Building a good portfolio can be hard, because there are limitless roads to go down. If you are new to the market, all of those options can get overwhelming.
The good news is that it is easier than you might believe to create a rock solid portfolio. These three types of investments are a great choice regardless of your investing experience, and they can help push your savings to new levels.
1. S&P 500 ETFs
An S&P 500 ETF is a selection of stocks that is created to copy the performance of the S&P 500. That means all of these funds have around 500 stocks from the biggest U.S.-based companies.
This kind of investment is among the more stable and has lower-risks. While the S&P 500 does have short-term volatility, it has brought in an average return of about 10% every year.
Where to start: There are numerous S&P 500 ETFs to look at, and they are all similar. Some of the best ones include:
- Vanguard S&P 500 ETF
- iShares Core S&P 500 ETF
- SPDR S&P 500 ETF Trust
2. Growth ETFs
A growth ETF is a fund that has stocks with better-than-average growth. The advantage of this sort of investment is that you might earn greater returns than you would with a larger-market fund such as an S&P 500 ETF.
The downside, of course, is that these ETFs are more risky. High-growth stocks can have more volatility than other more established stocks, so you might see more ups and downs with this sort of fund than you would if you had an S&P 500 ETF.
Where to start: It’s crucial to choose carefully when looking for a growth ETF, because some funds are better than others. For example, some funds only have smaller companies from niche industries. And this poses more risk than one that has larger corporations from a lot of industries. A few good growth ETFs are:
- Vanguard Growth ETF
- iShares Russell 2000 Growth ETF
- Invesco QQQ ETF
3. Dividend ETFs
A dividend ETF is a group of stocks that will pay you to hold them. Some companies give you a portion of their profits every quarter or year, and this is called a dividend. By putting your money in a dividend ETF, you will earn quarterly or annual payments on top of the fund’s normal profits.
Where to start: Just as with growth ETFs, the dividend ETFs offer varying risks and profits. Some of the best funds are:
- Vanguard Dividend Appreciation ETF
- iShares Core High Dividend ETF
- Schwab U.S. Dividend Equity ETF
Choosing the best investment is not as hard as it might seem. By creating a portfolio filled with good funds, you will be on your way to creating long-term wealth.
Author: Steven Sinclaire