Beginner ETF advise

[BigCityDreamer]

Originally Posted by slbnoob

1. Is it advisable for a beginner to invest small sums of money into various ETFs over time? I want to start small, with say $500-1000 for now and slowly build it up over time. Ideally, I'd want to pick a percentage of my earnings (however small) from time to time and keep them aside in more stable places.
2. Where do I begin? I was considering sogotrade.com for stocks for their cheap trades. This does not apply any more to ETF trading anymore. Any advise on which online platform will be cheap/suitable for my needs?
3. I understand that Vanguard ETFs are general favorites right now. With the stock indices at their all time high, is it a good time to buy what could be expensive ETFs?

My suggestion is to learn and understand as much as you can about whatever markets you're investing in. That way you will have a lot more confidence in your investments.

It's a good idea to start small and build from there as you become more experienced. I'm currently using Scottrade for most of my trading. Their commissions are $7.

The stock indexes may be at all-time highs, but what matters is which way they are likely to go from here. Although there are no guarantees in investing, based on my research I think the probability is that the stock indexes will continue to go higher over the long term.

Check out IWM. This Russell 2000 ETF has gone up 197% since March 2009.

[ragnarkar]

Stick with passive investing..

Do some research on asset allocations.. some popular ones are:

60/40 Stock/bond.
25% in Stocks, Bonds, Gold, and Cash.

Thoroughly research the risks of each and find one that fits your risk tolerance. For the "stocks" portion, hold a simple index ETF like SPY or VTI.

After a while, if you have a burning desire to speculate, say on individual stocks, then set aside some money that you can afford to lose to do that. Do not take it out of your nest egg.. transfer a portion of your paycheck each month to this "fund" and pretend that you lose all of that money overnight. If you can stomach that, then go ahead and speculate. And if your speculation turns out alright, then transfer the profits to your nest egg portfolio.

Speaking as an investment professional, I've had far better success with passive rather than active investing or buying individual stocks for my personal investments.

[slbnoob]

I am going to start out passive investing, only 1-2 buying broad index (S&P, Russell) and 2-3 sector based (Large Cap, Health/Bio, Emerging markets consumption based) ETFs. This is going to be my plan for a while since my 401K fund is 40% split towards bonds.

I am leaning towards the Vanguard ETF products. Since they charge no commission on their ETFs, I am planning to open a brokerage account with them and start putting small amounts each month in their ETFs. This way I can avoid transaction commissions when I buy ETFs each month and also dollar cost average since I do not want to tap into my savings to start investing.

I now need to decide exactly which ETF and how to split my investment among them. Please advise if this is a reasonable plan moving forward. Thanks.