What kinds of exchange-traded funds (ETFs) should specifically be avoided?
"Stay away from leveraged or synthetic ETFs. This answer talks about why leveraged ETFs are dangerous. There are numerous articles to be found by searching for ""leveraged etf"". My answer to this question links to one of the more accessible explanations I've read." One of the key things to look for is trading volume.  I think the price spread will be better on high volume ETFs, which means you'll be able to sell for more when the time comes.  Check Google or Yahoo finance for those stats. "As with ANY investment the first answer is....do not invest in any that you do not fully understand.  ETF's are very versatile and can be used for many different people for many different parts of their portfolio, so I don't think there can be a blanket statement of ""this"" one is good or bad for all."
This is the chart going back to the first full year of this fund.  To answer your question - yes, a low cost ETF or Mutual fund is fine. Why not go right to an S&P index? VOO has a .05% expense. Why attracted you to a choice that lagged the S&P by $18,000 over this 21 year period?  (And yes, past performance, yada, yada, but that warning is appropriate for the opposite example. When you show a fund that beat the S&P short term, say 5 years, its run may be over. But this fund lagged the S&P by a significant margin over 2 decades, what makes you think this will change? "Bit hesitant to put this in an answer as I don't know if specific investment advice is appropriate, but this has grown way too long for a comment. The typical answer given for people who don't have the time, experience, knowledge or inclination to pick specific stocks to hold should instead invest in ETFs (exchange-traded index funds.) What these basically do is attempt to simulate a particular market or stock exchange. An S&P 500 index fund will (generally) attempt to hold shares in the stocks that make up that index. They only have to follow an index, not try to beat it so are called ""passively"" managed. They have very low expense ratios (far below 1%) and are considered a good choice for investors who want to hold stock without significant effort or expense and who's main goal is time in the market. It's a contentious topic but on average an index (and therefore an index fund) will go even with or outperform most actively managed funds. With a sufficiently long investment horizon, which you have, these may be ideal for you. Trading in ETFs is also typically cheap because they are traded like stock. There are plenty of low-fee online brokers and virtually all will allow trading in ETFs. My broker even has a list of several hundred popular ETFs that can be traded for free.  The golden rule in investing is that you should never buy into something you don't understand. Don't buy individual stock with little information: it's often little more than gambling. The same goes for trading platforms like Loyal3. Don't use them unless you know their business model and what they stand to gain from your custom. As mentioned I can trade certain funds for free with my broker, but I know why they can offer that and how they're still making money." "As an exercise, I want to give this a shot.  I'm not involved in a firm that cares about liquidity so all this stuff is outside my purview.  As I understand it, it goes something like this: buy side fund puts an order to the market as a whole (all or most possibly exchanges).  HFTs see that order hit the first exchange but have connectivity to exchanges further down the pipe that is faster than the buy side fund.  They immediately send their own order in, which reaches exchanges and executes before the buy side fund's order can.  They immediately put up an ask, and buy side fund's order hits that ask and is filled (I guess I'm assuming the order was a market order from the beginning).  This is in effect the HFT front running the buy side fund.    Is this accurate?  Even if true, whether I have a genuine issue with this... I'm not sure.  Has anyone on the ""pro-HFT"" side written a solid rebuttal to Lewis and Katsuyama that has solid research behind it?" Index funds: Some of the funds listed by US SIF are index funds. ETFs: ETFdb has a list, though it's pretty short at the moment. "I made an investing mistake many (eight?) years ago. Specifically, I invested a very large sum of money in a certain triple leveraged ETF (the asset has not yet been sold, but the value has decreased to maybe one 8th or 5th of the original amount). I thought the risk involved was the volatility--I didn't realize that due to the nature of the asset the value would be constantly decreasing towards zero! Anyhow, my question is what to do next?  I would advise you to sell it ASAP. You didn't mention what ETF it is, but chances are you will continue to lose money. The complicating factor is that I have since moved out of the United States and am living abroad (i.e. Japan). I am permanent resident of my host country, I have a steady salary that is paid by a company incorporated in my host country, and pay taxes to the host government. I file a tax return to the U.S. Government each year, but all my income is excluded so I do not pay any taxes. In this way, I do not think that I can write anything off on my U.S. tax return. Also, I have absolutely no idea if I would be able to write off any losses on my Japanese tax return (I've entrusted all the family tax issues to my wife). Would this be possible?  I can't answer this question but you seem to be looking for information on ""cross-border tax harvesting"". If Google doesn't yield useful results, I'd suggest you talk to an accountant who is familiar with the relevant tax codes. Are there any other available options (that would not involve having to tell my wife about the loss, which would be inevitable if I were to go the tax write-off route in Japan)? This is off topic but you should probably have an honest conversation with your wife regardless. If I continue to hold onto this asset the value will decrease lower and lower. Any suggestions as to what to do? See above: close your position ASAP For more information on the pitfalls of leveraged ETFs (FINRA) What happens if I hold longer than one trading day?  While there may be trading and hedging strategies that justify holding these investments longer than a day, buy-and-hold investors with an intermediate or long-term time horizon should carefully consider whether these ETFs are appropriate for their portfolio. As discussed above, because leveraged and inverse ETFs reset each day, their performance can quickly diverge from the performance of the underlying index or benchmark. In other words, it is possible that you could suffer significant losses even if the long-term performance of the index showed a gain." Agree with Michael here. The exchanges help you more than they will hurt. It begs the question why you want to avoid exchanges and the brokers since they do provide a valuable service. If you want to avoid big fees, most of the discount brokerages have tiny fees these days (optionshouse is down to $4), plus many have deals where you get 60 or more trades for free. "I used to use etfconnect before they went paid and started concentrating on closed end funds. These days my source of information is spread out. The primary source about the instrument (ETF) itself is etfdb, backed by information from Morningstar and Yahoo Finance. For comparison charts Google Finance can't be beat. For actual solid details about a specific ETF, would check read the prospectus from the managing firm itself. One other comment, never trust a site that ""tells you"" which securities to buy. The idea is that you need sources of solid information about financial instruments to make a decision, not a site that makes the decision for you. This is due to the fact that everyone has different strategies and goals for their money and a single site saying buy X sell Y will probably lead you to lose your money." Note that many funds just track indexes. In that case, you essentially don't have to worry about the fund manager making bad decisions. In general, the statistics are very clear that you want to avoid any actively managed fund. There are many funds that are good all-in-one investments. If you are in Canada, for example, Canadian Couch Potato recommends the Tangerine Investment Funds. The fees are a little high, but if you don't have a huge investment, one of these funds would be a good choice and appropriate for 100% of your investment. If you have a larger investment, to the point that Tangerine's MER scares you a little, you still may well look at a three or four fund (or ETF) portfolio. You may choose to use an actively-managed fund even though you know there's virtually no chance it'll beat a fund that just tracks an index, long-term. In that case, I'd recommend devoting only a small portion of your portfolio to this fund. Many people suggest speculating with no more than 10% of your combined investment. Note that other people are more positive on actively-managed funds. SeekingAlpha has a section dedicated to Short ETFs as well as others. In there you will find SH, and SDS.  Both of which are inverse to the S&P 500.  Edit: I linked to charts that compare SH and SDS to SPY. "While @JB's ""yes"" is correct, a few more points to consider: There is no tax penalty for withdrawing any time from a taxable investment, that is, one not using specific tax protections like 401k/IRA or ESA or HSA. But you do pay tax on any income or gain distributions you receive from a taxable investment in a fund (except interest on tax-exempt aka ""municipal"" bonds),  and any net capital gains you realize when selling (or technically redeeming for non-ETF funds). Just like you do for dividends and interest and gains on non-fund taxable investments. Many funds have a sales charge or ""load"" which means you will very likely lose money if you sell quickly typically within at least several months and usually a year or more, and even some no-load funds, to discourage rapid trading that makes their management more difficult (and costly), have a ""contingent sales charge"" if you sell after less than a stated period like 3 months or 6 months.  For funds that largely or entirely invest in equities or longer term bonds, the share value/price is practically certain to fluctuate up and down, and if you sell during a ""down"" period you will lose money; if ""liquid"" means you want to take out money anytime without waiting for the market to move, you might want funds focussing on short-term bonds, especially government bonds, and ""money market"" funds which hold only very short bonds (usually duration under 90 days), which have much more stable prices (but lower returns over the longer term)." Bond ETFs are just another way to buy a bond mutual fund.  An ETF lets you trade mutual fund shares the way you trade stocks, in small share-size increments.  The content of this answer applies equally to both stock and bond funds. If you are intending to buy and hold these securities, your main concerns should be purchase fees and expense ratios.  Different brokerages will charge you different amounts to purchase these securities.  Some brokerages have their own mutual funds for which they charge no trading fees, but they charge trading fees for ETFs.  Brokerage A will let you buy Brokerage A's mutual funds for no trading fee but will charge a fee if you purchase Brokerage B's mutual fund in your Brokerage A account. Some brokerages have multiple classes of the same mutual fund.  For example, Vanguard for many of its mutual funds has an Investor class (minimum $3,000 initial investment), Admiral class (minimum $10,000 initial investment), and an ETF (share price as initial investment).  Investor class has the highest expense ratio (ER).  Admiral class and the ETF generally have much lower ER, usually the same number.  For example, Vanguard's Total Bond Market Index mutual fund has Investor class (symbol VBMFX) with 0.16% ER, Admiral (symbol VBTLX) with 0.06% ER, and ETF (symbol BND) with 0.06% ER (same as Admiral).  See Vanguard ETF/mutual fund comparison page.  Note that you can initially buy Investor class shares with Vanguard and Vanguard will automatically convert them to the lower-ER Admiral class shares when your investment has grown to the Admiral threshold. Choosing your broker and your funds may end up being more important than choosing the form of mutual fund versus ETF.  Some brokers charge very high purchase/redemption fees for mutual funds.  Many brokers have no ETFs that they will trade for free.  Between funds, index funds are passively managed and are just designed to track a certain index; they have lower ERs.  Actively managed funds are run by managers who try to beat the market; they have higher ERs and tend to actually fall below the performance of index funds, a double whammy. See also Vanguard's explanation of mutual funds vs. ETFs at Vanguard. See also Investopedia's explanation of mutual funds vs. ETFs in general. "I recommend avoiding trading directly in commodities futures and options.  If you're not prepared to learn a lot about how futures markets and trading works, it will be an experience fraught with pitfalls and lost money – and I am speaking from experience. Looking at stock-exchange listed products is a reasonable approach for an individual investor desiring added diversification for their portfolio.  Still, exercise caution and know what you're buying. It's easy to access many commodity-based exchange-traded funds (ETFs) on North American stock exchanges.  If you already have low-cost access to U.S. markets, consider this option – but be mindful of currency conversion costs, etc. Yet, there is also a European-based company, ETF Securities, headquartered in Jersey, Channel Islands, which offers many exchange-traded funds on European exchanges such as London and Frankfurt.  ETF Securities started in 2003 by first offering a gold commodity exchange-traded fund. I also found the following: London Stock Exchange: Frequently Asked Questions about ETCs.  The LSE ETC FAQ specifically mentions ""ETF Securities"" by name, and addresses questions such as how/where they are regulated, what happens to investments if ""ETF Securities"" were to go bankrupt, etc. I hope this helps, but please, do your own due diligence." Your link is pointing to managed funds where the fees are higher, you should look at their exchange traded funds; you will note that the management fees are much lower and better reflect the index fund strategy. "There are some index funds out there like this - generally they are called ""equal weight"" funds.  For example, the Rydex S&P Equal-Weight ETF.  Rydex also has several other equal weight sector funds" Options are contractual instruments. Most options you'll run into are contracts which allow you to buy or sell stock at a given price at some time in the future, if you feel like it (it gives you the option). These are Call and Put options, respectively (for buying the stock and selling the stock). If you have a lot of money in an index fund ETF, you may be able to protect your portfolio against a market decline by (e.g.) buying Put options against the ETF for a substantially lower price than the index fund currently trades at. If the market crashes and your fund falls in value significantly, you can exercise the options, selling the fund at the price that your option has specified (to the counter-party of your contract). This is the risk that the option mitigates against. Even if you don't have one particular fund with your investments, you could still buy a put option on a similar fund, and resell it to another person in lieu of exercise (they would be capable of buying the stock and performing the exercise themselves for profit if necessary). In general, if you are buying an option for safety, it should be an option either on something you own, or something whose price behavior will mimic something you own. You will note that options are linked to the price of stocks. Futures are contracts whose values are linked to the price of other things, typically commodities such as oil, gold, or orange juice. Their behaviors may diverge. With an option you can have a contractual guarantee on the exact investment you're trying to protect. (Additionally, many commodities' value may fall at the same time that stock investments fall: during economic contractions which reduce industrial activity, resulting in lower profits for firms and less demand for commodities.) You may also note that there are other structures that options may have - PUT options on index funds or similar instruments are probably most specifically relevant to your interests. The downside of protecting yourself with options is that it costs money to buy this option, and the option eventually expires, so you may lose money. Essentially, you are buying safety and risk-tolerance from the option contract's counterparty, and safety is not free. I cannot inform you what level of safety is appropriate for your portfolio's needs, but more safety is more expensive.