There is a great boom in ETF Investing and many of the blogs and advisors are pushing Index Investing. What's not to like, for a small fee you get total or at least great diversification. Cover the US, International and Emerging markets with 3 to 5 ETF's. Some of the International ETF's have up to 7500 stocks! Wow!
I'm not one of the converted. I've selected my portfolio of what I consider good\great dividend growth stocks. Bought them over the years, received a growing dividend and have not had to pay even a LOW fee. Why would I want to hold 100, 500, 2000, or 7000 stocks, most of which I know nothing about and wouldn't buy if I did. Why would I want to just follow market returns, my goal was to generate a growing income from my investments. When I looked into many of the etf's there was even a Return of Capital listed as part of the distribution... giving me back my own money?
Do you have any etf's?
I do not understand the recent craze over index investing. The best mutual funds still outperform index funds, even with their higher fees. I still own some of the T Rowe Price mutual funds I held before I began DGI, and they are still significantly outperforming the market.
I do not understand why people would want to own 1000s of companies of which probably more than 1/2 are worthless junk. Even in the SP500, probably 1/2 the companies are worthless junk. I would rather create my own portfolio that:
* contains the highest quality companies in the world
* outperforms the market in the long term
* generates stable income that grows faster than inflation
* has no fees
DGI does all of those things and more.
All of that being said, I own some index funds in my 401k because we are not allowed to purchase individual stocks within it.
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Quality, valuation, and weighting are all issues with index investing. I much rather select my own stocks; however, I also recognize that in the long run I will not be able to manage my portfolio and my wife is unwilling to manage the portfolio. Index funds are the best option under those conditions.
I am accumulating a portfolio of individual stocks, but will have to transition to index investing at some point.
crimsonghost747
Unregistered
I've always viewed mutual funds/ETFs as a way for those with little interest/knowledge to invest their money. That is not to say that professionals shouldn't or couldn't use them effectively but for me it's always been more of a "I don't know exactly, so I'll pay someone else to make the choices for me" kind of a deal. I started out with mutual funds but let go off them all a few years back.
And I still use ETFs for that purpose, though I don't currently own any.ETFs are what I would consider in sectors/markets where I feel like I don't have enough knowledge. For example, two years ago I was looking at investing into South America. I didn't have the resources or the knowledge to gather a good exposure there on my own (I was only looking to invest $1000 - $2000) so I was planning on using an ETF.
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SCHD is a dividend growth ETF with very low expense ratio, .07%, decent yield and good dividend growth
