Beginner ETFs for New Investors
People often come to me and say, “I’m new to investing: Tell me the next hot stock!” Or they say, “Give me 10 stocks I should buy.” And when I tell them I cannot give financial advice, nor is that the point of my TikTok account, they get all sly and say, “Well, what are 10 stocks you would buy?”
Nice try …
And yes, I could charge a pretty penny for people to have access to my investments. Or I could sell a course. Or I could join one of those apps where people pay to view my portfolio and then I get a percentage.
But my channel exists to create self sufficient traders and investors, not a crowd of copycats who do what I do. That doesn’t help anyone.
And speaking of not helping anyone, this message that you can find a hot stock, invest a little and become a millionaire is as close to complete bullshit as you can get. Sure, you can find a winning trade. But did you buy enough shares to really benefit? Did you get in at the right time or did you buy when it was nearing the top? Did you sell and take profits or did you get greedy and hold out for more? All of this magical thinking is what leads people to getting crushed by the markets.
It’s at this point that they realize they were rolling the dice on a risky gamble. There was no plan to take profits (or losses). They weren’t really even trading stocks properly. And they damn sure weren’t investing. If you asked what they were doing, they might not even be able to tell you, other than, “I wanted to make a lot of money.”
The worst part of this gambling strategy is that they confuse trading with gambling and investing. They shrug and say, “the stock market isn’t for me.” And because they got burned being reckless, they never invest a single penny.
Here’s what they should do instead:
Build a strong investing foundation first. This means investing in a broad market S&P 500 index funds. A few choices are:
SPY
VOO
or
SPLG.
The one that I own is SPLG. A mistake I see new investors make is they buy all three. Not necessary. They all invest in the same stocks, they all have the same dividends, they all have the same returns. And they all charge fees. Why pay three separate fees to own the exact same thing? Why not use the extra money to diversify?
And speaking of diversification, a broad market S&P 500 index fund handles the diversity for you.
HOWEVER, while a lot of index funds top 10 holdings are similar, if you dig deeper, they all offer different things.
Once you’ve got the S&P500 index fund as your foundation, you can expand into dividend funds. A few choices are:
SCHD
SPHD
VYM
Now that you’ve got those two covered, you can branch out into growth based ETFs. A few to consider are:
VUG
QQQ
VGT
If you wanted some additional income, you might consider covered call ETFs. Remember that TikTok link at the beginning of this article? Scroll up and find the playlist on covered calls and familiarize yourself with some of the risks involved. A few covered call ETFs to consider are:
JEPI
JEPQ
QYLD
Once you’ve got the solid foundation of your portfolio and you understanding markets, buy and hold investing and planning for your retirement, you can take on some risk. THIS is the point in your investing journey where you can say, “I’m ready to take a little risk.”
Maybe 5% of your portfolio can go into some riskier investments. Money you’re OKAY with losing because you know the majority of your money is invested wisely.
