Majority of small investors believes in market timing and buy-low and sell-high theories. Besides this, various sectors of our industry and economy perform low and high and market timing can not be judged by any guage therefore the best approach for small investor is to invest in all sectors of industry. It is not possible for small investor. So small investor needs some means to invest in all sectors of industry.
Exchange-Traded Funds or ETFs serve this purpose. Exchange-Traded Funds track indexes like S&P 500, Dow Jones Industrial or Russell 2000. Check for ETFs that invest in a large range of funds. Following ETFs are recommended.
Vanguard Total Stock Market VIPER
iShares MSCI-EAFE
iShares Lehman Aggregate Bond
iShares Dow Jones US Real Estate
iShares Dow Jones US Basic Materials.
If you have large sums of money to invest then go for mutual funds wich track the same indexes as ETFs do.
