Do you like to take a chance on high-risk, high-reward stocks every now and then? You are not alone. As long as you do not risk more than you can reasonably lose, there is nothing wrong with keeping things fun.
But if your capital is being saved away in an IRA to grow a retirement nest egg, things change fast. Growth is something that can be achieved, and risk should be managed. Many retirees will achieve this balance by purchasing a basket of stocks instead of going for individual ones.
So with that in mind, here’s a rundown of three top ETFs any investor working on retirement should think about adding to their IRA.
SPDR S&P 600 Small Cap Growth
When you want to stick to index funds instead of dabbling in individual companies, the fund many people recommend is the SPDR S&P 500 ETF Trust.
This index’s constituents are some of the nation’s top corporate names, and it could be one of the most widely used barometers of the market’s overall health.
The S&P 500 index is not necessarily the best index for performance, however. The smaller companies that are inside the S&P SmallCap 600 have better gains over time, and smaller-cap names lead the charge.
Over the past 20 years, the S&P 600 index has doubled the the numbers of the S&P 500. This puts an ETF like the SPDR S&P 600 Small Cap Growth ETF into play.
First Trust Clean Edge Green Energy
The green energy movement’s top stocks have lived up to their true potential. Almost 20% of the U.S. energy production now is sourced from renewable energy such as wind and solar.
With the First Trust NASDAQ Clean Edge Green Energy Index ETF, investors do not have to run the risk of choosing the wrong ones. The fund currently has 53 different companies ranging from Tesla to First Solar to NextEra Energy Partners, giving investors a connection to every company within the clean energy sector.
Vanguard High Dividend Yield
Finally, add the Vanguard High Dividend Yield ETF to your IRA as a final step to ensure easy portfolio growth.
The dividend yield of this ETF is not very high. Its current yield is 2.8% and that is respectable sure, but not unattainable from other investments.
The dividend is not the only benefit here. While promoted as a dividend stock ETF, what shareholders are getting is really a group of top-quality stocks that can reliably pay — and increase — their dividends.
Within the fund’s are big names like Johnson & Johnson and JPMorgan Chase — among names that are made to last.
The kicker: Vanguard makes it very cost-effective to buy these quality names in just one bundle instead of forcing you to do a lot of individual stock purchases on your own.
Author: Blake Ambrose