ETFs for the long game
4 min

ETFs for the long game

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No matter where you are in life, you need to invest in the long game. Your long-term financial future depends on maximizing returns and minimizing risks. One way to achieve that is through diversification. This is where ETFs may play a starring role. The sheer range of ETFs available today gives investors numerous ways to diversify1.

What you’ll discover?

  • How ETFs can diversify your portfolio and help you achieve your long-term goals
  • What to consider when choosing an ETF for a long-term investment
  • How ETFs can complement your existing long-term investment portfolio

Take control of your future

It’s a common misconception that you need a ton of money to start investing. Or that you can’t start investing when you are young.

Just like you don’t need a diploma in finance to take control of your finances, age and salary shouldn’t stop you from investing and playing the long game.

Invest in the future

Investing now with ETFs may save you a lot in future. ETFs are generally lower in cost than other investment options. One of the costs with ETFs is the transaction fee – the cost of buying the ETF. In the long run, these savings can make a huge difference2.

Consider your changing goals over time

When planning for the future, you need to map out an investment plan that works for different stages of your life. Choose an investment strategy with an appropriate risk and time horizon to meet these goals.

For example, a typical retirement investment plan may start out as 70% equities, 20% bonds, and 10% “other”, which reflects your higher appetite for risk when you’re young.

As you get closer to retirement, you want to lower risk, so your portfolio may be 70% bonds, about 20% in equities, and up to 10% in cash. This means your portfolio is potentially not exposed to a sudden shock like a stock market crash just before you want to cash in your retirement fund3.

Balancing your portfolio at all stages

Patience is key with long-term investing. Markets can change quickly and unpredictably, but historically, long-term investing has shown to have potential benefits. Success depends on your ability to balance your portfolio in a way that may maximizes potential return and matches your risk appetite at each life stage.

ETFs can form a diverse foundation1

The big advantage with ETFs is they offer an unmatched choice of assets, markets, and risk levels. That means there is probably an ETF to match your long-term needs at whatever life stage you are at.

ETFs can help you build a strong foundation for your long-term investment portfolio. Think of them as building blocks. They offer low-cost funds designed to give you instant access to a broad range of assets, giving you a diverse foundation for your portfolio.

Low cost:
ETFs cost about 1/10th as much as a typical managed fund and can help build a strong foundation for a portfolio4.

Quality:
iShares consistently delivers quality ETFs that clients globally rely on to invest for the future5.

Simplicity:
With just a few ETFs, investors can easily build a broadly diversified portfolio across major asset classes.

Already have a long-term plan? Why not make it better…

We always push ourselves to do better – why would we not push our money to do more?

Regardless of whether you have an existing long-term investment strategy in place, ETFs are a great way to build out your existing portfolio.

How ETFs can potentially help meet your investment goals

Investment strategies are just as unique as investment goals. ETFs are a flexible investment tools with many different uses.

  • Build a stronger core:
    There are diversified and low cost ETFs designed to help build a strong foundation for portfolios
  • Seek income:
    ETFs can help generate income through bonds, dividend-paying stocks and preferred stocks.
  • Prepare for market turbulence:
    Minimum volatility ETFs are designed to help reduce risk and keep you invested.
  • Invest internationally:
    ETFs offer access to virtually all investable markets.
  • Act on opportunities:
    ETFs offer the same trading flexibility as stocks, with added diversification.

The takeaway

Like any commitment, starting a long-term savings project can be overwhelming. Speak to a financial advisor to help you map out your goals now. As your goals change, your investment strategy should too.

  1. It’s never too early to think about investing for the long term
  2. Diversification1 and optimizing the reward-risk equation is critical to a successful long game
  3. ETFs are flexible investment tools with many different uses and offer many ways to meet your investment goals

Sources

  1. Diversification does not fully protect you from market risk and does not guarantee returns or eliminate potential for loss.
  2. Morningstar, as of 12/31/18. Comparison is between the average Prospectus Net Expense Ratio for the iShares ETFs (0.34%) and active open-end mutual funds (0.96%).
  3. For illustrative purposes only. Does not take into account your specific circumstances and is not a recommendation to adopt any particular investment strategy. Please seek independent financial advice.
  4. BlackRock and Morningstar, as of 12/31/18. Comparison is between the average Prospectus Net Expense Ratio for the iShares Core Series ETFs (0.07%) and the average Prospectus Net Expense Ratio of active open-end mutual funds (1.08%) available in the U.S. on 12/31/18.
  5. Blackrock, as of 12/31/18. Based on 974 ETFs and $1.73 trillion in assets under management globally.
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