How Many EFT's to buy?

KaneKungFu123 · #1 10-15-2005, 08:57 PM

what is the standard recommendation for investing. for instance, you should have no more then X Percent of your investment money in an EFT.

i was thinking that i'd put 10% of my money in 10 different EFT's?

Sniper · #2 10-15-2005, 09:23 PM

Kane,

There is no standard recommendation for ETFs.

There are ETFs for just about every possible segment of the market you can think of.. so its possible to be fully diversified into all sorts of things.

For more info on ETFs try... ETFConnect

Wolffink · #3 10-15-2005, 09:48 PM

I think that's the wrong way to look at it, to setup a certain limit on ETFs.

First you want to diversify. If you don't have any investments at all, then ETFs can take care of most, if not all, of your investment needs (perhaps you want to buy a house so there's that....).

Based off the Couch potatoes portfolio

ETF Inflation-linked Bonds
ETF Reits
ETF Overall US market
ETF International Market
ETF Emerging markets

I wouldnt buy into REITs right now though as real estate seems on a bubble.

KaneKungFu123 · #4 10-22-2005, 10:23 AM

[ QUOTE ]
I think that's the wrong way to look at it, to setup a certain limit on ETFs.

First you want to diversify. If you don't have any investments at all, then ETFs can take care of most, if not all, of your investment needs (perhaps you want to buy a house so there's that....).

Based off the Couch potatoes portfolio

ETF Inflation-linked Bonds
ETF Reits
ETF Overall US market
ETF International Market
ETF Emerging markets

I wouldnt buy into REITs right now though as real estate seems on a bubble.

[/ QUOTE ]

reits?

#5 10-22-2005, 11:29 AM

real estate investment trust

GeorgeF · #6 10-22-2005, 03:22 PM

If you buy 10 different index funds my guess is you will have recreated a broad market index fund, like SP500, only you will be paying higher expenses.

On the other hand if you are willing to buy out of favor sectors then you might be able to juice your returns long term by accepting short term pain.

Sniper · #7 10-22-2005, 06:40 PM

[ QUOTE ]
If you buy 10 different index funds my guess is you will have recreated a broad market index fund, like SP500,

[/ QUOTE ]

George,

ETFs cover many different areas, and are a good choice if you want to segregate your diversification and weightings, without having to select a specific stock. They will also generally be subject to lower volatility.

Its certainly possible to select 10 ETFs that would have no correlation to the SP500, if you so desired!