These 7 ETFs Could Make a Complete Retirement Portfolio

Many investors are intimidated by the idea of buying individual stocks. The potential rewards of choosing tomorrow's blockbuster stock pick are immense, but you can also lose everything if you choose badly. If that level of risk is too much for you to handle, exchange-traded funds offer a way to get a highly diversified portfolio that you can use for long-term financial goals like retirement.

In fact, you can put together a smart retirement saving strategy with just a handful of ETFs. The following seven funds give you exposure to every major asset class, with all kinds of diversification to keep your portfolio on an even keel throughout your career.

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The SPDR S&P 500 ETF (NYSEMKT: SPY) was the first major exchange-traded fund, and it's still an industry leader, with more than $265 billion in assets under management. The ETF tracks the S&P 500 index, owning all 500 stocks in the benchmark to match the index's performance precisely. A gross expense ratio of just 0.09% means that you'll pay just $9 a year for every $10,000 you invest in the ETF, letting you keep as much as possible as you benefit from the long-term growth trajectory and global reach of the largest companies in the U.S. stock market.

Dividend stocks play an important role for retirement investors, both in building up their nest eggs over the course of their careers and in producing much-needed income once they retire and start living off their portfolios. Schwab U.S. Dividend Equity (NYSEMKT: SCHD) focuses on 100 top dividend-paying stocks that have both high yields and a track record of consistency in making dividend payments. The ETF currently yields 3%, or about half again as much as the broader market, and the fund's 0.07% expense ratio is near the bottom of the dividend ETF universe.

Many investors gravitate toward big, well-known companies, but stocks of small and mid-sized companies have a better track record of long-term performance. Vanguard Extended Market (NYSEMKT: VXF) concentrates on these less prominent stocks in the U.S. stock market, specifically excluding S&P 500 stocks from its holdings. All told, the Vanguard ETF holds more than 3,200 different individual stocks, and its 0.08% expense ratio keeps investing cheap for the long haul.

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Smart investors know that investing only in U.S. stocks can leave a huge gap in your portfolio in today's global markets. The iShares MSCI EAFE ETF (NYSEMKT: EFA) invests in stocks of countries across the world, including Europe, Australia, and the Far East. Japan, the U.K., and France have the largest allocations of fund assets, and Americans will recognize many of the brand names that these companies export to U.S. markets. An expense ratio of 0.31% isn't the cheapest in the space, but it makes international investing far easier than finding individual brokerage accounts with access to foreign stock exchanges.

Going beyond the most highly developed economies in the world, many investors have focused on the high-growth emerging markets of China, India, Brazil, and Russia as opportunities to find more rewarding investments. Vanguard FTSE Emerging Markets (NYSEMKT: VWO) owns more than 4,600 stocks scattered across the globe. Chinese stocks make up more than 35% of the portfolio, while Taiwan, India, South Africa, and Brazil round out the top five countries. A 0.14% expense ratio is extremely inexpensive for the emerging market stock category, and investors hope that these stocks will become the consumer giants of tomorrow in these rapidly growing locations.

Fixed-income investments are important to help give some balance to a portfolio. Schwab U.S. Aggregate Bond (NYSEMKT: SCHZ) owns high-quality bonds, providing a mix of U.S. Treasury bonds, mortgage-backed securities, government agency bonds, and corporate debt to provide reliable interest income. A rock-bottom 0.04% expense ratio makes bond exposure cheap and easy to get, and despite low interest rates on bonds currently, a yield of more than 3% provides a decent amount of income for those who rely on their portfolios generating cash for immediate use.

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Real estate has characteristics that no other asset can match, including both the potential for appreciation and the current rental income that it can provide. The Vanguard REIT ETF (NYSEMKT: VNQ) offers real estate exposure through real estate investment trusts, which put together their own portfolios of real estate assets. Various REITs specialize in areas like shopping malls, office space, industrial warehouses, storage facilities, and data centers, producing healthy dividend yields and also offering growth. With an expense ratio of just 0.12%, Vanguard REIT is among the lowest-cost providers in the space, offering a 3.5% yield to its shareholders.

You don't have to own individual stocks in order to reach your retirement goals. With exchange-traded funds like these seven, you can build a diversified portfolio that will provide growth and income for your financial needs both now and in the future.

Dan Caplinger owns shares of Vanguard International Equity Index Funds. The Motley Fool has the following options: short January 2019 $285 calls on SPDR S&P 500 and long January 2019 $255 puts on SPDR S&P 500. The Motley Fool has a disclosure policy.