10x Popular ETFs for Beginners [2022] Happy Investors

Happy Investors

Dear Happy Investor, Are you at the beginning of your journey to financial freedom and want to start investing? In this article, you will find an overview of popular ETFs for beginners. There are a number of reasons to buy popular ETFs as a beginner. Granted, it's not the path for exceptional returns. But that doesn't have to be the goal either. Advanced investing can always be done. Perhaps it's wiser to start more quietly with popular ETFs.

On to sustainable (financial) success!

Reasons to buy popular ETFs: Pros and Cons

Buying popular ETFs, also seen as the most well-known ETFs, offers attractive benefits for beginners. Exchange-Traded Funds are known for a reason. Below we discuss some of the advantages and disadvantages of buying well-known ETFs.

Pros of buying best-known ETFs

Risk diversification: popular ETFs are a low-threshold way to diversify your portfolio
Go with the flow: they follow the market average without complex financial instruments to potentially generate higher gains (or losses)
Liquidity: they have high liquidity because popular equity funds have a lot of assets. This means that you can quickly buy or sell popular ETFs when it is appropriate.
Low expense ratio: because of their scale, popular ETFs can have lower annual fees

Cons of buying best-known ETFs

Negative market movement: if you invest in a popular ETF, it means that it follows the movements of the market - and that is not always a good thing. For example, at Happy Investors, we pay close attention to certain sectors that are performing much stronger than the rest. If you buy the best shares in the best sectors at that time, you realize significantly higher returns and avoid losses.
Average return: the big advantage of buying popular ETFs as a beginner is precisely the disadvantage for advanced investors. The most well-known ETFs are popular because they are aimed at the market average. This reduces risk and is therefore attractive. But advanced investors know how to achieve higher returns, and this is not done by investing in popular stocks. Rather, they opt for undervalued stocks, or lesser-known companies with huge growth potential

Where to buy popular ETFs?

It is important to choose the best investment platforms. They offer a wide range of ETFs so that you can build a good portfolio. They also have low transaction costs. Some even offer commission-free investing. In the long run, this saves a lot of costs.

10 Popular ETFs to buy as a long-term investor

You are now aware of the pros and cons to buying popular ETFs. Below we look at ten of the most popular Exchange-Traded Funds for beginning investors. Note that there are differences in risk and return. So you should carefully determine if the fund fits your risk profile.

In general, these trackers are best suited for buy & hold. That means: investing with small amounts that you can fully miss, and hold for the long term.

Well-known ETF: SPDR S&P 500 ETF Trust (SPY)

SPY (the fund's ticker) is one of the world's largest and most actively traded ETFs and provides exposure to one of the most well-known stock indexes: the S&P 500.

SPY can be attractive to investors who want to build a long-term portfolio of U.S. large-cap stocks. In addition, it has become popular with more active traders who use it as a tool to switch between risky and safer assets.

Do you want to invest in the 500 largest publicly traded U.S. companies? Then a tracker for the S&P 500 is ideal.

You can buy SPY via eToro, just like all of the best eToro ETFs you should consider.

Well-known ETF: Vanguard S&P 500 ETF (VOO)

Vanguard manages the most popular ETFs in the world. An alternative to SPY is the popular Vanguard S&P 500 ETF (VOO). In doing so, Vanguard is known for its low fees. With VOO, this is no different.

With VOO, you can invest in the S&P 500 as a beginner. Please note that the S&P 500 also has a certain financial valuation. At times when stocks are overvalued, you should expect less future return. And vice versa. This fact is relevant to the entry point.

Well-known ETF: Invesco QQQ Trust (QQQ)

This popular ETF provides exposure to the NASDAQ, one of the world's most extensively watched equity indices, and it has become one of the most popular exchange-traded products.

The composition of QQQ is unique; this fund maintains a significant allocation to technology companies, which can lead to high volatility due to greater exposure to a sector that has historically experienced both remarkable gains and disastrous declines.

Be aware that Invesco QQQ ETF has a higher risk profile. The (daily) volatility is more intense. Novice investors may struggle with this. However, we consider it one of the best ETFs because QQQ can offer higher returns over the long term than broader indexes such as the S&P 500.

Well-known ETF: SPDR Gold Shares (GLD)

GLD is one of the world's most popular ETFs, providing exposure to an asset class that has been increasingly essential in the asset allocation process in recent years.

GLD can be utilized in a variety of ways, including short-term holdings to hedge against equity market volatility, currency weakness, or inflation.

Others may choose to include gold as part of their long-term investing strategy. GLD is a simple instrument with underlying assets consisting of gold bullion housed in secure vaults.

As a result, the price of this ETF is likely to move in lockstep with spot gold prices.

Well-known ETF: iShares MSCI Emerging Markets ETF (EEM)

One of the world's most popular ETFs and one of the market's oldest products, EEM provides exposure to emerging market equity markets. Given its strategy, EEM can be used in a variety of ways. The most logical, however, is to buy this popular ETF for the long term as a complement to an ETF focused on the U.S.

Given the size of its asset class, EEM can undoubtedly be considered a "building block" for a portfolio, but it also has some significant weaknesses.

Well-known ETF: Vanguard Total Stock Market ETF (VT)

The Vanguard Total World Stock Index ETF (VT) is the most comprehensive stock tracker in the world. This unprecedentedly popular ETF offers diversification among 9000+ different stocks. All of which are global. This is why VT is considered a well-known global ETF.

VT can be used as a passive investment in the entire "world economy". The fund contains both large caps and small stocks, of which approximately 60% are U.S. and 40% are about the rest of the world.

This is not to say that VT is the best ETF for returns. The risk is lower and so is the potential return. VT is best suited for passive- and risk-averse investors (who still want to invest).

Well-known ETF: Russell 2000 ETF

The Russell 2000 ETF is predominantly focused on small cap stocks. The tracker follows 2,000 smaller publicly traded companies from the United States. Small companies are riskier and have higher volatility. Yet bundling them together can offer higher returns than large companies in the long run. After all, the average can simply grow faster.

Russell 2000 ETF can be used as a complement to an S&P 500 ETF, along with a fund that focuses on Europe and emerging markets.

Well-known ETF: iShares Core U.S. Aggregate Bond ETF (AGG)

AGG is a popular bond ETF that offers comprehensive exposure to investment-grade U.S. bonds. This makes AGG a valuable building block for any investor putting together a well-balanced long-term portfolio.

Bond ETFs are known for a low-risk profile. On the other hand, they therefore offer low returns. The most popular bond ETFs focus primarily on asset preservation, rather than asset growth.

Well-known ETF: VanEck Gold Miners ETF (GDX)

This ETF provides investors with exposure to some of the world's major gold mining businesses, providing "indirect" exposure to gold prices.

Due to the fact that gold miners' profitability is dependent on current market prices for the items they sell, these companies will typically show a strong correlation to changes in spot gold prices.

GGGG may be a better choice than GDX for investors who want to optimize their gold exposure while avoiding silver, copper, or other metals.

Well-known ETF: Vanguard Information Technology ETF (VGT)

VGT is one of the most popular technology ETFs. It tracks the MSCI USA IMI Information Technology 25/50 Index. Although the VGT portfolio contains more than 400 stocks, the two largest holdings (Apple and Microsoft) make up about 40% of the portfolio. The number of positions is greater than QQQ (100), but the distribution is more disproportionate. Nevertheless, VGT is slightly less volatile than some other tech ETFs because most of its assets are invested in large-cap tech companies.

Do you know of any other funds that we should add to the list of most well-known ETFs? Let us know in the comments below!