How Many ETFs Do You Recommend Having in Your Portfolio?

The finance industry offers thousands of different ETFs for armchair and institutional investors, so how many should you have in your portfolio? Read this to find out.

Andrew Moran
By Andrew Moran
Edited by Taj Schlebusch

Published June 9, 2021.

The first question: What are your objectives? Value, growth, dividends?

The second question: How savvy are you as an investor? Just getting started or decent enough knowledge?

The third question: How much money do you have to invest? A couple of hundred dollars to start or a couple of thousand dollars?

Is There a Right Number?

It is best to have three to five ETFs. One ETF that mirrors the composition of your favorite index fund (S&P 500, for example). Another ETF that is diversified in energy, technology, financials. Another ETF that parks money in low-risk investments, such as government and corporate bonds and indexes.

What You Should Buy

Also, depending on your knowledge of the business world, you could invest in a sector that you think will be booming in the next couple of years without having to find the best stocks related to that industry.

For example, before the coronavirus pandemic, you could have invested in base metals ETFs: the United States Copper Index Fund (CPER), Invesco DB Base Metals Fund (DBB), or iPath Series B Bloomberg Industrial Metals Subindex Total Return ETN (JJM).

Never Forget About Costs!

Be sure to monitor the net expense ratio before hitting the buy button. You do not want to eat a huge chunk of your capital or profits on exorbitant fees!