In a lot of ways I think making things simple is normally the best way to approach investing and finance.
Investing in low-cost, diversified exchange-traded funds (ETFs) obviously is a pretty good strategy for most people. But even then you need to choose which ones you’re going to invest in.
I think it would be feasible for your entire investment strategy to be just one of these two ETFs:
Vanguard Diversified High Growth Index ETF (ASX: VDHG)
This ETF is an all-in-one type investment that gives you exposure to different asset classes.
It has around 35.6% invested in Australian shares, 26.7% invested in international shares, 16.3% invested in a hedged international shares fund, 6.6% in small international companies and 4.8% in emerging markets. It also has 7.1% invested in global bonds and 2.9% in Australian bonds.
As you can see, it’s very diversified and each of those funds has many underlying investments, meaning that you are very well invested with this ETF in terms of diversification.
It comes with a management fee of only 0.27%, which is excellent for all of that diversified exposure.
I’d be happy enough if this was my only investment.
iShares S&P 500 ETF (ASX: IVV)
Many of the world’s top investors say it’s hard to beat the return of the S&P 500, which is interesting considering it’s invested in 500 businesses – you’d think it would be possible to cut out some of the bad investments and do well. S&P have a handy selection process which naturally improves the quality of the holdings and returns in this index.
With the ETF’s top holdings being businesses like Microsoft, Apple, Facebook, Alphabet and Amazon, it’s quite likely this ETF can continue to do quite well as long as the big tech businesses aren’t broken up. A lot of the underlying earnings from the ETF comes from right across the world.
It has an insanely-low annual management fee of only 0.04% per year, leaving nearly all of the returns in the hands of investors.
I reckon both of these ETFs would be attractive as a single investment in your portfolio for many years. Which is the best out of the two? It depends whether you want additional diversification with bonds and shares listed in many other countries. Over the long-term I think the S&P 500 ETF will deliver stronger returns so that would be my pick.
However, both of these ETFs have quite disappointing dividend yields, so if you want income then it would probably be better to invest in these great ASX shares.
With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.
Hint: These are 3 shares you’ve probably never come across before.
They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”
We think these 3 shares offer solid growth prospects over the next 12 months. The first two currently offer fat, fully franked yields. The last is a surprising REIT offering you the benefits of being a landlord with none of the hassle! You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."
Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!
The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.