As more discount brokerage firms tap into the exchange traded fund (ETF) market, more ETFs are now available to the average retail investor for building a well-balanced investment portfolio at zero-cost per trade.

In the last year, Schwab, Fidelity, and Vanguard have been engaging in a price war with ETF deals, writes Dan Caplinger for The Motley Fool. At first, Schwab started with its handful of commission-free ETFs. Then, Fidelity dished out its own iShares commission-free ETFs. Vanguard, not to be bested in luring investors, now offers all of its ETFs at no commissions.

TD Ameritrade, witnessing all the traffic that is coming in through ETFs, recently announced that more than a hundred ETFs from different ETF providers can be traded commission free. [The ETF Supermarket Has Arrived.]

Caplinger offers three different guidelines for ETF portfolios that a retail investor may want to consider when utilizing these commission-free ETFs to their fullest:

  • Getting started. For those who are just getting started, ETFs focused on equities provide the greatest possible return over the long-term. Potential investors may consider trading in the stocks of a developed, emerging or even the whole global market. Young investors who are just getting started can afford a little more risk, and small-cap equities-based ETFs could also be something to think about.
  • Retiring soon? People who are entering their golden years may not want to risk it all on stocks. And may switch over to fixed-income options, such as bond ETFs for a less volatile investment strategy. Investors may choose from Treasury, corporate, municipal, high-yield, Treasury-inflation protected or total bond market ETFs. [More on Bond ETFs.]
  • Enjoying retirement. Retirees may want to stick to a more conservative mix of fixed-income and stock ETFs. But one may also consider placing a greater emphasis on dividend appreciation ETFs that focus on companies with growing dividend payouts. [More on Dividend ETFs.]

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.

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.