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Use ETF For Index Investing





ETF allows you to track index closely and construct your index investing portfolio without using mutual funds.

From Investopedia:

From a strategic standpoint, the first and most obvious use of ETFs is as a tool to invest in broad-market indexes. On the equity side, there are ETFs that mirror the S&P 500, the Nasdaq 100, the Dow Industrials and just about every other major market index. On the fixed-income front, there are ETFs that track a variety of long-term and short-term bond indexes including the Lehman 1-to-3 Year Treasury, the Lehman 20-Year Treasury and the Lehman Aggregate Bond Index.

Using ETFs to cover the major market sectors, you can quickly and easily assemble a low-cost, broadly diversified index portfolio. With just two or three ETFs, you can create a portfolio that covers nearly the entire equity market and a large portion of the fixed-income market. Once the trades are complete, you can simply stick to a buy-and-hold strategy as you would with any other index product, and your portfolio will move in tandem with its benchmark.

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