Asked 2w ago
Does it make sense to invest $50-100 into different ETFs (6-10), into areas of interest that i believe have growth, or focus on a few (2-3) and focus my capital to $100-200 into each?
Before you do so, do consider carefully if you really need so many. For example, ETFs such as VTI and VOO, while technically different, have large correlation in the way that they move.
Next, ensure that you understand the reason for entering each of the investments. For example, if you're investing into the clean energy sector via ICLN, do try to understand their top holdings so you're not blindsided by sudden movements in the share price of your ETFs.
Lastly, if you're on a non-zero comm platform, I'd advise you to reconsider as the commissions will eat into your returns significantly due to the small amount that you're investing in each transaction ($50-$100).
If your broker is zero comms, then this will not be an issue then.
Hope this helps!
Improving from what Chris mentioned,
You need to look if there is any crossover or similarities between the ETFs. If u overdiversified, along with a need to pay commission, you cost will be hefty and your upside reward is heavily compromised.
This is assuming that u do not know how to optimise your portfolio.
Taking account into Chris, I would recommend u to use roboadvisors while u learn how to fine pick ETF.
Assuming u want your cost to be <=1%.
If the trading cost is $25, then u need >= $2500 per trade transaction
Etf alone is made to be diversified. If you want to further protect your risk, and taking into Chris recommendation, my recommendation is to use roboadvisors
Answered 2d ago
An alternative would be to invest through a robo-advisor like Syfe. Each Syfe portfolio holds about 15 ETFs and your investment would give you exposure to all 15 ETFs directly. There are no brokerage fees or trading costs that you have to pay.
Given that your capital is relatively small, rather you focus on a few etfs. no need to over-diversify. Each etf on its own is already quite diversified. Also check if there are any overlaps between the etfs, if yes then all the more focus on a few will do
Given your investment size, you should be be mindful of the transaction fees that you might incur especially if you invest in 6-10 ETFs.
That said, if you are ok with the fees (and I’m assuming you’re a new investor here), I think there is a value in going with 6-10 ETFs to get a feel for each of them and observe how they perform and then over time, focus your capital to a smaller handful, if you ultimately decide to.