How to Choose ETFs
With thousands of ETFs available, choosing the right ones can feel overwhelming. Focus on a few key criteria to build a solid portfolio.
Start with Core Holdings
Core ETFs should form the foundation of your portfolio. These are broad, diversified funds like Total Stock Market, S&P 500, or Total International. They give you exposure to thousands of companies with a single investment.
What to Look For
Low expense ratio (under 0.20% for index funds). High trading volume and assets under management (AUM) for liquidity. Tight bid-ask spreads. Reputable fund provider (Vanguard, BlackRock, Schwab, Fidelity). Clear, simple strategy that you understand.
Avoid Gimmicky ETFs
Stay away from ultra-niche, leveraged, or inverse ETFs unless you fully understand the risks. These complex products are often short-term trading tools, not long-term investments. Stick with simple, low-cost, diversified funds.
- Start with broad, core ETFs that cover major asset classes
- Look for low fees, high liquidity, and reputable providers
- Avoid complex, leveraged, or niche ETFs for core holdings
Answer these questions to complete the checkpoint and unlock the next one.