ETFs are the New Kings

In recent years, there has been a lot of people saying that 'Cash is King'.
Especially now where most markets have hit new highs and interests are at all time low.
However, if you are looking to invest for your retirement or for the long-term, staying invested is key, and there is no better instrument than ETFs!

ETFs are Exchanged Traded Funds.
They are basically funds that are traded on an exchange.
You can buy these ETFs just like buying stocks.

Benefits of ETFs:
1) Diversification -  1 fund investments in many securities, spreading out the risks associated with individual stocks. Eg; a Financial ETF will invest in almost all financial stocks (usually market weighted), which lowers your individual stock risk. As Warren Buffett says, "Diversification is protection against ignorance," and ETFs are a great way for diversification, especially coupled with point 4.

2) Low Cost - these are low cost funds (usually fees of less than 0.5% per annum, excluding standard brokerage fees). Low costs plays a huge role to long-term investment returns. As John C. Bogle, founder of Vanguard funds always say, the key to investment is to buy the market via a low-cost fund!

3) Easy, Simple & Lazy - Skip choosing individual stocks, especially if you are not that well-versed in certain sectors or industries. You can also avoid spending previous time reading up on a company only to end up not investing in the company.

4) Capture upside of a Sector/Industry with Lower Risk - If you think that Technology stocks are going to do well, instead of buying individual stocks like Microsoft or Google, why not buy a Tech ETF that owns them both and many other companies. You may not get the full upside but at least you will not face the full downside!

5) Low Initial Capital Required - If you are just starting out with little capital for investment, you might not be able to diversify your investments properly or cost-efficiently! Eg; you have $200 to invest monthly. The money would probably allow you to at max invest in 2 companies ($100 each) excluding brokerage fees (2 times because it is 2 transactions).
If you invest in S&P 500 ETF however, you are immediately offered diversification to the 500 largest US companies & at a lower cost (maybe 0.5% annual fees + 1 time brokerage fee).


Instead of timing the market (which many people, including me, cannot do well), try to think of investment as a savings plan and set aside a monthly sum for investment into a ETF (preferably index ETF like S&P500). It can go a long way to building up your retirement egg nest, especially if you start young.
As John C. Bogle says, buy the market, buy low-cost, invest for the long-term and HANG TIGHT!