Editorial staff
Most people don't have time to research hundreds of stocks. Between work, family, and daily responsibilities, investing often needs to fit into an already full schedule. Still, many everyday investors want a practical way to plan for retirement or build long-term wealth without feeling overwhelmed.
Total market exchange-traded funds (ETFs) offer a good solution. As one of many exchange-traded funds available today, they allow investors to gain total market exposure through a single investment. Instead of choosing individual companies or reacting to market charts, investors can follow a broader approach that tracks the overall market. It doesn't remove uncertainty, but it can make the process feel clearer and easier to manage over time.
Here's how everyday investors are taking advantage of total market ETFs to build wealth:
Using Total ETFs as a Core Holding
One common strategy involves using a total market ETF as the core holding in a portfolio. Instead of choosing a traditional mutual fund, investors may allocate a large share of their equity exposure (stock investments) to one broad index fund. This makes it easier to understand what the portfolio represents at a glance.
Because total market ETFs reflect a wide range of companies, they're often structured as passively managed investments. They tend to follow a market-cap-weighted portfolio, which means larger companies carry more influence based on their market capitalization. For investors who want a simple foundation without constant decision-making, this setup can feel practical.
To make informed investments, look for total market ETFs with a clear structure and transparent costs. Review the expense ratio and management fees to see how much the fund charges for its operations. You should also ensure the fund closely follows its index. This ensures your investment actually moves in sync with the broader market over time.
Pairing Total ETFs With Other Asset Types
Another strategy focuses on balance across asset classes. Investors often pair a total market ETF with bonds, cash-based holdings, or other asset class options to shape their overall risk level. This pairing enables adjustments without altering the primary equity position.
For example, someone might hold a total ETF for domestic stock exposure and add bonds as they approach retirement. Others may explore asset-allocation opportunities by adding small positions tied to emerging markets. This keeps the structure simple while leaving room for personal preferences.
Simplifying Contributions and Rebalancing
Total market ETFs can also simplify the process of adding money over time for investors. With fewer holdings, deciding where to allocate new contributions becomes more straightforward. Many investors direct regular deposits into the same fund rather than splitting money across multiple options.
This simplicity extends to how you handle dividends. Because these funds hold thousands of companies, the combined dividend yields provide a steady stream of cash.
Rebalancing can feel easier as well. Instead of tracking multiple net asset value (NAV) changes across different funds, investors can focus on adjusting the percentages between their primary holdings. While market prices still fluctuate daily, this structure may reduce the frequency with which investors feel the need to make changes.
Reducing Overlap and Unnecessary Complexity
Many investors sometimes add new funds until their holdings become a tangled web of overlapping investments. For instance, an investor might hold a Large-Cap Fund, a Tech Fund, and a Growth Fund only to realize that all three are heavily weighted in the same companies.
Consider the difference in management:
- The cluttered portfolio: 10+ niche funds requiring constant monitoring of different expenses, varying dividend schedules, and manual rebalancing to keep the math right.The streamlined portfolio: A core-and-satellite approach using one total market ETF for 90% of the holdings.
- The cluttered portfolio: 10+ niche funds requiring constant monitoring of different expenses, varying dividend schedules, and manual rebalancing to keep the math right.
- The streamlined portfolio: A core-and-satellite approach using one total market ETF for 90% of the holdings.
With fewer overlapping positions, reviewing total return can feel more straightforward. Investors don't need to sort through several similar funds to understand how the portfolio is progressing over time.
Managing Risk Through Broad Exposure
Risk doesn't disappear with a total market ETF, but it looks different. Instead of being tied to a single company, investors diversify their exposure across multiple sectors and companies of varying sizes. This can soften the impact of sudden moves tied to individual stocks.
Even with broad exposure, factors such as stock market risk and tracking error risk persist. Investors may also encounter differences in category risk level depending on how the fund is built. Understanding these risks, along with ideas like the risk-reward scale, can support more informed decisions without adding complexity.
Supporting a Long-Term Mindset
Many investing challenges stem from behavioural issues, not strategic ones. When portfolios feel complex, it's easier to second-guess decisions during market swings. A total market ETF can support a calmer mindset because it doesn't rely on short-term predictions.
Since these funds track broad market indices, investors may focus more on consistency than on daily fluctuations. Over time, this perspective can align better with evaluating risk-adjusted performance rather than reacting to short-term changes.
Adjusting Strategies Over Time Without Starting Over
Life changes often lead to strategy changes. Income shifts, family needs, or retirement planning can all affect how investors approach their portfolios. Total market ETFs can accommodate these changes without necessitating a complete reset.
Instead of selling core holdings, investors may adjust surrounding positions or contribution levels. Some may compare net assets, expense ratio details, or assets under management when reviewing options. This continuity enables portfolios to evolve while maintaining a familiar structure.
Conclusion
Everyday investors use total market ETFs in different ways, but simplicity often sits at the center of their approach. Whether used as a core holding, paired with other asset classes, or adjusted over time, these funds can offer a clear framework for long-term planning.
They don't guarantee outcomes or remove risk, but they can make investing feel more approachable. For individuals seeking a strategy that aligns with real life, a total market ETF can provide a steady foundation without unnecessary complexity.
Editorial staff
