big stocks) in the long run.

So more risk, more reward.  So let’s have a look at another small cap ETF, for investors willing to accept more risk for higher potential gains.

VB – Vanguard Small-Cap Index Fund ETF
VB is another ETF for those investing in small companies in the US stock market.  There are 1384 stocks in this fund.

As mentioned, people invest in small companies because they are betting they have a big future ahead of them.  So some of these small companies may eventually pay off big.   But again, remember that some of these can fail in this early stage.  So these investments can be volatile with bigger price swings than others.

But buying over 1384 of them, about double VIOO, gives more diversification, which helps even things out.  And unlike VIOO, VB has some medium size and medium/small companies as well as small companies in it.

VB is a blend of growth and value so buying VB gives you some small growth stocks and some small value stocks.  However, VB seems more oriented toward growth with a P/E ratio of 15.7, about three times that of VIOO.

The ETF follows the CRSP US Small Cap Index, described as a widely diversified index of stocks of small U.S. companies.  And it pays a 1.39% dividend which is about average.  And it has a quite low net expense ratio of 0.05%, which is half of the VIOO expense ratio.

But overall it pretty much represents all of the smaller stocks in the market, both growth and value, is low cost, and pays a dividend.  And it’s been around since 2000, so it’s well established at this point.

You can think of investing in the VB as getting in on the exciting action of small stocks with the reduced risk of wide diversification to smooth out the ride, although still bumpier than ETFs with larger stocks.

Indexed to: CRSP US Small Cap Index

Expense Ratio: 0.05%

Total Assets: $151.7 billion

Annual Dividend Yield: 1.39%

P/E ratio: 15.7

Fund Inception: 11/13/2000

Top Holdings:

• TRGP     Targa Resources Corp.
• AXON    Axon Enterprise, Inc.
• SW         Smurfit Westrock Plc
• DECK     Deckers Outdoor Corporation
• FCNCA   First Citizens BancShares, Inc.
• BLDR     Builders FirstSource, Inc.
• BAH       Booz Allen Hamilton Holding Corporation
• PTC        PTC Inc.
• CSL        Carlisle Companies Incorporated
• ATO      Atmos Energy Corporation

So that’s the VB – Vanguard Small Cap Index Fund ETF.

In our next post, we’ll look abroad to an international stock fund.  Because there are many profitable international companies too.  And we just might want to invest in them.

So you’ll want to check it out when we post it.

And if you found this sample chapter from our latest book interesting, you can check it out at Exchange-Traded Funds For Beginners for free right here.

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.  Of course, they don’t have as much of an established track record yet, and some may eventually go out of business.  So, their stock price will be more volatile, which reflects these real risks.

So why would anyone put up with that?

Well, because the future payoff for some of them may be great.  After all, think of Apple and Google, because they were small companies once.  And early investors that bought and held on to their stocks made a fortune.

So small cap stocks offer higher growth potential.  And better yet, small cap ETFs have outperformed the S&P 500 (big stocks) in the long run.

So more risk, more reward.  That’s interesting, so let’s have a look at some of the small cap ETFs, for investors willing to accept more risk for higher potential gains.  We’ll start with Vanguards Small-Cap 600.

VIOO – Vanguard S&P Small-Cap 600 Index Fund ETF
Investing in the VIOO is investing in small companies in the US stock market.  There are 607 stocks in the fund.

As mentioned, people invest in small companies because they are betting they have a big future ahead of them.  And some companies can eventually pay off big.  For example, Microsoft and Amazon were once small companies.  But remember that others can go bust at this early stage.  So investments in small companies can be volatile and a bit scary, with a bumpy ride not for the faint of heart.

But buying over 600 of them in an EFT gives diversification, which helps even out the ride a bit.

Small stocks can be further broken down into growth and value.  The growth stocks are hot, prices move a lot and they probably cost a lot.  The value stocks will not be so popular, hot, pricey and volatile.  But they give good value for the price.

VIOO is a blend of both of these types of stocks.  So buying VIOO gives you some small growth stocks and some small value stocks.

The ETF follows the S&P Small Cap 600 index.  And it pays a 1.50% dividend which is about average.  And it has a fairly low net expense ratio of 0.10%.

So it pretty much represents many small stocks in the market, both growth and value, is low cost, and pays a dividend.  And it’s been around since 2010, so it’s fairly well established at this point.

You can think of investing in the VIOO as getting in on the exciting action of small stocks with some risk protection of diversification to smooth out the ride, although it will still be bumpier than ETFs of large stocks.

Indexed to: S&P Small Cap 600 index

Expense Ratio: 0.10%

Total Assets: $4.3 billion

Annual Dividend Yield: 1.50%

P/E ratio: 5.56

Fund Inception: 09/07/2010

Top Holdings:

• AIT         Applied Industrial Technologies, Inc.
• PSC        SPS Commerce, Inc.
• ATI         ATI Inc.
• EXPO     Exponent, Inc.
• FIX         Comfort Systems USA, Inc.
• ABG       Asbury Automotive Group, Inc.
• ENSG    The Ensign Group, Inc.
• RMBS    Rambus Inc.
• ASO       Academy Sports and Outdoors, Inc.
• FN         Fabrinet

So that’s the VIOO, the Vanguard S&P Small-Cap 600 Index Fund ETF.

In our next post, we’ll look at another small cap stock ETF for those interested in high potential for investment growth.  It has over 1300 stocks, twice as many, as the VIOO.  So you’ll want to check it out when we post it.

And if you found this sample chapter interesting, you can check out more in our latest book Exchange-Traded Funds For Beginners for free right here.

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 arge, medium and small companies stocks in the total market.

People invest in large stocks because they are more established and have less risk, but they also have less growth ahead of them.  And small stocks because they have big growth potential (but higher risk).  So why not just invest in all of them.  And that’s where VTI fits in.

It follows the CRSP U.S. Total Market Index.  And it pays a 1.59% dividend which is about average.  But it has a very low net expense ratio of 0.03%.

So it pretty much represents the entire US stock market, is very low cost, and pays a dividend.  And it’s been around since 2001, so it’s well established.

The thinking with VTI is why invest in representative segments of the stock market when you can just invest in all of it by buying one ETF.

Indexed to: CRSP U.S. Total Market Index

Expense Ratio: 0.03%

Total Assets: $1 trillion

Annual Dividend Yield: 1.59%

P/E ratio: 19.11

Fund Inception: 05/24/2001

Top Holdings:

• AAPL        Apple Inc
• MSFT       Microsoft Corp Technology
• AMZN      Amazon.com Inc
• TSLA        Tesla Inc
• NVDA      NVIDIA Corp
• GOOGL    Alphabet Inc Class A
• BRK.B       Berkshire Hathaway Inc Class B
• GOOG      Alphabet Inc Class C
• XOM        Exxon Mobil Corp
• UNH        UnitedHealth Group Inc Healthcare

So that’s the VTI Vanguard Total Stock Market Index Fund ETF.  It’s very well established, with an extremely low expense ratio of just 0.03%.

And buying shares of VTI get you invested in the total stock market, virtually all the different stocks, all in just one investment.  Now, it’s not owned by legendary billionaire investor Warren Buffett since he owns VOO and  SPY already.  But that’s some great diversification, all in one ETF, wouldn’t you say.

And to learn about more ETFs if you found this sample chapter excerpt interesting, you can check out the book for free right here.

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 the S&P 500, and the S&P 500 is one of the best ways for investors to get exposure to the stock market.

While VOO is not as large as SPY, it has an expense ratio of just 0.03%, which is 3 times less than SPY’s 0.09%.

It follows the Standard & Poor’s 500® Index.  And it pays a 1.61% dividend which is about average.  But it has a very low net expense ratio of 0.03%.  So while VOO is not as large as SPY, it’s very low cost can be a good choice for long term investors.

So it represents a large cross section of the market, is low cost, and pays a dividend.  And it’s been around since 2010, so it’s well established.  And the S&P 500 is constantly reported in the news, so it’s performance is easy to track.

Also note that well known investor Warren Buffett also owns VOO in his Berkshire Hathaway portfolio.  So Warren owns SPY and VOO, the only two index funds in his portfolio.

Indexed to: Standard & Poor’s 500® Index.

Expense Ratio: 0.03%

Total Assets: $775 billion

Annual Dividend Yield: 1.61%

P/E ratio: 20.47

Fund Inception: 09/07/2010

Top Holdings:

• AAPL        Apple Inc
• MSFT       Microsoft Corp        Technology
• AMZN      Amazon.com Inc
• NVDA       NVIDIA Corp
• TSLA        Tesla Inc
• BRK.B       Berkshire Hathaway Inc Class B
• GOOGL    Alphabet Inc Class A
• GOOG      Alphabet Inc Class C
• XOM        Exxon Mobil Corp
• UNH        UnitedHealth Group Inc        Healthcare

So that’s the VOO Vanguard S&P 500 ETF.  It’s quite well known and its one of the world’s most popular ETFs, at an expense ratio of just 0.03%.  And it one of only two ETFs owned by billionaire Warren Buffett, so that’s something to consider.

In our next post, we’ll look at our last large cap stock ETF we discuss in this chapter.  And it’s different than the other three we discussed.  It literally owns all the stocks in the market, i.e. small, medium and large.  So you’ll want to check that out when we post it.

That said, if you found this sample chapter excerpt interesting, you can check out the book for free right here.

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 $381 billion assets under management.  That’s over a third of a trillion dollars.  And it has the most shares traded daily of all of the ETF’s.

It follows the Standard & Poor’s 500® Index.  And it pays a 1.58% dividend which is about average.  And it has a low net expense ratio of 0.09%.

So it represents a large cross section of the market, is low cost, and pays a dividend.  And it’s been around since 1993, so it’s well established.  And the S&P 500 is constantly reported in the news also – so it’s easy to keep track of.

And while it is the oldest and largest, due to its internal structure some analysts feel there are better, more efficient choices for individual investors.

That said, note that well known billionaire investor Warren Buffett recommends that most retail investors allocate much of their stock portfolio to an S&P 500 ETF, instead of taking the risk of picking individual stocks.  And he owns some SPY in his Berkshire Hathaway portfolio.

Indexed to: Standard & Poor’s 500® Index.
Expense Ratio: 0.09%
Total Assets: $381 billion
Annual Dividend Yield: 1.58%
P/E ratio: 20.55
Fund Inception: 01/22/1993
Top Holdings:

• AAPL        Apple Inc
• MSFT        Microsoft Corp Technology
• AMZN       Amazon.com Inc
• NVDA        NVIDIA Corp
• TSLA         Tesla Inc
• BRK.B        Berkshire Hathaway Inc Class B
• GOOGL      Alphabet Inc Class A
• GOOG        Alphabet Inc Class C
• XOM          Exxon Mobil Corp
• UNH          UnitedHealth Group Inc        Healthcare

So that’s the SPY – SPDR® S&P 500 ETF.  It’s quite well known and the largest ETF.  It’s constantly reported in the news also – so it’s easy to track.

In our next post, we’ll look at another ETF.  And it’s one of the cheapest ETFs with an expense ratio of just 0.03%.  And no surprise, Warren Buffett owns it too.  In fact, it’s the only other ETF he owns.

That said, if you found this sample chapter excerpt interesting, you can check out the  book for free right here.

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 real estate investment trusts of offices, warehouses, retail centers, apartment buildings, medical facilities, data centers, cell towers, etc.

Get the picture?  Now don’t worry if you don’t know much about bonds, precious metals, real estate, etc. because we’ll explain them as we get to them.  And you’ll just need to have the overall concept, not be an expert.  Because the fund manager takes care of the fund for you.

But for now let’s carry on with stock-based ETFs, because we already know something about them.  So let’s start out with large company stock based ETFs because we’ve already talked about a couple of them.  And then we’ll carry on from there.

Large US Companies Stock ETFs (Large Cap)
We’ve used a couple of stock ETFs so far to illustrate the general advantages of ETFs.  But now, we’ll get more specific.  Because they are very popular, and if you buy ETFs, you will probably buy at least one or more of them.

So, as we mentioned earlier, a stock ETF is just an investment in a bunch of different companies’ stocks.  But what is a stock?

Well, a stock is an ownership position in a company.  So when you buy shares of a stock, you become an owner of that company.  Really.  You are a legal owner.  You get part of the profits (your share), and you have a right to vote.

For example, if you buy shares of IBM stock, you are an owner of IBM.  And all the people that work at IBM go to work every day to make you (and thousands of other owners / stock owners) money.

And since you are a legal owner, like we said, IBM will share their profits with you.  They do this by paying you a dividend check every three months.

For example, let’s say you bought 10 shares of IBM at $231.50 per share for $2315.  IBM pays a dividend of 2.88%, or $6.67 per share annually, which is $67.00 annual dividends for your 10 shares.  So they would pay you $16.50 every three months ($67.00 / 4 = $16.50).  Or if you own 100 shares, $165.00 every three months, etc.

That sounds like an owner to me.

So when you buy a stock ETF that has IBM as one of its many stocks, you are buying a piece of that action.  Now note, in this case the ETF owns the stock and the ETF may or may not pay you the IBM dividend.  They may just collect the dividend and increase the value of the fund – which increases your value too.

But the key thing to remember is that buying stocks is buying ownership in a company.  And stock funds are made up of a bunch of different companies’ stocks.  And you’re buying a stock fund to get a piece of that action, kind of like you actually bought the stock.

And there are many different kinds of stock funds you can buy.  Some focus on large companies, or small companies, or all companies, large and small.

Or they can just own US stocks, or international stocks only.  Or different market sectors like health care companies, or technology companies, or energy, utilities, real estate, etc.

Or better yet, just dividend paying stocks.  I really like these, by the way.  I like to be paid to invest my money.

Anyhow, all that said, let’s start off with large US companies ETFs, because we’ve already touched on a couple of them, and I bet they’ll sound familiar to you.  Let’s start with a Dow Jones Industrial Average ETF.

EXTRA CREDIT: Large Cap.  You’ll often see big companies referred to as Large Cap.  That’s short for large market capitalization.

A company needs money invested in it (capital) to start and operate.  So if a company has a lot of money invested in it, it’s a big company, a large cap company.  And companies with a market capitalization greater than $10 billion are considered “large cap” these days.

You can actually calculate this.  You just take the total number of shares outstanding times the value per share to get the capital value.

For example, IBM has 934,000,000 shares of stock outstanding.  The price of a share at writing is $231.50 per share.  So the market cap is $216,221,000,000 (934,000,000 shares X $231.50 price per share = $216,221,000,000 market cap).

$216 billion is definitely more than $10 billion.  So IBM is clearly a “large cap” company.

Okay, so extra credit aside, here is our first large cap stock ETF.

DIA – SPDR® Dow Jones Industrial Average ETF

Investing in DIA is like investing in the overall stock market.  The fund is made up of 30 prominent, blue chip companies across key industries 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 sound familiar to you from our discussion on diversification in Chapter 3.  It follows the Dow Jones Industrial Average index (the DJIA or DOW).  And it pays a 1.96% dividend, which is not bad.  Better yet, it has a net expense ratio of 0.16%.

So it represents an overall cross section of the market, is low cost, and pays a dividend.  And it’s been around since 1998, so it’s well established.  And the DOW is constantly reported in the news – so it’s easy to track.

However, some analysts feel it’s based on an antiquated, somewhat arbitrary index that’s probably more useful to financial professionals than individual investors.

Indexed to: Dow Jones Industrial Average

Expense Ratio: 0.16%

Total Assets: $28 billion

Annual Dividend Yield: 1.96%

P/E ratio: 19.94

Fund Inception: 01/13/1998

Top Holdings:

• UNH        UnitedHealth Group Inc
• GS            The Goldman Sachs Group Inc
• HD           The Home Depot Inc
• MCD        McDonald’s Corp
• MSFT       Microsoft Corp        Technology
• CAT          Caterpillar Inc
• AMGN      Amgen Inc
• V               Visa Inc Class A
• BA            Boeing Co
• HON        Honeywell International Inc

So that’s the DIA – SPDR® Dow Jones Industrial Average ETF.  It’s quite well known and the oldest ETF.  In our next post, we’ll look at another ETF.

It’s not as old as DIA, but it is the largest ETF with $381 billion assets under management.  That’s over a third of a trillion dollars.  And it has the most shares traded daily of all of the ETF’s.

And if you found this sample chapter interesting, you can check out the book for free right here.

My new book Exchange-Traded Funds For Beginners has just been released and In it you’ll learn why millions of investors are building their wealth every day with these stock-like funds, or ETFs.

Once only available to the big institutions on Wall Street, these special funds were created as a tool just for themselves.  But since those early days, the number of ETFs has grown faster than any other product as they’ve become available to the average investor.  And for good reason.

LEGENDARY INVESTOR WARREN BUFFET OWNS ETFS
For example, Warren Buffet, legendary investor and 7th richest person in the world, has often recommended that most retail investors allocate much of their stock portfolio to an S&P 500 ETF instead of taking the risk of picking individual stocks.

And in fact, he owns two ETFs in his portfolio that fill the bill.  We explain both of them in simple terms in the book and tell you their specific names and trading symbols on pages 42 and 44.

And on a more personal note, Warren says when he passes that in his will, his advice to the trustee is simple.  And that is to place 90% of his wife’s inheritance into just one investment like these.

Here’s his quote.  “My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”  And Warren recommends using Vanguard’s S&P 500 index fund.

So we tell you the name and symbol of the Vanguard S&P 500 Index Fund ETF that fills this bill on page 99.   And it’s clearly a quality ETF with a Morningstar Rating of 5 out of 5 stars.

We don’t know how big of an inheritance Warren is leaving, but with a net worth today of $143.9 billion, he clearly favors ETF-like investing for his wife’s future.

Now we’re not saying anyone is going to make billions of dollars, or anywhere close to that, by investing in ETFs.  After all, this is a beginner’s book, and Warren has decades of expertise and other investments to draw on.

But his ETF ownership and directed wife’s inheritance are certainly something to ponder.

FORGET THE NEEDLE, BUY THE WHOLE HAYSTACK
But Warren Buffet aside, and back to us mere mortals, ETFs are not just for the wealthy.  You will also learn how they offer a unique advantage to beginning investors with little money to start off with.  Because ETFs allow them to invest a small amount of money in many companies’ stocks all at once.

Just buying one share of an ETF can give them exposure to a hundred or more different companies stocks.  So they can afford to get in the game with less risk than just owning a few individual stocks at the very start.

Because ETFs have diversification built right into them.  So investors are not putting all their eggs in one basket.  In other words, forget the needle, buy the whole haystack.  And ETFs make this possible for all investors.

THEY’RE CHEAP
Additionally, many ETFs are quite cheap, with low fees, so more of your money works for you.  Because there’s a big difference between fund expenses.

Mutual fund expenses have averaged as high as .71% in the recent past. But the average expense ratio to invest in an ETF was just .18%.  And some are Incredibly cheap, with fees as low as .03%.  That’s almost no charge.

And many mutual funds have minimum purchases like $3000, which is tough for some beginning investors.  But ETFs do not.  As we mentioned, you can buy just one share if you like. Or more.

THEY’RE EASY
Also, and this is one of my favorite things, they are fast and easy to trade because they trade just like stocks.  That is to say, you can go to your online stock account, put in the ETF symbol (just like you would a stock)  enter the number of shares, and press the buy button.  And boom, you own the ETF shares, typically within seconds.

Contrast that to many mutual funds where you put in your order, and it isn’t executed until the next day.  That’s because they have to wait until the market closes so they can calculate the new share price.

I don’t know about you, but I don’t like to wait around when I buy a stock or fund.  I want to place my order and see it in my stock account right now, not have to wait and follow up tomorrow to see if I got it.

Or here’s another drawback.  If you have different funds with different mutual fund providers, you will need a separate account with each provider.  So you have many different accounts to deal with.

So hmmm… kinda awkward.

But with ETFs, you can just buy instantly through you stock account and be done with it.  Because as we said, ETFs trade like a stock.  And you can do all of this in just your one stock account.  So no multiple accounts to mess with.

AND YOU’LL LEARN MUCH MORE
So those are just some of the highlights.  And you’ll get many more insights in the book, such as…

· The basics of ETF investing.

· How to get started.

· How to buy and sell ETFs.

· How to build a simple low-cost ETF portfolio.

· Three key strategies to protect your ETF investments from big losses.

· And many more valuable tips and resources.

READERS HAVE GIVEN IT A FIVE STAR RATING
Although just published, the book has been well received, and early readers have already given it 5-Star ratings and excellent reviews.  For example, here’s what Mike of New Jersey says…

“… I have learned so much from this ‘ETF Fund Investing for Beginners’ book, that I have purchased a book for each of my three kids who are now young adults beginning their investing careers for their family and their future. Mike-NJ.”

Or John of Orlando when he writes…

“I loved this book. It was very simple and easy to read, and I learned a lot about ETFs and investing in general. It was very complete, and the author explained everything in simple, plain English like in his other books.

Also, his sample portfolios and how to keep them in balance to grow a retirement account was very helpful.

This is simply an outstanding book, and a fun read as well.”

CONCLUSION
So to summarize, many investors, including billionaire Warren Buffet, are increasing their wealth with ETFs.  And ETFs are cheap, fast, and easy to buy and sell just like stocks.

Additionally, by the end of this book, you will be able to buy your first ETF.  And you will know the simple steps to build your wealth with less risk in a simple low-cost ETF portfolio. And start on your path to a more secure financial future.

If that sounds interesting, you can preview the book for free right here.

And start on your path to a more secure financial future.

To your health and prosperity – John

P.S. NOTE THERE ARE MANY KINDS OF ETFs:  There are ETFs for many investment types, not just stocks.  There are ETFs for bonds, precious metals, commodities and many other investments.

But we focus just on stock-based ETFs for starters, just to keep it simple and get the basics down first.  Then the book moves on to the other investment types once you’re on a solid footing.

But when you are invested in an exchange traded stock fund (ETF), you have many more things going on. For one, you’re dealing with more than one company’s stock. You might have fifty, or a hundred, or even thousands of stocks. And that’s because the fund you’re invested in owns some of all of those stocks. Now you don’t necessarily have to research all of those stocks because the ETF provider has selected them.

But that highlights the fact that now you have a third party involved, which is the ETF provider. This is the company, the provider, that puts together and manages the ETF funds. The provider is the company that you bought your fund shares from.

So you will be interested in the ETF provider company. Of interest will be their size, the expenses they charge you and the historical performance of their funds – particularly their fund(s) you’ve invested in.

Now there are many ETF providers. And like in most industries, there are a few of them that rise to the top. Just like in the automobile world, General Motors, Ford and Chrysler are often referred to as the “Big Three” automakers because they are the largest automobile manufacturers in the United States.

Similarly, in the ETF world, we can think of the “Big Four” ETF providers as BlackRock, Vanguard, State Street and Invesco, because they have the largest assets under management in their ETF’s.

As mentioned, it’s good to know something more about them. Because some providers are known to be very inexpensive to invest with, while others are more traditional and charge larger expenses. So let’s look at some of the ETF providers you could be dealing with.

In total, there are over 200 of them, and they have created thousands of ETF’s that you and I can invest in. The chart below shows the top 15.

Largest U.S. Exchange Traded Funds (ETF’s) Providers.

Looking at the chart, it’s clear that of those fifteen, the four major players are BlackRock, Vanguard, State Street and Invesco PowerShares.  So those are the main ones, the “Big Four,” that we mentioned.  And they each have many ETF’s you can invest in.

So with that said, let’s take a high level look at the big four, starting with the biggest one, which is BlackRock iShares.

BLACKROCK iShares

BlackRock’s iShares is the leader in ETF’s with $1.8 trillion in assets under management.  That’s a lot of investment money people have trusted them with.

So it’s not surprising that the parent company, BlackRock Inc., is the world’s largest asset management firm.  At writing they offer over 370 different ETFs to choose from.  Here are a couple of their largest ones.

IVV – iShares Core S&P 500 ETF.  This fund includes stocks of 500 large companies listed on stock exchanges in the United States.  It tracks the S&P 500 Index, one of the most commonly followed stock indices.

AGG – iShares Core U.S. Aggregate Bond ETF.  This fund includes U.S. Investment Grade Bonds.

BlackRock’s overall average Expense Ratio is a respectable .19%, which is pretty low.  That’s $1.90 per $1000 invested, so most of your money is going toward your investment instead of expense.

VANGUARD

Vanguard is also a leader in ETF’s, with $1.3 trillion in assets under management, and second only to Blackrock.

Vanguard is one of my favorite ETF providers because they have extremely low expenses.  The average Expense Ratio of all their ETFs is an incredible .06%.

Vanguard does this by being uniquely structured.  It’s owned by its shareholders, so there are no outside investors.  This allows them to charge those very low expenses.

At writing, Vanguard offers over 80 different ETFs to choose from.  Here are two of their largest ETFs.

VOO – Vanguard S&P 500 ETF.  The fund includes stocks of 500 large companies listed on stock exchanges in the United States. It tracks the S&P 500 Index, similar to BlackRock’s IVV we discussed earlier.

VTI -  Vanguard Total Stock Market ETF.  It tracks thousands of U.S. stocks of various sized companies – virtually all of the US stocks.

Note that both funds have an incredibly low expense ratio of .05%, even lower than the Vanguard average.  That’s a mere fifty cents for $1000 invested.  Contrast that to a traditional Mutual fund with an average expense ratio of 1%, or $10 per thousand invested ($1000 x .01 = $10.0 (1000 x .01 = $10).

So 50 cents expense or ten dollars – which would you prefer?

STATE STREET

State Street SPDR is another leading ETF provider with $771 billion in assets under management.

At writing they offer 139 different ETFs to choose from.  Here are two of their largest SPDR funds.

SPY – SPDR S&P 500 ETF (Standard & Poor’s Depositary Receipt).  This fund includes stocks of 500 large companies listed on stock exchanges in the United States.  It tracks the S&P 500 Index, one of the most commonly followed stock indices.

GLD – Gold Trust ETF.  This fund tracks the spot price of gold bullion.  So many investors use it as a handy way to invest in gold.

State Streets overall average Expense Ratio is a respectable .17%, which is pretty low.  So most of your money is going toward investment instead of expense.

INVESCO

Invesco is the fourth of our Big Four ETF providers with 260 billion in assets under management.

At writing they offer 218 different ETFs to choose from.  Here are two of their largest ETFs.

QQQ – INVESCO QQQ ETF.  This fund tracks the 100 largest non-financial companies listed on the Nasdaq.  So the focus tends to be more on the technology companies instead of the overall market.

RSP – Invesco S&P 500 Equal Weight ETF.  This fund includes stocks of 500 large companies listed on stock exchanges in the United States.  It tracks the S&P 500 Index.  It’s somewhat different in that it gives an equal weighted allocation of the 500 companies, where other S&P 500 funds may weight some heavier than others.

Invesco’s overall average Expense Ratio is .29%, so it’s the most expensive than the top four.

CHARLES SCHWAB

Okay, so I threw in a bonus provider and that is Charles Schwab.  They are the fifth largest ETF provider and I really like their low average expense ratio.

They offer 25 ETFs, the fewest of the top providers.  Here are two of their largest funds.

SCHX – Schwab U.S. Large-Cap ETF.  This fund tracks the 30 large US companies listed in the Dow Jones Industrial Average.  The Dow is a well-established group of stocks and you hear it mentioned every day in the stock reports.

SCHF – Schwab International Equity ETF.  This fund gives you international exposure.  It tracks many stocks of large-size and mid-size stocks companies outside the US operating in various developed markets.

As noted earlier, Schwab’s average Expense Ratio is quite low, coming in at .07%.

MIX AND MATCH

So that gives you a high level summary of the top five ETF providers.  And some samples of their funds, which cover the 30 Dow industrial stocks, the S&P 500 stocks, International stocks, bonds and gold.

Note that it’s generally okay to invest in ETF’s from different providers and mix and match.  You’ll just want to make sure you don’t have a big overlap in the underlying stocks they’re invested in.  But aside from that, I don’t worry about investing in ETF’s from different providers.

CONCLUSION

So ETFs can provide a cost effective way to invest in many stocks (and other securities) all at once, depending on the provider.  As you can see, these top providers range from very cost effective to not bad on average.

So if you’re investing in ETFs, it’s good to know something about the provider.  Because you can find funds that are low cost to invest in.  And that, combined with their other advantages of fast and easy to trade, make them good investments for many people.

And finally, note that the funds mentioned in this article are not investment recommendations and are simply used to illustrate a range of ETFs for educational purposes.

To learn more about ETFs, you may be interested in my new book Exchange Traded Funds For Beginners.  You can click here for free preview.