ETFs Made Simple: One vs. Many - Which is Better for Your Portfolio?

1 ETF Portfolio

One of the main advantages of investing in a single ETF, such as VWRL, is that it provides investors with a simple and straightforward way to diversify their portfolio. VWRL is designed to track the performance of the FTSE All-World Index, which includes large and mid-cap stocks from developed and emerging markets worldwide. By investing in VWRL, investors can gain exposure to a diversified range of companies and industries without the need to research individual stocks or countries.

Another advantage of investing in a single ETF is that it can help to reduce investment costs. When investing in multiple ETFs, investors may incur additional fees, such as trading commissions and management fees, which can eat into their returns. By investing in a single ETF, investors can avoid these additional costs and potentially achieve better returns.

Finally, another advantage of a one ETF portfolio is the ease of management. With a single ETF, investors only need to monitor and adjust one investment, which can save time and effort compared to managing a portfolio of multiple ETFs. Having multiple ETFs may lead to diworsification meaning having multiple positions and leading to a lower return overall, While an ETF such as an all-world ETF has some proven track record, nothing that historical return does not lead to future returns.

However, investing in a single ETF does have some drawbacks. For example, VWRL may not align with an individual's specific investment goals or risk tolerance. Additionally, investing in a single ETF may limit an individual's ability to take advantage of market opportunities, such as investing in specific sectors or regions.

Multiple ETFs Portfolio

Investing in multiple ETFs can provide investors with greater flexibility and control over their portfolio. By investing in multiple ETFs, investors can tailor their portfolio to their specific investment goals and risk tolerance. For example, an investor may choose to invest in ETFs that provide exposure to specific sectors or regions that align with their investment strategy, or ETFs that focuses on specific strategies such as growth and dividends.

Another advantage of investing in multiple ETFs is that it can help to reduce risk. By diversifying across multiple ETFs, investors can reduce their exposure to individual stocks (for example the top holdings of a single ETF) or regions, which can help to mitigate the impact of market volatility.

However, investing in multiple ETFs can also increase investment costs. As mentioned earlier, investors may incur additional fees, such as trading commissions when investing in multiple ETFs. Additionally, managing a portfolio of multiple ETFs may require more time and effort than investing in a single ETF, and in the end, it may be complicating things without it being necessary.

Conclusion

In summary, whether it is better to invest in a single ETF, such as VWRL, or multiple ETFs depends on an individual's specific investment goals, risk tolerance, and investment strategy. Investing in a single ETF can provide investors with a simple and cost-effective way to gain exposure to a diversified range of companies and industries. On the other hand, investing in multiple ETFs can provide investors with greater flexibility and control over their portfolio.

For me personally, currently, I hold multiple ETFs in my portfolio this is due to my strategy where I want to combine dividend and growth and personally I love researching and engineering my portfolio based on my goals, expectations, and market condition, however, I do see a possibility in the future where I would want to simplify things and would invest in a single ETF such as an all-world ETF such as VWRL instead, as a way to simplify my approach and investing in the world market.

Disclaimer: I am not a financial advisor, this blog is centered around my opinion and should not be viewed as legal, professional, or financial advice. For me, it's crucial to supplement my knowledge with resources like videos, articles, and books to deepen my understanding of investing principles and strategies.

Consider donating to keep the blog going by clicking buy me a coffee ☕ button. Your support is highly appreciated.