Simple ETF investment strategy

Too often we spend hours researching irrelevant details, stress about minor issues, and ignore what really matters. ETF investing is what really matters, and it's far simpler than you think. No fancy math, no crystal ball, no insider knowledge—just common sense and patience.

Keep It Simple, Keep More Money

The best ETF investment strategy comes down to this: buy cheap, well-performing, diversified funds and don't mess with them. That's it. No secret sauce, no complicated formulas.

ETFs let you own thousands of stocks for almost nothing. You can buy the entire U.S. stock market for 0.03% per year. Invest $10,000 and pay just $3 annually in fees. Twenty years ago, you would have paid 50 times more for far less diversification.

Most investment advice makes this harder than it needs to be. Wall Street loves complexity because it justifies high fees. You don't need complexity—you need time and low costs.

Why Passive ETFs Beat the Pros

Here's what nobody wants to tell you: most professional money managers are terrible at their jobs. Over 15 years, passive index funds beat about 90% of actively managed funds. These are supposedly brilliant people with teams of analysts, yet they can't beat a simple computer program that just buys everything.

The S&P 500 has returned about 10% annually over the past 90 years. The average mutual fund? Maybe 7-8% after fees. That 2-3% difference turns $100,000 into an extra $300,000 over 30 years.

Buy broad market ETFs that own hundreds of companies. Don't try to pick winners. Just own everything and let the market do the work.

Choose the Winners

Not all ETFs are created equal, and many perform poorly. When making your initial investment, spend time researching and select top-performing ETFs. Your broker should have a screening page where you can filter for passive funds with low fees and international market exposure.

Once you've narrowed down your options, choose funds showing strong performance over the last 3-10 years. I prefer funds that maintained positive returns even during difficult years.

If there's overwhelming information on the page, take a screenshot and ask ChatGPT or Claude to identify the best ETFs and present a comparison in a well-formatted table.

Please take your time—spend 30 minutes to an hour making comparisons. This is crucial and represents the best time you'll ever invest.

Check Your Portfolio Once a Year

Review your ETF investment strategy once per year. Not daily, not monthly—once.

Pick a specific date, perhaps your birthday or New Year's Day. Examine how your funds performed compared to their benchmarks. Assess whether your mix of stocks and bonds still aligns with your age and goals. That's it.

Daily monitoring leads to poor decisions. Markets fluctuate constantly. If you watch every movement, you'll panic and sell at the worst possible times. Set it and mostly forget it.

Your Basic ETF Setup

Start with just one or two funds: a broad international ETF that includes U.S. stocks, or separate U.S. and international stock ETFs. This covers the entire global stock market with maximum simplicity.

If using one fund, choose a total world stock index ETF. If using two funds, consider something like 50% U.S. stocks and 50% international stocks, adjusting based on your preference for home market exposure.

A well-diversified global stock portfolio historically provides strong long-term returns. Bonds are only necessary for cautious investors—many people building wealth over time don't need them. Keep it simple: own the world's companies and let compound growth do the work.

Fees Will Kill You Slowly

Every dollar you pay in fees is money that can't compound. A 1% fee doesn't sound significant, but over 30 years it will cost you about 25% of your final balance.

Stick to ETFs with expense ratios under 0.20%. Many outstanding funds charge 0.05% or less. The difference between 0.05% and 0.75% equals about $50,000 on a $100,000 investment over 30 years.

Don't pay for flashy marketing or celebrity fund managers. Pay for broad diversification at rock-bottom prices.

Taxes Matter Too

ETFs are more tax-efficient than mutual funds. They generate fewer taxable distributions, so more of your money stays invested and growing.

Use tax-advantaged accounts like 401(k)s and IRAs whenever possible. However, don't let tax considerations override sound investing principles. A good investment in a taxable account beats a poor investment in a tax-free account.

The Rules That Actually Work

Here's what matters for successful ETF investing:

• Buy funds with fees under 0.20% – Every penny saved compounds for decades

• Own well-diversified funds – Don't try to pick winning sectors or countries; choose one global fund or several smaller ones focusing on geographical regions (U.S., Europe, Asia)

• Choose the best-performing ETFs – Your broker should provide performance data for the last 3, 5, or 10 years. Select the top performers

• Rebalance annually – Once a year or every 18 months, review performance and replace underperforming ETFs with new winners

• Ignore daily market drama – Wealth builds over years, not days

• Stay invested during crashes – Volatility is the price you pay for long-term returns

Why Simple Wins

The best ETF investment strategy won't impress anyone at cocktail parties. You won't have exciting stories about hitting it big on hot stock tips. You'll just have a steadily growing pile of money that requires almost no effort.

While everyone else chases the latest trends or pays hefty fees for active management, you'll be quietly building wealth through boring, consistent investing. The tortoise beats the hare because the tortoise doesn't get distracted.

Your strategy should be simple enough to explain in two sentences and boring enough that you forget about it for months at a time. In investing, boring usually wins. The goal isn't to beat the market—it's to match the market's long-term growth while avoiding the mistakes that derail most investors.

Sometimes the smartest thing you can do is absolutely nothing at all.