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. Mutual Funds & ETFs

    Why ETFs Are a Smart Investment Choice for Millennials

    Exchange-traded funds offer an investment alternative to cost-conscious millennials who want to diversify their portfolios with less risk.
  2. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  3. Mutual Funds & ETFs

    Should Investors Take a BITE Out of This New ETF?

    ETF BITE offers a full menu of restaurants. Is now the right time to invest?
  4. Financial Advisors

    5 Things All Financial Advisors Should Know About ETFs

    Discover five things all financial advisors should know about ETFs, including when ETFs may be a better choice for your clients than mutual funds.
  5. Stock Analysis

    The Top 5 ETFs to Track the Nasdaq in 2016

    Check out five ETFs tracking the NASDAQ that investors should consider heading into 2016, including the famous PowerShares QQQ Trust.
  6. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  7. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  8. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  9. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  10. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  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 >>

You May Also Like

Trading Center