Exchange-Traded Funds for Dummies

If you are still far away from that 25 times mark, and you are not in debt, and your income is secure, and you are not burning out at work, and you have enough cash to live on for six months if you had to, then with the rest of your loot, you might tilt toward a riskier ETF portfolio (mostly stock ETFs). You need the return. If you have your 25 tim

Morningstar indexes are crisp and distinct: Any company that appears in the growth index is not going to be popping up in the value index. Even though that crispness could lead to slightly higher turnover, I like it.

Mutual funds, for example, are clearly the better option when you’re investing in dribs and drabs and don’t want to have to pay for each trade you make…although, starting a couple of years ago, a number of brokerage houses, including Charles Schwab, TD Ameritrade, Vanguard, and Fidelity, started to allow customers to trade ETFs for free.

I suggest that you read through the following descriptions and make the choice that you think is best for you. Whatever your allocation to domestic large-cap stocks (see Chapter 20 if you aren’t sure), your allocation to value should be somewhere in the ballpark of 50 to 60 percent of that amount. In other words, I suggest that you tilt toward valu

The United States stock market is by far the largest in the world. Still, even after a decade of solidly outperforming foreign markets, the total capitalization of the U.S. market is but 55 percent of the world stock market.

REITs typically deliver annual dividend yields significantly higher than even the highest dividend-paying non-REIT stocks, and almost three times that of the average stock. (Many stocks, of course, pay no dividends.) At the time of this writing, the Schwab U.S. REIT ETF (SCHH) is offering a dividend yield of 2.86 percent versus the Schwab U.S. Mid-

These large-cap stocks that you’ll find in VTI are value and growth as well as in-between (blend) stocks. If you have a very small portfolio, and you really want to keep things super simple, then VTI (which just celebrated its 20th birthday) is a great ETF to hold. But for most investors, it would be wise to have large-cap stocks separate from smal

Vanguard Global ex-U.S. Real Estate ETF (VNQI) Indexed to: S&P Global ex-U.S. Property Index, which tracks the performance of REITs in both developed and emerging markets outside of the United States Expense ratio: 0.12 percent Number of holdings: 680 Top five holdings: Vonovia, SE, Mitsubishi Estate Co., Ltd., Goodman Group, Sun Hung Kai Prope

The recipe that makes most sense to me is to split up your wisely chosen international ETFs into two large categories: developed markets and emerging markets. For most portfolios, a reasonable split of foreign stock holdings would be something in the neighborhood of 75/25, with 75 percent going to developed nations (England, France, Germany, Japan,