Best ETFs for Brokerage Account to Diversify Your Portfolio

Diversifying your portfolio is key to minimizing risk and maximizing returns. A well-diversified portfolio can help you ride out market fluctuations with ease.

Investing in a range of ETFs can help you spread your investments across different asset classes, sectors, and geographic regions. This can include domestic and international stocks, bonds, commodities, and real estate.

Consider investing in a total stock market ETF, such as the Vanguard Total Stock Market ETF (VTSAX), which tracks the CRSP US Total Market Index and provides broad exposure to the US stock market. This ETF has a low expense ratio of 0.04%.

Another option is a bond ETF, such as the iShares Core US Aggregate Bond ETF (AGG), which tracks the Bloomberg Barclays US Aggregate Bond Index and provides exposure to a broad range of US investment-grade bonds. This ETF has a low expense ratio of 0.04% as well.

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If you're looking to add some ETFs to your brokerage account, you've got a lot of options to choose from. With over $535 billion in assets under management, the Vanguard 500 Index ETF (VOO) is a great choice for those looking to invest in the US stock market.

The ETF has a low expense ratio of 0.03% and a dividend yield of 1.3%. You can also consider the Vanguard Dividend Appreciation ETF (VIG), which has a slightly higher dividend yield of 1.7% but a similar expense ratio of 0.06%.

For those looking for a more specialized investment, the Vanguard U.S. Quality Factor ETF (VFQY) is an option with a dividend yield of 1.3% and an expense ratio of 0.13%. The SPDR Gold MiniShares (GLDM) is another choice with a low expense ratio of 0.10% but a zero dividend yield.

If you're looking for a bond ETF, the iShares 1-3 Year Treasury Bond ETF (SHY) has a high dividend yield of 3.7% and an expense ratio of 0.15%.

Here are the top ETFs to consider for your brokerage account:

To create a well-rounded investment portfolio in your brokerage account, you'll want to consider a mix of ETFs that cover various asset classes. This can include US stocks, foreign stocks, high-quality bonds, and other investment options.

You can start by choosing a core holding ETF that covers a broad range of stocks, such as the Schwab 1000 Index ETF (SCHK) or the Schwab U.S. Broad Market ETF (SCHB). Both of these ETFs have an operating expense ratio (OER) of 0.05% and 0.03%, respectively.

A core holding ETF should be a low-cost fund that covers the major asset classes, including US stocks, foreign stocks, and high-quality bonds. Schwab offers a range of ETFs that fit this bill, including the Schwab U.S. Large-Cap ETF (SCHX) and the Schwab U.S. International Equity ETF (SCHF).

You can further diversify your portfolio by adding other asset classes or subasset classes. For example, you might consider adding a bond ETF, such as the Schwab High Yield Bond ETF (SCYB) or the Schwab U.S. Aggregate Bond ETF (SCHZ).

Here are some ETF options to consider for your brokerage account:

Remember to consider your personal financial goals and risk tolerance when selecting ETFs for your portfolio.

Low-Cost Investing is a key consideration when selecting the best ETFs for your brokerage account. ETFs with low operating expenses can save you money in the long run.

ETFs like Schwab's have among the lowest operating expenses in the industry, with expense ratios as low as 1%. This means you'll pay $10 in fees for every $1,000 you invest, which can add up over time.

A low expense ratio is especially important for passive ETFs, which simply track a stock index. These funds aim to match the index's performance, so it's essential to keep costs low to maximize returns.

Here are some low-cost ETFs to consider:

By choosing low-cost ETFs, you can keep more of your hard-earned money in your account and focus on growing your investments over time.

Taxes can be a major consideration when it comes to investing, but there are ways to minimize their impact.

In a standard brokerage account, ETFs can result in taxable income from gains and dividends.

Taxable income from ETFs is taxed according to capital gains tax rules.

If you invest in ETFs through an IRA, you won't have to worry about capital gains or dividend taxes.

This is because money in a traditional IRA is only considered taxable income after it is withdrawn.

Roth IRA investments aren't taxable at all in most cases.

Tax-inefficient assets, such as high-dividend-yield stocks or funds, are best held in tax-advantaged space like an IRA.

These assets can result in significant tax liabilities due to dividends and capital gains distributions.

ETFs, on the other hand, can be a tax-efficient option in a taxable brokerage account.

However, not all ETFs are created equally, and some may have tax-inefficient structures.

Look for ETFs with low turnover, low capital gains distributions, and low fees to minimize tax liabilities.

Consider reading: What Is Taxable Brokerage Account

Low-cost investing is a key component of a successful investment strategy.

ETFs like Schwab ETFs have among the lowest operating expenses in the industry, making them an attractive option for investors.

Investors can trade online in their Schwab account with $0 commissions, eliminating a significant expense.

Schwab ETFs are managed by Schwab Asset Management, one of the industry's largest and most experienced asset managers.

The Schwab Fundamental U.S. Large Company ETF (FNDX) is designed to track the total return of an index that measures the performance of large U.S. companies based on their fundamental size and weight.

A total market ETF like ITOT from iShares is a low-cost option to access the total U.S. stock market, containing over 3,500 stocks and having an expense ratio of 0.03%.

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If you're looking for a low-cost way to diversify your portfolio, consider Schwab's Market Cap domestic equity and international equity ETFs. Their operating expense ratios (OERs) are impressively low, with some as low as 0.03%.

The Schwab 1000 Index ETF (SCHK) has an OER of 0.05%, making it a great option for those looking for a broad market exposure. The Schwab U.S. Broad Market ETF (SCHB) also has a low OER of 0.03%, providing investors with a diversified portfolio.

Here are some specific ETFs to consider:

These ETFs offer a range of options for investors, from broad market exposure to specific sectors like real estate.

If you're looking for a strategic beta solution, consider Schwab Market Fundamental Index ETFs. These ETFs offer a low-cost alternative to traditional active management.

The Schwab Fundamental U.S. Broad Market ETF (FNDB) tracks the performance of large U.S. companies based on their fundamental size and weight. It has an expense ratio of 0.25%.

You can choose from a range of Schwab Fundamental Index ETFs, including the Schwab Fundamental U.S. Large Company ETF (FNDX) and the Schwab Fundamental International Equity ETF (FNDF). Both have an expense ratio of 0.25%.

Here are some key ETFs to consider:

The Schwab Fundamental U.S. Small Company ETF (FNDA) also offers a low-cost option for investing in small U.S. companies, with an expense ratio of 0.25%.

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The iShares Core S&P Total U.S. Market ETF (ITOT) is a low-cost option to access the total U.S. stock market. It contains over 3,500 stocks and has an expense ratio of 0.03%.

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This ETF is a great choice for investors looking to add exposure to small- and mid-caps to their portfolio. The ITOT fund provides instant access to a broad range of U.S. companies, including those in the small- and mid-cap segments.

The expense ratio of 0.03% is one of the lowest in the industry, making it an attractive option for investors who want to keep costs low. With over 3,500 stocks in the fund, ITOT offers a highly diversified portfolio that can help reduce risk.

Here's a comparison of the ITOT fund with the iShares Core S&P 500 ETF (IVV):

As you can see, the ITOT fund offers a much broader range of stocks than the IVV fund, but both funds have the same expense ratio. This makes ITOT a great choice for investors who want to add some small- and mid-cap exposure to their portfolio.

The SPDR Gold MiniShares is an excellent way to get exposure to gold in your portfolio. It's backed by real, tangible gold bullion and its share price tracks the price of gold, minus a very modest management fee.

One of the biggest advantages of GLDM is its extremely low expense ratio, which is just 0.10%. This makes it one of the cheapest ways to own gold.

The SPDR Gold MiniShares has $9.2 billion in assets under management, giving you confidence in its stability and performance.

The dividend yield on GLDM is 0.00%, which is to be expected given that it's a commodity-focused ETF.

Investing in gold can provide a crisis hedge in uncertain market conditions, and with GLDM, you can get that exposure without breaking the bank.

Here are the key facts about the SPDR Gold MiniShares:

The U.S. Quality Factor is an investment strategy that focuses on identifying high-quality stocks. This approach is perfect for times when the market seems chaotic.

The Vanguard U.S. Quality Factor ETF (VFQY) is a great example of this strategy in action. It selects stocks based on Vanguard's quantitative assessment of a company's earnings and balance sheet quality.

VFQY has some overlap with major indexes like the S&P 500, but its top 10 holdings are dominated by smaller names. This provides access to a diverse range of companies that might not be part of your typical portfolio.

The fund's expense ratio is a mere 0.13%, making it a cost-effective option for investors. This is in line with Vanguard's reputation for offering affordable investment products.

Here are some key facts about the Vanguard U.S. Quality Factor ETF:

US Small- and Mid-Cap Stocks can be a great way to diversify your portfolio, but it's essential to understand the differences between small-cap and mid-cap stocks.

Schwab's ETFs offer a range of options for investing in US small- and mid-cap stocks, including the Schwab U.S. Small-Cap ETF (SCHA) with an OER of 0.04% and the Schwab U.S. Mid-Cap ETF (SCHM) with an OER of 0.04%.

These ETFs can provide access to smaller companies that may not be included in larger indexes, such as the S&P 500.

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The top holdings of the Schwab U.S. Small-Cap ETF include companies like TJX Companies and Gilead Sciences, which may not be part of your typical portfolio.

The Schwab U.S. Mid-Cap ETF also offers a mix of smaller and larger companies, with a focus on mid-cap stocks.

Here are some key stats for the Schwab U.S. Small-Cap ETF and the Schwab U.S. Mid-Cap ETF:

By investing in US small- and mid-cap stocks, you can potentially reduce your portfolio's correlation with the stock market and increase your diversification.

Bond ETFs are a great way to add some stability to your brokerage account. They can help reduce risk and provide a steady income stream.

Low expenses are a key factor when it comes to bond ETFs, especially for safer assets like bonds. In fact, low-cost ETFs can be valuable building blocks in a bond portfolio.

For those looking to add some fixed-income exposure, high-quality intermediate-term bond funds are a good option. One such ETF is the Vanguard Tax-Exempt Bond ETF (VTEB), which tracks the S&P National AMT-Free Municipal Bond Index and has an expense ratio of 0.06%.

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If you're looking for a short-term bond option, consider the iShares 1-3 Year Treasury Bond ETF (SHY). This ETF holds a portfolio of U.S. government securities maturing in one to three years and yields 3.7% at current prices.

Treasury bonds tend to have a lower correlation to stocks than municipal bonds, making them a likely superior hedge. The Vanguard Intermediate-Term Treasury ETF (VGIT) tracks the Bloomberg Barclays U.S. Treasury 3–10 Year Bond Index and has an expense ratio of 0.05%.

Here are some key characteristics of the iShares 1-3 Year Treasury Bond ETF (SHY):