Yay! You're ready to invest in ETFs. You're excited about managing your own investments and savings on fees. Let's get going!
Exactly how, though? What's the best way to build an easy, low-maintenance, and low fee portfolio without needing a lot of expertise?
Here three options:
1. Go DIY, choosing a few ETFs and invest using an online broker.
2. Buy an all-in-one ETF with an online broker.
3. Use the services of a robo-advisor.
All are low-fee, simple options but with important differences. The DIY approach is the cheapest but requires the most work. Investing in an all-in-one ETF is easier with less ongoing maintenance, while the robo-advisor approach is the most hand-off of the three.
All-in-one ETFs are a good deal
Like anything in life, the more you do yourself, the less you’ll pay, making the DIY approach the cheapest of the methods. However, the all-in-one ETF is a good deal: for a slightly higher fee, you’ll get a fund that invests in 5-10 other ETFs, providing an instant portfolio that requires no additional work for you. It's a real "chill out in the hammock" kind of product.
The real benefits of paying lower fees
Investment product fees aren't always super visible and unless you are looking closely, you might have no idea how much your funds are costing you. Here is the truth about how paying lower fees can help the value of your investments over time. Assume you invest $50,000 over a ten-year period. You don't touch the money - just leave it alone. Here is how each method impacts your final balance:
