How to Choose ETFs? We asked our members this question, and here’s what they shared:
“I invest in what I’ve heard of, like the S&P 500 or FTSE 250 index fund. Familiarity plays a role in my investment decisions.”
“I invest in what I’m passionate about. Sustainability is a big focus for me, so I choose ETFs aligned with that.”
“I invest in the regional market I believe in, such as Asia, Germany, or China.”
WInvest Collective
Choosing funds to invest can feel overwhelming, especially when you have a lump sum but are unsure of the platform or fund to choose. Don’t worry, we’ll guide you through it step by step!
First, let’s understand what an ETF is. Think of it as a makeup palette: if one stock is like a single blush, then one ETF is like a blush palette with various colours and options.

Here’s how we, the WInvest team, choose our ETFs:
- 1. Start with beginner-friendly resources: Utilise beginner-friendly investment resources like Forbes Money, Financial Times for overall ETF recommendations. You can also explore Reddit to learn from investment connoisseurs who have invested in and reviewed ETFs. Sophia from WInvest: The key is to find trustworthy sources and consider multiple references.
- 2. Start with broad market indexes: For beginners, it’s often recommended to begin with ETFs that track broad market indexes like the S&P 500 or total market indexes. These ETFs offer diversified exposure to a wide range of companies. Sophia from WInvest: In my ISA stocks and shares account, the S&P 500 still makes up over 50% of my holdings.
- 3. Research the fund provider: Stick with well-established fund providers known for their expertise and credibility in managing ETFs. If you want to know the investment fees for your lump sum among different providers, check out this resource: https://www.boringmoney.co.uk/isas-pensions/isas-pensions/. Sophia from WInvest: When you start with small investments, having a fixed fee in the platform (aka all-inclusive) might occupy a significant portion of your investment.
- 4. Keep expense ratios low: Look for ETFs within the platform that have low expense ratios, which are the fees charged by the fund. Lower fees mean more of your investment stays in your pocket. In general, active funds charge more, while passive funds, usually index funds, charge less. Sophia from WInvest: Did you know? Passive funds often outperform active funds? Learn more here: https://executiveeducation.wharton.upenn.edu/thought-leadership/wharton-wealth-management-initiative/wmi-thought-leadership/active-vs-passive-investing-which-approach-offers-better-returns/ https://www.fool.com/investing/how-to-invest/active-vs-passive-investing/
- 5. Check the fund’s performance: Review the historical performance of the ETF to understand how it has performed over time. Remember, past performance doesn’t guarantee future results. Sophia from WInvest: Ask yourself, are you willing to experience that amount of loss (the opposite of the gain)? If so, you’re ready!
- 6. Diversify your investments: Consider ETFs that provide exposure to different sectors, industries, or regions. Diversification helps spread risk and can enhance long-term returns. Sophia from WInvest: My worst-performing fund in 2022 was actually S&P500, but luckily, my other funds balanced it out. Therefore, diversifying your portfolio across different sectors, industries, and regions is also crucial. Not sure which sectors or industries to try? Refer to step 1, checking multiple credible sources and community review platforms like Reddit or WInvest’s community to validate your thoughts.
- 7. Start with a small investment: Begin with a small amount to get comfortable with the investment process. As you gain confidence and knowledge, you can gradually increase your investment. Sophia from WInvest: For employees, it’s beneficial to include a monthly investment and forget about it. For founders/freelancers, make a lump sum investment whenever you have extra income coming in. Start small with each new investment, test the waters, and try different strategies. You’ll be much more comfortable engaging further once you’ve gained experience.
Is ETF investing for everyone? Here are the pros and cons for you to consider:
Cons of Investing in ETFs:
- Market fluctuations: ETFs are subject to market volatility, and their value can go up or down based on market conditions.
- Lack of individual control: Since ETFs represent a basket of assets, you have less control over the specific investments within the fund.
Pros of Investing in ETFs:
- Diversification: ETFs offer diversification by investing in a basket of different assets, reducing the risk of relying on a single investment.
- Convenience: ETFs are traded on stock exchanges, making them easy to buy and sell throughout the trading day.
- Lower costs: ETFs typically have lower expense ratios compared to actively managed funds, which means more of your investment stays in your pocket.
Happy Investing!
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