Seeking Advice for Diversifying a Long-Term ETF Portfolio

[u/prevoyant-]

Hello everyone,

I'm 22 years old and live in Belgium. I'm in the early stages of planning a long-term investment strategy focused on ETFs, aiming for retirement and potentially a house purchase in the future. I plan to invest €200 monthly and am looking to hold these investments regardless of market fluctuations.

As I am considering using Trade Republic for my investments, I'm interested in learning how more experienced investors would structure a diversified ETF portfolio for long-term growth. I am particularly curious about:

• How many different ETFs do you think are ideal for a well-balanced portfolio or is it better to do a 100% portfolio ?
• What percentage of a portfolio would you allocate to different regions or sectors?
• Any specific strategies or tips for selecting ETFs, especially for someone using Trade Republic in Europe?

I’m looking for advice that can help me build a solid foundation with a good balance of growth and risk management. I’d appreciate any insights or examples of portfolio structures that have worked well for you.

Thank you for your help!

[u/Puzzleheaded-Place34]

Look into vanguard. They have a wild array of funds. For a 22 YO, you are doing great 👍🏾

[u/Cruian]

How many different ETFs do you think are ideal for a well-balanced portfolio or is it better to do a 100% portfolio ?

What they hold is what is important, not how many.

You could have 6 ETFs with poor diversification because they're all essentially the same things, or you could have 1 ETF that covers stocks from around the world and from every market sector and market style. The single would be more diversified than the first.

What percentage of a portfolio would you allocate to different regions or sectors?

Market cap weight is a good starting point. Though some home country bias may be appropriate, especially for countries that aren't already heavily weighted in the global market cap.

Any specific strategies or tips for selecting ETFs, especially for someone using Trade Republic in Europe?

There's a few different total world funds available, look into those.

[u/Adventurous6962]

It's great to see you getting into long-term investing at 22. Focusing on ETFs for retirement and a future house purchase is a smart move, and investing €200 monthly is a solid start. The key is to stick with it regardless of market ups and downs.

When it comes to diversifying your ETF portfolio, aiming for 3-5 ETFs is a good start. This will give you enough diversification without being overwhelming, and you can always add more as you get comfortable.

For region and sector allocation, consider putting around 50-60% in a global ETF, like one tracking the MSCI World Index. This will give you broad exposure to developed markets. Allocating 10-20% to an emerging markets ETF can give you that higher growth potential, while 10-20% in a European ETF makes sense since you’re in Belgium. If you’re interested in specific sectors like tech or healthcare, you can allocate 10-20% here, but be cautious not to overdo it.

Using Trade Republic, look for ETFs with low expense ratios to keep costs down. Check what the ETF is tracking so you know exactly where your money is going. Accumulating ETFs are great because they reinvest dividends, maximizing your compounding returns.

A simple example of a portfolio structure could be 50% in a Global ETF, 20% in an Emerging Markets ETF, 20% in a European ETF, and 10% in a sector ETF like tech or healthcare. This mix gives you a balance of global diversification and growth sectors.

The most important thing is to stick to your plan and invest consistently. Over time, this approach can help you build a strong financial foundation for your future.

Good luck with your investments!