Diversifying your assets, ETFs
With inflation at a 40-year high and the markets recovering from a global pandemic, now more than ever is a great time to diversify your assets to create a more balanced portfolio.
Exchange Traded Funds
ETFs buy into a large number of companies, so investing in them is one of the simplest ways to quickly diversify your portfolio. You can invest in broad index funds that cover almost all sectors or go for a more focused approach and invest in ETFs that only target one or two industries.
SPY covers the S&P 500, the 500 largest companies listed on US stock exchanges. Investing in it is one of the most popular investments to make, and for good reason.
Source: TradingView Lifetime average yearly returns are 8.18% for SPY. The S&P 500 covers Information Technology, Health Care, Financials, Consumer Discretionary, Communication Services, Industrials, Consumer Staples, Energy, Utilities, Real Estate, and Materials.
QQQ covers the 100 largest companies on the NASDAQ and covers information technology, communications services, consumer discretionary, healthcare, consumer staples, industrials, and utility sectors.
Source: TradingView QQQ has had 7.11% lifetime average annual returns.
ICLN
ICLN is a much more narrow ETF and a good option for those getting into the energy sector. It seeks to follow the investments of the S&P Global Clean Energy Index and holds a stake in clean energy companies around the world.
Source: TradingView ICLN has risen 145.64% in the past 5 years. Of the various energy ETFs out there I would recommend this as one of the safer ETFs, for two reasons. 1, by holding a stakes in companies from around the world the fund isn’t tied down to a single economy, safeguarding it from potential market crashes in a single country. 2, as the world is moving towards cleaner alternatives for energy, ICLN is going to positively benefit from this movement as its companies will massively benefit from this.
