If you ever wonder whether you can create a balanced portfolio on your own—one that cuts through the noise and minimizes unnecessary decisions—the answer is yes. You can set up and manage exchange‑traded funds (ETFs) with minimal effort. Here’s how.
Aim for three investment types
To cover your bases, focus on three core fund categories:
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A broad U.S. stock market index fund for domestic exposure.
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An international stock index fund for global diversification.
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A high‑quality bond index fund for stability.
Investing in three to four low‑cost index funds can give you exposure to hundreds or thousands of securities, providing instant diversification without constant research or trading. The three funds below form an ideal portfolio foundation.
1. Domestic exposure
If you’re unsure where to start, this fund is a strong choice for primarily U.S. market exposure:
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Fidelity 500 Index Fund (NASDAQMUTFUND: FXAIX): Invests in the 500 largest U.S. companies, mirroring the S&P 500 with an expense ratio of just 0.015%.
2. International exposure
For broad exposure to developed‑market stocks outside North America, consider:
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iShares Core MSCI EAFE ETF (NYSEMKT: IEFA): Tracks the MSCI EAFE index, covering large‑ and mid‑cap companies across Europe, Australia, New Zealand, and other markets. Its expense ratio is 0.07%.
3. Bonds
A bond index fund can help cushion your portfolio when markets turn volatile or inflation rises. One solid option is:
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Vanguard Total Bond Market ETF (NASDAQ: BND): Provides broad U.S. bond market exposure by tracking the Bloomberg U.S. Aggregate Float‑Adjusted Index, which includes Treasury, agency, corporate, and mortgage‑backed securities.
If you decide to simplify your investment process, these three easy‑to‑buy and manage index funds are all you need to get started.
