Use ETFs to Avoid Stock Picking Mistakes

Financial Times reporter Rebecca Knight writes that investors who are tired of picking the wrong stocks should switch to exchange traded funds or ETFs.

In her article Passive Route Avoids Stock-Picking Pitfalls , Knight relays the story of a Genworth Financial advisor who moved to a passive strategy in 1995 and advises his clients to do the same.

The advantage of an index is that your portfolio isn’t crippled if one of the stocks suddenly collapses in value.

To assemble a portfolio, the Genworth advisor begins with fixed income and then assembles a core equity portfolio that provides exposure to US stocks using a single “total market” index fund. Examples include SPDR S&P 500 (SPY), Dow Jones U.S. Index Fund (IYY) or the Russell 3000 Index Fund (IWV).

See Investing in the Total Stock Market with ETFs for more information and a complete listing of total market etfs.

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