MW UPDATE: These ETFs make investing easy -- even if you're broke

By Jeff Reeves, MarketWatch

5 stock- and bond investments that cost you almost nothing to own

The U.S. stock market may be roaring nowadays, but you don't have to look far to see that most Americans aren't exactly rolling in dough.

A recent Washington Post article notes 40% (https://www.washingtonpost.com/business/economy/this-doesnt-look-like-the-best-economy-ever-40percent-of-americans-say-they-still-struggle-to-pay-bills/2019/07/04/855c382e-99b5-11e9-916d-9c61607d8190_story.html?utm_term=.f39f802e25a4) of Americans struggle to pay the bills. Moreover, the U.S. workforce is older than ever before, with 20% (https://news.stlpublicradio.org/post/more-older-americans-working-past-65-delaying-retirement) of those older than 65 still on the job -- in large part because many simply cannot afford to retire.

Every family has different financial needs, of course, but this much is true: Most of us could benefit from having more savings in the bank. It is possible to open an IRA or even a taxable brokerage account even if your nest egg is only a few hundred bucks: TD Ameritrade, E*Trade, and Robin Hood, for example, have no minimum balances. Once your account is up and running, many exchange traded funds offer simple but effective investing strategies for a remarkably low cost.

Investing comes with risks, but if you are behind on your savings plan then there's also a risk to simply parking your cash in the bank instead of trying to make it grow.

Here are several accessible exchange-traded funds that can help even broke investors put their modest but hard-earned savings to work on Wall Street:

1. U.S. stocks: JPMorgan BetaBuilders U.S. Equity ETF

Many investors know about low-cost index funds such as SPDR S&P 500 ETF (SPY) or any number of inexpensive ETFs from fund giant Vanguard. Yet lesser-known JPMorgan BetaBuilders U.S. Equity ETF (BBUS) is one of the best bets for investors without a lot of cash who want to own domestic large-cap stocks.

Comprised of about 630 of the biggest U.S. companies, with top picks that include tech megacaps Microsoft (MSFT) and Apple Inc. (AAPL) , you get much the same exposure of a S&P 500 fund but with a deeper bench for extra diversification.

The only knock against this JPMorgan ETF is that the fund's inception was just a few months ago, so there's obviously not much of a track record. But with the backing of JPMorganChase (JPM) and an attractive fee structure of just 0.02% in annual expenses -- a mere 20 cents a year on every $1,000 you invest -- this ETF could be worth a look as simple and cheap way for those with modest means to gain U.S. stock exposure.

2. International stocks: State Street SPDR Portfolio Developed World ex-US ETF

Building an investment portfolio that achieves effective international diversification can be difficult. Many U.S.-based investors struggle to understand global economic trends and find it hard to dig into the financials of individual foreign stocks.

State Street's SPDR Portfolio Developed World ex-US ETF (SPDW) stands up as one of the best international offerings for cost-conscious investors.

This State Street ETF casts a wide net. Annual operating expenses of just 0.04% -- 40 cents for every $1,000 invested -- is a small price to pay for access to more than 1,800 companies across the entire developed world and excluding the U.S; currently, the portfolio commits about 23% to Japan, 14% to the United Kingdom and 9% to France.

3. Dividend stocks: Vanguard High Dividend Yield ETF

Dividend-paying companies tend to generally be more stable investments, with a built-in cash flow to support their distributions, and the regular income they produce can be effective as either a hedge against market declines or a way to build wealth over time.

If this approach appeals to you, then consider the Vanguard High Dividend Yield ETF (VYM) , a fund that exemplifies the approach of index fund giant Vanguard in that it provides broad exposure in the cheapest way possible.

Specifically, for an annual expense ratio of just 0.06% or 60 cents on every $1,000 invested, you can currently own 423 dividend-paying stocks that include favorites such as healthcare megacap Johnson & Johnson (JNJ) as well as regional utilities and other lesser-known picks.

The fund's portfolio collectively generates a 3.3% annual yield at present -- significantly better than the 1.9% for the S&P 500.

4. Aggregate bond: Schwab U.S. Aggregate Bond ETF

If you are interested in income, you may want to look beyond dividend-paying stocks and into the bond market. There's a staggering number of options in the fixed income marketplace, from U.S. Treasurys to junk bonds to mortgage debt.

If you're a small-time investor, it's probably best to commit to a wide swath of the bond market via a so-called "aggregate" bond fund that rolls together a bunch of these different flavors.

One such offering that is incredibly affordable is Schwab U.S. Aggregate Bond ETF (SCHZ) . This fund costs just 0.04% annually in expenses, or 40 cents per year on $1,000 invested, and in exchange gives you access to a tremendously broad portfolio of close to 5,200 bonds. These include Treasury bills, agency mortgages from the likes of Fannie Mae, corporate bonds, municipal bonds, and even a smattering of sovereign debt from outside of the U.S. Each of these categories is limited to "investment grade" debt, excluding high-risk "junk" bonds.

The result is a diversified one-stop bond portfolio that sports an annualized yield of about 2.8% based on the last 12 months of payouts.

5. Asset Allocation: iShares allocation ETFs

The aforementioned ETFs all offer a different investing flavor at a low price. If it's hard to decide or you don't want to limit yourself, consider choosing one affordable "asset allocation" ETF from fund family iShares that reflects your risk tolerance.

These ETFs, which invest in various iShares stock- and bond ETFs, include iShares Core Conservative Allocation ETF (AOK) , iShares Core Moderate Allocation ETF (AOM) and the iShares Core Aggressive Allocation ETF (AOA) -- all of which charge 0.25% annually in expenses.

That is a bit more costly than a typical index fund, but can serve investors who don't want to manage their portfolio by rebalancing positions or choosing allocations for each asset class. Moreover, these funds have no glide path like those popular "target date" funds that get increasingly conservative over time and so may not meet with your specific investing goals.

With these iShares ETFs, simply "set it and forget it" -- all for $2.50 in expenses each year on every $1,000 you invest. This approach is appealing and affordable to many individual investors who don't have the cash or the patience to manage multiple positions.

Read: How to invest for income when bonds pay pennies on the dollar (http://www.marketwatch.com/story/how-to-invest-for-income-when-bonds-pay-pennies-on-the-dollar-2019-06-28)

More: Trump and the stock market are spooking Powell into making this rookie mistake (http://www.marketwatch.com/story/trump-and-the-stock-market-are-spooking-powell-into-making-this-rookie-mistake-2019-07-10)

-Jeff Reeves; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

July 11, 2019 05:21 ET (09:21 GMT)

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