Everyone should be saving for his or her golden years. With exchange traded funds, an investor can create a diversified and low-cost 401(k) investment portfolio with just a few fund picks.

John Wasik for Forbes points out that anyone can build a diversified portfolio with six ETFs and just adjust the ETF weightings depending on one’s time-horizon.

  • The Vanguard Total Market Stock Index ETF (NYSEArca: VTI) acts as a core holding and includes pretty much all of the U.S. stock market, with a cheap 0.05% expense ratio.
  • The Vanguard Total International Stock Index ETF (NYSEArca: VXUS) helps provide the foreign equity portion of an investment portfolio. VXUS comes with a 0.16% expense ratio
  • The iShares Core Total U.S. Bond Market (NYSEArca: AGG) can act as a core bond holding. AGG covers most of the U.S. bond market and comes with a 0.16% expense ratio.
  • The Vanguard REIT Index (NYSEArca: VNQ) follows real estate investment trusts, which can offset some bond and stock-market risk. VNQ has a 0.10% expense ratio.
  • The iShares Barclays TIPS Bond (NYSEArca: TIP) tracks inflation-protected Treasury bonds, which helps hedge against inflationary pressures The fund charges 0.2%.
  • The PowerShares DB Commodity Index Tracking ETF (NYSEArca: DBC) tracks  a diverse basket of commodities which also provide an inflation hedge. The fund has a 0.87% expense ratio.

A young investor who is in their 20s to mid-30s should lean toward growth-oriented ETFs, with a 60% allocation toward stock funds, 20% in bonds, 10% in TIPS, 5% in REITs and 5% in commodities.

Someone with a more moderate risk appetite can cut back on riskier assets and load up on bonds, with a 50% allocation toward stocks, 40% in bonds and a 3.3% slice in TIPS, REITs and commodities.

Investors who are near retirement should focus on income and inflation protection. For instance, a retirees portfolio should look more like 40% bonds, 30% stocks, 20% TIPS and 10% REITs.

For more information on ETFs in 401(k)s, visit our 401(k) 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.