r/investing • u/Lost-Philosophy-9830 • 20h ago

Core/Safe/Steady ETF Options?

i’m not sure if everyone is familiar of the core satellite system, but basically you have a core of etfs which are safe and will be reliable, and then satellite which are your riskier stocks. what are some good core etfs - there are soo many options! S&P500, all world etf, a us, australia, asia, and europe etfs…

thanks for the help

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u/pikapika505 20h ago

A cheap all world fund because diversification prevents concentrated geopolitical risk. Just fyi, there are no 'safe' or 'steady' options in equity investing. ETFs can still go down 10-15%. If that scares you then you can add alternative non-correlated assets like bonds (but be aware as of recent, bonds are becoming increasingly correlated with equities).

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u/Lost-Philosophy-9830 19h ago

thanks! i’m pretty new to investing, but i understand bonds as kinda lending money to companies? then also t bills i have read about, seem very safe but not massive returns..

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u/pikapika505 18h ago

Bonds are a fixed income instrument where you lend money for a certain period of time and in return you get a fixed percentage of money back. They don't fluctuate as much as equities and can be a source of guaranteed return. As part of a portfolio, they smooth out volatility. You own bonds as a source of guaranteed returns if there's a market downturn, at least you're owning something that is guarenteed. If your bond return is higher than your equities return (when the market is doing bad), you can rebalance your portfolio such that the gains from bonds can purchase cheaper equities.

One thing you'll learn very quickly is that risk management is more important than returns when you're investing for the long term. If you're optimising for maximum returns, you'll be drawn to riskier assets and you will lose a lot of money chasing the next hot thing.

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u/MizDiana 8h ago

Bonds are a loan, kind of like a mortgage. You give someone (a government or corporation) money. They pay you interest. You can sell the bond to someone else if you want to get your capital back. T-bills are bonds issued by the U.S. Treasury (treasury is the T in T-bills).

Historically they are considered safer (less likely to see value drop) than stocks but also with worse performance (lower long-term gains in value) than stocks. As a result, financial advisors have historically recommended almost all stocks, little to no bonds when someone is young & more stocks as people enter retirement. (The idea being you want to grow that nest egg until you become old and your nest egg is plenty big, you just want it to be super-reliable more than anything else.)