If you find it difficult to choose which share is the best to buy or when to sell, then exchange-traded funds (ETFs) could be the answer.
ETFs allow you to buy a large basket of shares in a single trade, meaning you don't need to consider many individual implications or risks with a good-quality ETF investment.
But you still need to take care choosing an ETF. Some ETFs have high costs and some may not have the diversification you're looking for. There are some ETFs that focus purely on one sector like gold.
The best ETFs are the ones that invest in whole share markets and have very low costs, such as these two:
iShares S&P 500 ETF (ASX: IVV)
The world's greatest investor Warren Buffett recommends that most (American) people should just stick with a S&P 500 fund – so who am I to argue with that?
The S&P 500 represents a list of 500 of the biggest businesses listed in the US. Don't think these as American businesses, they're listed in the US but a lot of the underlying earnings comes from across the globe.
If you buy this ETF you get exposure to top holdings like Microsoft, Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Visa, MasterCard, Disney and so on.
Not only do you get excellent diversification with this ETF but it comes at a wonderfully-low cost too. Blackrock only charges an annual management fee of 0.04% per annum.
I wouldn't expect the next 10 years to be as good as the last 10 years from today's price, but the best businesses usually create excellent compounding returns.
Vanguard Australian Share ETF (ASX: VAS)
If you want to stay a bit closer to home then this Vanguard ETF could be the best way to do it. Vanguard is a world leader in offering low-cost ETFs to regular investors like you and I.
There are tax advantages to investing in Australian businesses, such as franking credits and higher dividend yields.
This ETF gives us access to the ASX 300, which is obviously 300 of the biggest businesses on the ASX. I'm sure you know of the top holdings like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), BHP Group Ltd (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS).
It also gives good exposure to some faster-growing businesses like CSL Limited (ASX: CSL), Aristocrat Leisure Limited (ASX: ALL) and Transurban Group (ASX: TCL). It's a pretty good mix of income and growth.
This ETF comes with a cheap management fee of just 0.10% per year.
Foolish takeaway
Both of these ETFs provide good diversification and easy access to lots of businesses creating good returns for shareholders. If I could only chose one of the two it would be the S&P 500 ETF for its better businesses, better growth prospects and a cheaper management fee.
