An essential portfolio building block

In the last blog I talked about the ETF traps that we should be aware of, i hope that message is getting through and you would avoid those traps in your coming investments. In today's entry I want to mention building an essential core portfolio with appropriate low cost and diversified ETFs.

Here is an excellent article that covers it in details. It is a long article but it covers not only just ETFs but also touches many general investment practices and ideas. It is really a must read if you are going to read just one investment guide (or whatever it might be called).

http://seekingalpha.com/article/15134-the-seeking-alpha-etf-investing-guide

Now It is only human nature that we sometimes (or most of times for some people) think we could do better than others do. Since we are small investors we might/tend to think we could be much nimble than the big guys such as hedge funds and mutual funds "monsters", that we could beat them with a quick movement. Your adrenaline will run high when your pick outperforms. That is all fine but whatever you do you do want to diversify it out. When it comes to diversify you should diversify not just on the assets but also on fund managers, you have to consider yourself as a fund manager since you are handling your own investment. So do yourself a favor, open two broker accounts, one you would be the fund manager in charge, the other one, please let this ETF core portfolio be in charge. After a year you could do a comparison yourself which fund manager delivers (don't forget the tax man effect when doing the comparison).