| In order to maximize returns and minimize risk | | | | 2. The Dow Jones Industrial Average |
| the smart investor needs a diversified portfolio. | | | | In today's market the Dow Jones Industrial |
| Traditionally one of the best ways to build a | | | | Average, which tracks the 30 largest companies, |
| diversified portfolio was to invest in mutual funds. | | | | isn't considered the best overall indicator of |
| But if you're looking to invest on your own, | | | | market performance (the S & P 500 is |
| without expensive fees or a professional money | | | | considered by many to have taken over that |
| manager, how can you diversify your own | | | | role). Even so the Dow still plays a role as one of |
| portfolio without having to spend hundreds of | | | | the major indicators of the overall stock market |
| hours of research? To duplicate what a | | | | performance and state of the economy. If |
| professional money manager does when creating | | | | following the Dow Jones Industrial Average is to |
| mutual funds, you'd have to devote full-time hours | | | | your liking, then one exchange traded fund that's |
| to researching stocks, company fundamentals, | | | | available is the Dow Diamonds Fund (DIA). Like |
| trends, and bond markets. Most of us don't have | | | | SPY, Dow Diamonds gives small investors a way |
| time for that. | | | | to start investing in this index without having to |
| Fortunately exchange traded funds provide an | | | | put up a large amount of upfront money, since |
| alternative to mutual funds for the independent | | | | you can purchase one share at a time. |
| investor. Like mutual funds, exchange traded | | | | 3. Gold Shares |
| funds track multiple stocks or bonds in a single | | | | Looking to take advantage of the exploding gold |
| fund. But what's nice about exchange traded | | | | market, but don't want to store gold bars in your |
| funds is that you can trade them just like | | | | home? Exchange traded funds that follow prices |
| individual shares of stock. You can buy and sell | | | | of precious metals give you a way to do that. |
| them in real time when the markets are open, | | | | Examples include the SPDRS Gold fund (GLD) and |
| the same way you would buy say shares of IBM | | | | the iShares Gold Trust, both of which follow the |
| or Apple. They are easy to trade online. Since | | | | price of gold bullion. Investing in other precious |
| there are no investment minimums, you can start | | | | metals such as silver and platinum is also possible |
| building your own portfolio of exchange traded | | | | with exchange traded funds. |
| funds for a small amount of money. | | | | 4. Bonds |
| The variety of exchange traded funds available | | | | There's an ETF for just about anything and this is |
| on the market is staggering. Here is a small | | | | great for the independent investor-because its an |
| sample of funds you could use to start building a | | | | easy way to get into bonds. Any smart investor |
| diversified portfolio. By selecting the right asset | | | | will have a diversified portfolio that includes bonds |
| allocation, you could develop your own fund that | | | | but unfortunately, buying bonds as an individual is |
| meets your goals such as growth, value, or | | | | a little bit harder than stocks and often requires |
| interest income. | | | | larger investments. One very easy way to get |
| 1. S & P 500 | | | | around these problems is to find an exchange |
| One of the best ways to grow your capital over | | | | traded fund that invests in bonds that suits your |
| the long term is to invest in large-cap companies. | | | | liking. Take one example, Barclays Capital New |
| If you had enough time and money, you could | | | | York Municipal Bond Fund ETF (INY). The example |
| buy shares in each of the S & P 500 | | | | we've selected here is a fund that corresponds to |
| companies, but that's something out of reach for | | | | the price and yield performance of the Barclays |
| most of us. Fortunately exchange traded funds | | | | Capital Managed Money Municipal New York Index. |
| can make this type of investing feasible. You | | | | There are bond funds that track US Treasury's, |
| purchase shares in a fund which in turn invests | | | | munis, short, long, and high yield junk bonds. |
| the money in S & P 500 stocks. The price of | | | | 5. Real Estate |
| the shares are indexed to the S & P 500, so | | | | Every portfolio should have a small amount |
| as the S & P 500 grows (or declines) the | | | | invested in real estate, and an ETF is a relatively |
| value of your shares grow or decline with it, | | | | painless and inexpensive way to do it. One |
| giving you a way to track the overall progress of | | | | example is the SPDR Dow Jones Global Real |
| the stock market. One exchange traded fund | | | | Estate ETF (RWO). This fund follows a Dow |
| which does this is the SPDR S & P 500 | | | | Jones index which tracks global real estate. There |
| (SPY), an affordable way to start investing in the | | | | are many other options which can be used to |
| S & P 500. | | | | track different sectors of the real estate market. |