Everyone can easily get exposure to the wealth-building world of share markets simply by investing in exchange-traded funds (ETFs).
The best ETFs aim to give investors exposure to an index of shares, hopefully for a low annual cost.
In recent years it has been very difficult for many investors to outperform the index due to the relatively good performance of the biggest companies and the strength of the resources market – which is where most stock pickers don't look. But you don't need to worry about that when you invest in an ETF.
Here are two of my favourite ETFs to consider:
BetaShares Australia 200 ETF (ASX: A200)
This is the cheapest ETF to give exposure to the Australian share market. It aims to track the ASX 200, which is 200 of the largest businesses listed on the ASX. Its annual management fee is 0.07%, which is half that of its Vanguard peer, Vanguard Australian Share ETF (ASX: VAS). Lower fees mean higher net returns for investors.
You get significant exposure to the big banks like Westpac Banking Corp (ASX: WBC) with this ETF, but there is also a growing group of businesses worth owning it for, such as CSL Limited (ASX: CSL), which are becoming larger parts of the index.
One of the best reasons to consider this ETF over international ones is the dividend income. According to BetaShares, this ETF has a dividend yield of 4.7% as well as the extra bonus of franking credits, which is an Australian-only benefit.
BetaShares NASDAQ 100 ETF (ASX: NDQ)
The ASX is lacking in allocation to technology businesses, so you could make up for that with an investment in this NASDAQ ETF, also offered by BetaShares.
All of the best US technology businesses are listed on the NASDAQ and you ca get exposure to them with this ETF which provides diversification with 100 different holdings.
Some of the names it owns includes Microsoft, Amazon, Alphabet, Apple, Facebook, Netflix and so on. Over the past decade these businesses have been the best group of blue chips to own with how much they are attracting our spending and eyeballs. Unless they are broken up, I imagine the NASDAQ group could continue to be top-quality holdings with new services to be launched like automated car service Waymo and virtual reality which will drive earnings even higher.
Foolish takeaway
Owning just the above two ETFs would provide a good mix of a decent dividend yield and solid long-term capital growth.
