If exchange-traded funds (ETFs) like the SPDR S&P 500 ETF Trust (SPY -0.90%) or the SPDR Dow Jones Industrial Average ETF Trust (DIA -0.65%) just aren’t your thing as an investor, you’re not alone. Putting your money into individual stocks is considerably more exciting, as each one offers you the chance to plug into a particular company’s growth story. Conversely, ETFs are just big baskets of equities bundled into logical groupings, and their results can be weighed down by their laggards as much as they’re lifted by their leaders.
Don’t assume, though, that this lack of excitement means they’re destined to be subpar performers. Exchange-traded funds generally perform just as well as most portfolios of hand-picked stocks do — if not better — and are just as capable of turning your consistent stream of moderate investments into a million-dollar retirement stash.
In fact, ETFs may actually be better suited for the task of retirement investing than individual stocks are.
The broad market is bullish enough
Most investors inherently understand that ETFs such as the aforementioned SPDR S&P 500 ETF Trust and the SPDR Dow Jones Industrial Average ETF Trust reflect the performances of the S&P 500 (^GSPC -0.96%) and Dow Jones Industrial Average (^DJI -0.57%), respectively. For better or worse, they’re meant to match the performance of the broad market rather than beat it.
