Exchange traded funds are a great idea for a long term investment. ETFs have low operating expenses, are tax-efficient and because they track an index, the investor knows what they are getting. They are also a good way to buy a broad area of the market.
Although, as Walter Updegrave wrote in Money Magazine, "…the trend among purveyers of ETFs is to churn out ETFs aimed at narrower and narrower slices of the market: the tech sector, semiconductors, energy stocks, even gold, silver and commodities." These choices are great, but can also get investors in trouble if they are not careful.
With regular investments, such as a monthly investement into an ETF, the brokerage fees can add up. This reinforces the idea that ETFs are good for long-term, with a portfolio that includes a balanced mix of different types of stocks.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.