Last week I posted the basics of ETFs where I noted that I'm learning the ins and outs of these (relatively) new investment vehicles. Here's a piece from Money magazine that offers five smart strategies for ETFs -- a few investment objectives you can achieve with ETFs. Their list:
PLAN 1: Put a windfall to work. ETFs can be an excellent way to invest a large sum such as a 401(k) or IRA rollover, a bonus or some other windfall.
PLAN 2: Create the "me" mix. With ETFs you can customize your asset mix in ways that used to be possible only if you built a complicated portfolio from scratch - or paid an adviser to do so.
PLAN 3: Go a little farther afield. Diversifying beyond the traditional asset classes of stocks and bonds is a way to dampen a portfolio's risk.
PLAN 4: Round out what you've got. ETFs make it easy to plug gaps in your portfolio.
PLAN 5: Harvest a tax loss. ETFs can also help you do some tax maneuvering.
If you want more details, including issues to watch out for, click through to the link above.
For me, it seems like strategies 3, 4, and 5 might be viable alternatives. I need to learn more about how these work, but ETFs may be part of my second phase of re-organizing my investment portfolio. For now, I'll stick with index funds while I do some more learning. Stay tuned.
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