Most of the time the simplest way to do something is usually the best way, which is why exchange-traded funds (ETFs) could be the best choice for investing.
ETFs give everyone an easy way to invest in the share market without the need to buy all the shares yourself. The average return of the market over the long-term has been excellent and most people would do wonderfully if they just achieved the historical 10% per annum returns of the past.
Here are two ETFs to consider for your portfolio this year:
Vanguard Australian Share ETF (ASX: VAS)
One of the best developments in recent decades has been the expansion of Vanguard, a leading global fund provider which is run for the benefit of its members, it is driving the management fee costs of its ETFs lower and lower, leading to higher net returns for investors.
The Australian Share ETF invests in 300 of the biggest businesses on the ASX, so it provides a pretty good level of diversification, although there is a fairly heavy weighting towards financial and resource businesses such as Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), so it's not as great as other international ETFs in terms of diversified industries.
The low annual management fee that I was referring to is only 0.14% per annum with this ETF, which leaves higher net returns for investors. It comes with an attractive partially franked dividend yield of 4.3%.
BetaShares NASDAQ 100 ETF (ASX: NDQ)
As a way to make up for the lack of technology options on the ASX, you could invest in this NASDAQ ETF which is operated by BetaShares.
The ETF invests in the biggest 100 businesses on the NASDAQ, a technology-focused exchange, its largest holdings include Microsoft, Amazon, Apple, Facebook, Alphabet and so on. I think this is the best group of businesses to own in the western world because of the strength of their current products & services, as well as what they're working on for the future.
If they aren't broken up by US politicians then the FAANG group are likely to become increasingly powerful as new ideas are launched like automated cars (eg Waymo) and virtual reality services (eg Oculus).
Foolish takeaway
Even though the US market is valued expensively today, I would much rather buy the NASDAQ ETF compared to an ASX ETF because the long-term growth prospects seem much better.
