10 Ways to Be a Better ETF Investor in 2015

It’s another year, another new calendar and another new set of challenges for investors.

Indeed, this time of year everyone is looking to make resolutions and to implement new ways to be better people in the year ahead. And while I can’t really help you with common resolutions like eating better or exercising more, I can help you to be a better exchange-traded fund (ETF) investor in 2015.

Here are 10 ways to do just that in the year ahead.

1. Find more money to invest in ETFs. It’s time to dump those mutual funds, get out of your bank savings account that’s paying next to zero interest and roll over any old 401(k)-type accounts into a self-directed IRA. Doing so will result in more money to invest in the best ETFs that the market offers.
2. Consolidate your accounts at one brokerage. Whether it’s Schwab, Fidelity, TD Ameritrade or Vanguard, there is no need to have more then one brokerage firm. I find many investors have multiple accounts at multiple financial institutions. All this does is create more paperwork, more confusion, more passwords and more problems for your investing. Move your assets to one brokerage firm, and make life easier in 2015.
3. Start a Roth IRA. It may seem trivial or small potatoes in the big picture, but if you qualify for a Roth IRA, you should open one ASAP. Here’s why. A Roth IRA is a tax-free savings account. The key word here is FREE. There are no taxes on withdrawals of your contributions at any time, nor are there any taxes on earnings in retirement. There are also no required minimum distributions with a Roth. You can contribute $5,000 per year ($6,000 if you’re over 50).
4. Become passionate about ETFs. This does not mean you make knowing about ETFs a full-time job. Rather, it means that you are engaged with your money, and that you spend the appropriate amount of time making sure your investments are right for your goals. For example, going into 2015, you MUST review all of your accounts and all of your positions. Review your asset allocation, cash positions and the performance of your accounts. This process should be done quarterly at a minimum, but preferably it should be done monthly. Also, spend some time learning about the ETF landscape, and the easiest way to do that is to read this publication, as well as listen to my weekly ETFU.com podcast.
5. Spread the word. Nothing is more powerful for achieving success than to help others. Now, I’m not talking about boasting about what a great investor you are. What I’m referring to is talking with your spouse, your friends, your children and your co-workers about their money and about ETFs. Ask them if they are using ETFs. If they say no, ask them why not. Talk to them about ETFs just like you would if you got a great deal on something like a car or a home. Hey, when you share helpful knowledge, other helpful knowledge tends to come back to you.
6. Look before you leap. There will be hundreds of stories about the best ETFs and top-performing ETFs of 2014 during the next few weeks. It happens every year. Many of the top performers will be sector-specific ETFs or leveraged ETFs. And while I know it’s tempting, please don’t buy another ETF until you look at the following: fund objective, asset class, assets under management, expense ratio, volume and top holdings. Also remember that repeat winners, especially sector specific winners, are rare.
7. Check out the top 20. The top 20 ETFs hold 40% of the $2 trillion industry. These are the most successful ETFs in terms of assets, but they also have the lowest fees and some of the best core positions for your portfolio. I will be doing some detailed editorial on the top 20 over the course of the first quarter of 2015. Look at today’s ETF Talk for greater detail on the top 20 ETFs.
8. Consider China a key place to invest. China became the world’s largest economy in 2014. It also was the top-performing international stock market, with gains north of 40% in the China A-shares market. China opened its investment markets in 2014 and has implemented major economic and market reforms. And, consider that China’s economy is growing at a 7% rate, which actually is comparatively slow for the behemoth nation. There are now more than 25 ETFs dedicated to China, and these funds represent a key place for investors in 2015.
9. Look at last year’s losers for this year’s winners. More often then not, when the calendar rolls over, last year’s winners tend to morph into next year’s losers — and vice versa. I am looking at energy, commodities, emerging markets and international opportunities as we move into 2015, and that’s because they have been many of the most unloved sectors of 2014.
10. Join ETFU.com. Become a charter member of our new educational website, ETF University, or ETFU.com. The mission of this site is to change the way you invest and enhance your level of investment success using ETFs. Read the stories and special reports, watch the videos and, most importantly, listen to my weekly ETFU.com podcast. The best part is that it’s all FREE, and it’s all for you, so check it out as soon as you can.

I think 2015 is going to be a very interesting year, so be sure to tune in here every week to make sense of it all.