Inflation and stock market depreciation are obvious detriments to a portfolio designed to last throughout retirement, but fees are an equally damaging hurdle. In this article we'll look at a group of low cost ETFs for investors hoping to cash in on the volatility in the market. (For more on the fee structure common to many mutual funds and ETFs, read Stop Paying High Mutual Fund Fees.)

IN PICTURES: 5 Tips To Reading The Balance Sheet

Low Cost Equity Exposure
The SPDRS S&P 500 Index (NYSE:SPY) fund gives investors exposure to a breadth of large U.S.-based firms from online giant Google (Nasdaq:GOOG) to commodity concerns like U.S. Steel (NYSE:X) and widely held conglomerate Procter & Gamble (NYSE:PG). An investor could consider the SPY fund as the foundation of his or her portfolio.

The SPY fund has an extremely low expense ratio of 0.10% and is up +10.11% year to date.

Going Overseas
International ETFs, like the Vanguard FTSE All-World ex-US ETF (NYSE:VEU), with a heavy concentration in Western Europe and other regions outside of the U.S., provide an additional level of diversification to a portfolio. True, more than 100 companies on the S&P 500 like Intel (Nasdaq:INTC) generate 50% or more of their revenue overseas; however, an additional international component like the VEU fund should be considered.

The VEU fund has a low expense ratio of 0.25% and is up +8.55% year to date.

Inflation Hurdle
When the value of the dollar is headed south and inflation fears arise the SPDR Gold Trust ETF (NYSE:GLD) offers protection. With inflationary pressures potentially growing on the horizon and oil prices creeping near $90 per barrel, it might still be a good idea dollar cost average this ETF even though gold is above of $1,400 per oz. (To learn more about inflation, and how it affects you, read our Inflation Tutorial.)

The GLD fund has an estimated expense ratio of 0.40% and is up +28.76% year to date.

Fixed-Income Dividend Yield
Finally the SPDR Barclays Capital TIPS (NYSE:IPE) is a fixed income ETF designed to help investors outpace inflation. The IPE fund is composed of a variety of medium- and long-term U.S. Treasuries. Along with the GLD fund, IPE offers another measure of protection for a portfolio.

This fund has a low expense ratio of 0.18% and is up +5.05% year to date.

Final Thoughts
There are many barriers and fences in the form of inflation, economic slowdowns and high fees that will sap the earnings potential of your portfolio. The low cost ETFs mentioned above, weight adjusted based on the age and goals of the investor, will give long-term investors a way to mitigate expenses as they build a portfolio for retirement. (To learn how to pick the best ETF, read Five Ways To Find A Winning ETF)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  2. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  3. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  4. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  5. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  6. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  7. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  8. Mutual Funds & ETFs

    Pimco’s Top Funds for Retirement Income

    Once you're living off the money you've saved for retirement, is it invested in the right assets? Here are some from PIMCO that may be good options.
  9. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  10. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center