Secondly, a portfolio is the sum of a person’s investments, broken down by assets, for a long-term horizon. Different portfolios have varying strategies. For instance, some may focus on growth and gains over time and others may feature yield-generating assets.
The basic portfolio includes stocks and bonds, but investors should also diversify into foreign equities, small-caps, emerging markets, real estate and commodities to craft a well-rounded portfolio.
Lastly, indexing refers to owning ETFs that mimic index funds by closely following well-established indices. Investors would typically hold plain-vanilla index funds for long-term exposure and targeted niche or sector ETFs for short-term tactical positions.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.