King Solomon was very wealthy and he was also very wise.  Many are aware of his wise sayings in the Old Testament book of Proverbs, but many have not explored the book of Ecclesiastes.  Solomon understood that “disasters” can and do come and that putting all your eggs in one basket was a risky and a silly idea.  Here is what he said in Ecclesiastes 11:2 (ESV): “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.”

When I review someone’s investment statement, I generally look for three things immediately.  The sad truth is that many do not even open their monthly statement and most who do don’t know what to look for.  Here is what I want to see:

  1. Quality investments (stocks and ETFs)
  2. Low costs (which means most mutual funds are disqualified)
  3. Diversification

Diversification can appear in many variations.

  1. Vast diversification using a low-cost, total-stock-market ETF or low cost index fund
  2. A good cross section of quality company stocks in different business sectors. This might include energy, utilities, consumer staples, financials, technology and health care stocks.
  3. Good representation in large, mid and small cap areas of the business universe.
  4. Some fixed income investments – this might be bonds or CD’s.

To save my readers some time, you might want to start by looking at this ETF:

iShares Core S&P Total U.S. Stock Market ETF (ticker: ITOT).

  1. The expense ratio for this ETF is a very reasonable 0.03%.
  2. The Distribution Yield (TTM) is currently at 1.73%.
  3. XTF Inc. currently gives this ETF a rating of 9.8 out of a possible 10.0.
  4. The total basket holdings (03/17/17) is 3,356.
  5. If you are a Fidelity Investment’s client, there is no commission to trade ITOT shares as of this date.

Morningstar ITOTITOT-Returns-2007-2016