You read the headline right. You need to take advantage of ETFs. What are ETFs, you ask? Well, there are several kinds. Let's review some of them:
Engaging Tollbooth Fun: You can make passing through tollbooths much more fun by spending twice as much as you need to. (Yes, I know, this doesn't sound very fiscally Foolish, but bear with me.) If you're about to hand 50 cents to the toll-taker as you speed on your way, consider forking over a dollar instead, and explaining that you're paying for the person behind you as well. I've done this, and it's not only fun to surprise and confuse a stranger, but it may even generate a little more goodwill in the world.
Exquisite Tall Felucca: A felucca is a "narrow, fast, lateen-rigged sailing vessel, chiefly of the Mediterranean area," according to Webster's. (By the way, want to read an interesting book about how the Oxford English Dictionary came about? Check out The Meaning of Everything.) The felucca might fit in well with your fleet of sailboats. Of course, before you build a fleet of sailboats, you'll have your financial ducks in a row, right? You'll have an emergency fund of short-term savings and perhaps a few outstanding mutual funds, for example.
Exuberant Talking Fools: You'll run across these inspirational and informative (or at least amusing) folks on our vast discussion board community, which you can try out for free for 30 days. They're gushing about companies and stocks they like, recipes they love, books they recommend, software, golf, religion, politics, photography, pets, low P/E-ratio stocks, high-dividend-yield-paying stocks, and much, much more. You might also consider Fool co-founders David and Tom Gardner to be ETFs -- listen to them weekly on our Motley Fool Radio Show, where you'll likely also hear some CEOs and other fascinating folks.
Exchange-Traded Funds: I confess: Exchange-traded funds are what I really wanted to take a minute to plug. These ETFs have been growing wildly in popularity, and for some compelling reasons. Built like mutual funds but trading like stocks, they can permit you to easily invest in a wide range of indexes and other groups of securities. A recent Business Week article reported that "ETF assets have soared to about $229 billion as of the end of March 2005, from just $464 million in 1993. In 2004 alone, ETF assets grew by 50%. They could reach the $1 trillion mark by the end of the decade."
A recent article in Forbes noted that according to Morningstar data, some total-market ETFs are undervalued, trading for a little less than the weighted average of their holdings' fair values. These included the Vanguard Total Stock Market Vipers (AMEX:VTI), the iSharesDow Jones US Total Market (AMEX:IYY), and SPDRs (AMEX:SPY), also known as Spiders, which track the S&P 500.
You don't have to invest broadly with ETFs, though. If you like the prospects of consumer goods in general, you can buy into the Vanguard Consumer Staples Viper (VDC) and the Consumer Staple SPDR (AMEX:XLP) -- these will instantly have you invested in the likes of giants such as Procter & Gamble (NYSE:PG), Kimberly-Clark (NYSE:KMB), and AltriaGroup (NYSE:MO).
Are ETFs perfect? No. They do have a few disadvantages. But they also offer a lot to investors. Learn much more in our 60-second guide to ETFs.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.
