The cost of land, homebuilding, taxes and homeownership exceeds what many people are able to afford as a result of slow personal income growth and inflation, remarks John F. Wasik for The Huffington Post.

Municipalities also favored upscale home developments since home values fuel property tax revenue that is used for schools and public services.  In between 2002-2005, home prices rose 45% in restricted areas for upscale building, whereas unrestricted areas rose 24%. Homeowners’ costs also increased as more infrastructure, schools and other public services were needed for these new suburbs.

Rather than waiting for foreclosures to abate, inventory to shrink, and financing to loosen up… Wasik points out there may be more problems than we thought.

In Wasik’s book The Cul-de-Sac Syndrome, he notes that the government will have to create incentives to build more affordable housing if homeownership were to increase, find a way to de-link property taxes from funding local services, eliminate tax breaks for mortgage interest and create policies that would make houses more energy efficient to reduce long-term costs.

Currently, housing stocks are still 70% off of their highs.

• First Trust S&P REIT Index (FRI): down 6.6% year-to-date

• Vanguard REIT Vipers (VNQ): down 5.4% year-to-date

John F. Wasik is also Tom’s co-author on iMoney.

For more stories on real estate, visit our real estate category.

Max Chen contributed to this article.

Cost Efficiency. ETFs are more cost-effective than your average mutual fund, and unlike the active managers who claim protection, ETFs are able to insulate investors better than most managers.

Easy to Trade. ETFs are also flexible to trade and have better tax advantages than their predecessors. 2008 was a poor year for most indexes, especially The Dow Jones Industrial Average, which is at levels not seen since 1931, reports Jane Bryant Quinn for Bloomberg.

Tracking an Index. An ETF is like a mutual fund that you can sell and trade like a single stock through a brokerage account. Most ETFs are index funds – meaning they track the performance of a particular market, or slice of the market, rather than try to exceed it.

Active managers claim is that they will beat the indexes, since their funds build up cash during a market drop. They’re also supposed to be able to pick the stocks that will hold up better during declines, as they are earning their pay, right?

They’re Not Trying to Outperform. Last year, 58% of all actively managed funds lost more in value than the benchmark they measure themselves against, reports Morningstar. Many say that that is around the same as chance.

Instead of trying to beat the market, why not just buy the market and save yourself the headache?

To learn more about ETFs and how you can use them, you can either purchase our book, iMoney: Profitable ETF Strategies for Every Investor or visit our education page.

While investors wait for full implementation, though, there are ways to build your own retirement portfolio while using ETFs. By buying and holding an ETF, if that’s what you’d like to do, it’s one of the cost-effective ways of using them because you’re cutting down on trading costs, Katy Marquardt for U.S. News & World Report points out.

Here’s how to build your portfolio:

• Core & Explore: A portfolio consisting of all ETFs is possible, however, many prefer to use one or two positions with ETFs for exposure to a certain sector or region.
• Diversification: The shifts within the markets are best handled by a well-diversified approach to both foreign and domestic stocks. Volatility in the markets is tamed by having a well-rounded portfolio that does not concentrate too much in one area. And it’s also wise to ensure that you’re invested across non-correlated areas so that all your investments don’t go up and down in lockstep, says ABCs of Investing. Ultimately, your portfolio allocation also hinges on a number of factors, including financial goals, age, life expectancy, and your ability to tolerate risk. My book, iMoney:Profitable ETF Strategies For Every Investor, provides model portfolios geared for a range of investors, from young to those closer to retirement.
• Limit stock-specific risk: ETFs are perfect for doing this, as they avoid company-specific risk by investing in a variety of different stocks or companies within the same sector.
• Underperforming active managers are out: We point out that most managers weren’t earning their keep even before the market meltdown. Broad-based ETFs charge much lower fees than actively managed mutual funds and most mutual funds gave negative performance in 2008.
• Take stock: If rebalancing your portfolio is in the picture, now is the time to do so. The upside to selling and buying now is that you can purchase many ETFs at deep discounts. In future years, if your mutual fund is gearing up for a big year-end capital-gains distributions and has straggled, we recommend replacing it with an ETF in a similar asset class. Plus, you’ve got a loss you can use to write off future gains. As with mutual funds, you can write off investment losses up to $3,000, and losses beyond that can be carried forward to future years.

This year, 2008, has been our best year yet! We’ve made some improvements to the site, grown and learned a lot, had a few achievements and set several statistical records for ourselves.

Take a look:

• In July, we redesigned ETF Trends to make it more informative, cleaner and more useful to you, the reader. In the sidebar, we added videos and podcasts; there’s a tag page so you can find specific topics and ETFs; we’ve compiled our most educational articles onto one simple page; and we’ve got an FAQ page to help you further.
• In September, we launched ETF Trends charting, which enables readers to look up any security by its ticker symbol and see performance, as well as a chart that includes the 50-day and 200-day moving averages, and much more.
• In October, we launched our new ETF Analyzer. Now, ETF Trends readers can track ETFs and sort them in a number of different ways, including: alphabetically, by 50-day or 200-day moving average, and by short- or long-term performance.
• We published a book! iMoney: Profitable Exchange Traded Fund Strategies for Every Investor was released in June. Have you gotten your copy yet? Read more about it here.
• On Dec. 11, ETF Trends reached the two million visitor milestone; in November, we reached 4 million page views.
• In December, we are on track to have a record month with more than 300,000 page views.

It’s been a great year, and we’re grateful to have all of you as readers – we couldn’t do it without you. Thanks for helping us to continue growing and being your best source of information when it comes to ETFs! We’d also like to give a special thank you to our advertising partners. Their ongoing support enables us to continue to enhance the services and news we provide you.

If that idea sounds too radical for now, consider that mutual funds and ETFs can exist in a complementary relationship, giving investors the perfect amount of exposure.

Many investors use ETFs to represent one or two positions, such as an industry-focused fund in place of its actively managed benchmark, reports Katy Marquardt for U.S. News & World Report.

Another point sharply in favor of ETFs is that on average, active mutual fund managers weren’t earning their keep, even before the current market meltdown. If you look back even 10 years, your positions are probably down. There is nothing you can do to change the past, but you can readjust going forward. If you need to rebalance your portfolio, now is the time to do it.

The  upside to selling a mutual fund and buying an ETF in its place now is that you can purchase ETFs at deep discounts, and if your mutual fund is getting ready to distribute those capital gains, why not replace it with an ETF in a similar asset class? You have a loss you can write off future gains.

Ultimately, your portfolio allocation also hinges on a number of factors, including financial goals, age, life expectancy and your ability to tolerate risk.

Here are three sample portfolios for investors to consider, depending on the factors listed above. For more information about portfolio-building with ETFs and what this could mean to you, have a look at iMoney: Profitable ETF Strategies for Every Investor.

Then, while you’re there, why not buy a copy of the book and for someone who deserves a present? The holidays are just around the corner!

To read more about Tom’s book, visit our book page.

There’s a strong chance ETF prices will be far north of where they are today in the next six to twelve months, and iMoney: Profitable ETF Strategies for Every Investor will help you develop your strategy.

There are a number of things any investor can learn from our book, including:

• How to know when to enter the markets
• How to choose an ETF that’s right for you and your portfolio
• Having an exit strategy to protect yourself

When the markets recover, you will want to know how to enter with confidence by having a clear plan. You will also want to learn about getting out in time to save yourself on the downside if things become dicey again.

I know this is a shameless plug, but I don’t know of a better way to get investors up to speed in this exciting area. Don’t wait until it’s too late. Learn about how to use ETFs to your best advantage now so you can be prepared when the time comes!

Visit your favorite bookseller to make your purchase, or read about our book in more detail on our book page.

One of the best ways to build a portfolio using ETFs is to begin with the core.

The core is the main part of the portfolio, and as the word implies, it should be solid. This part focuses on getting the rate of return necessary to reach your financial goals, while cutting risk as much as possible, reports Rebecca Knight for Financial Times.

The first area to consider is fixed income and the allocation to this category is determined upon risk tolerance and investment horizon. Bonds can take anywhere from 10%-80% of a portfolio.

As for equities, a single total market fund is a start, such as the SDPR S&P 500 (SPY) or Vanguard Total Market (VTI). Make sure to get exposure to large-, mid- and small-caps through these funds. At least half the equity holdings in the core of a portfolio should be from companies outside the United States. If you look at trends, there is a heck of a lot more growth overseas these days.

Once the core is established, then look to asset classes such as commodities, real estate and emerging markets. If you really want to diversify from an index standpoint, you’ve got to use ETFs, but of course it depends on how diversified you want to be and how much work you’re willing to put in.

ETFs are well established and they have lower fees than mutual funds, however, there are brokerage fees to consider. Also, ETFs can serve as tactical allocation tools for overweighting and underweighting sectors of the market.

SPY is down 32.4% year-to-date, while VTI is down 32.6% year-to-date.

We talk about how you can use ETFs in your portfolio in iMoney: Profitable ETF Strategies for Every Investor.

Have a look at the kind words (note that the link is a .pdf), then buy a copy of the book for yourself. More information is available on our book page.