Shares have proven to be the best way to generate sustainable long-term returns for people over the decades, without the risk of debt. It can take a long time to analyse shares properly, but it would be a mistake to avoid the share market altogether. Exchange-traded funds (ETFs) have come into popularity recently, which is where you can buy an index fund through an exchange like the ASX. Some ETFs mirror the most popular indexes in the world, such as the iShares S&P 500 ETF (ASX: IVV). Indexes are great because they give you diversification to a whole heap…
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Shares have proven to be the best way to generate sustainable long-term returns for people over the decades, without the risk of debt. It can take a long time to analyse shares properly, but it would be a mistake to avoid the share market altogether.
Exchange-traded funds (ETFs) have come into popularity recently, which is where you can buy an index fund through an exchange like the ASX. Some ETFs mirror the most popular indexes in the world, such as the iShares S&P 500 ETF (ASX: IVV).
Indexes are great because they give you diversification to a whole heap of businesses with just one purchase.
Here are three of my favourite ETFs:
Vanguard MSCI Index International Shares ETF (ASX: VGS)
This ETF is run by Vanguard, a world leader in providing ultra-low-cost ETFs to passive investors around the world.
I like this ETF because it is an extremely diverse ETF giving exposure to over 1,500 businesses around the world including shares like Apple, Alphabet (Google), Microsoft, Amazon, Facebook, Toyota, Nestle and Samsung.
It has an annual management fee of only 0.18%, which is very cheap compared to most other ETF and managed fund products.
BETANASDAQ ETF UNITS (ASX: NDQ)
This ETF gives the investor exposure to the biggest 100 non-financial businesses on the NASDAQ, the technology exchange in the USA. Many people may feel that it’s going to be the giant technology companies that provide the biggest returns over the next decade, so they may want higher exposure to this group of companies.
Its top holdings are focused around Apple, Microsoft, Amazon, Facebook and Alphabet (Google), which make up around 43.4% of the index.
Betashares Global Cybersecurity ETF (ASX: HACK)
This ETF offers investors exposure to a group of global cybersecurity companies. Cybersecurity is a very important and growing sector. Readers may be aware of a spate of hacks in recent times where large companies have had to own up to large data breaches.
Uber and Ashley Madison are two of the latest companies which made the news regarding hacks. Governments, power companies, infrastructure businesses and so on are prime targets for cyber-attacks.
I think the stocks that make up this index could, as a whole, generate market-beating profit growth and make a good investment.
Out of the three choices, the Vanguard is the most passive ETF and should serve a ‘know-nothing’ investor very well over the decades. However, I think the Global Security ETF could provide the best medium-term returns because the other two are trading at very high valuations compared to their historical averages.
I also think that these top stocks will beat the index as well.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.