July 30, 2008 at 6:00 am by Tom Lydon
Are you a novice to exchange traded fund (ETF) investing?
If you would like to build an all-ETF portfolio, there are some things to consider.
We had a conversation with Katy Marquardt for U.S. News & World Report about it.
- Diversification: As a new investor, this is a must-have for a portfolio. Given that we’ve had a decline in the market, it is a good time to get in. We encourage large, mid, small and international ETFs. From a diversification standpoint there is Vanguard Total Stock Market (VTI) which offers quick and easy allocation. The underlying index has a bit of everything.
- Do not over-allocate domestically: Remember that the world’s market-cap is two-thirds that outside the United States. As U.S. investors, we tend to do a vast majority of allocation domestically, because it’s what we know. We should be looking more internationally. Vanguard FTSE All-World ex-US (VEU) gives just international stocks in the index.
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