Not Sure Where to Invest? Here’s a Beginner Portfolio to Help You Get Started

Updated for 2020

Choosing your first investments can be overwhelming. There are so many options available, and it’s hard to figure out where to start…and the sheer number of choices can be crippling.

To get instant diversification, low fees, and hundreds of commission-free investments, ETFs (exchange traded funds) are the best way to go. That narrows down your choices a lot, but there are still more than 2,000 ETFs to choose from.

So to help you dip your toe in, here are some good portfolio-foundation ETF ideas to get you started. And since the minimum investment for most ETFs is the price of a single share (plus commissions, if any), you can build a strong base no matter how much money you have to invest.

Remember, you’re in this for the long haul, so don’t freak out when the market dips – that will absolutely happen, and you can ride it out. It will rebound eventually, and you’ve got time. In fact, buying when the market is down can be like shopping when your favorite things are on sale.

This five-ETF combo covers the basics, and you can build from there as you get more comfortable with investing.  The NYSE:XXX means that the ETFs trade on the New York Stock Exchange, and the XXX is the symbol for that particular ETF.

  1. Broad stock market ETF, such as Vanguard Total Stock Market (NYSE:VTI) or iShares Core S&P (NYSE:IVV)
  2. Growth stock ETF, such as Schwab U.S. Large Cap Growth (NYSE:SCHG) or iShares Russell Mid-Cap Growth (NYSE:IWP)
  3. High-yield dividend stock ETF, such as Vanguard High Dividend Yield (NYSE:VYM) or iShares Core High Dividend (NYSE:HDV)
  4. International stocks, such as Schwab Emerging Markets (NYSE:SCHE) or Vanguard FTSE Emerging Markets (NYSE:VWO)
  5. Bond fund, such as Pimco Investment Grade Corporate Bond Index (NYSE:CORP) or Vanguard Total Bond Market (NYSE:BND)

PLEASE NOTE: These are examples of funds in each category, NOT investment recommendations. Please make sure any investment you make fits in with your overall financial plan.

A few things to keep in mind as you get started:

  • Some banks and brokers have minimum deposit requirements, and they can run pretty high. Look for a firm that has low or no minimum deposit requirements so you can open your account and start investing right away. Here are some of the best online brokers for beginners, and instructions on how to open accounts with them.
  • Trading commissions can take a substantial chunk of your money. Even a low $7 commission adds up fast when you’re trying to build a portfolio. Focus on commission-free ETFs to avoid that wealth-sucking cost.
  • Fund expense ratios also eat away at your portfolio, so look for low- or no-cost ETFs…and there are a lot of them out there. You can find solid ETFs with expense ratios as low as 0.0% - 0.03%, which comes out to just pennies for every $1,000 you invest.
  • If you’re opening a regular (and not retirement) investment account, you’ll have to pay taxes on interest and dividends earned even if you reinvest them instead of taking the cash.

The most important thing here is to get started. The sooner you invest, the more time your money has to grow.

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