Here's How to Build a Passive Income Portfolio With ETFs

1 hour ago 2

Dana George, The Motley Fool

Tue, June 16, 2026 astatine 9:05 AM CDT 3 min read

There are plentifulness of reasons exchange-traded funds (ETFs) entreaty to investors. First, it's casual to cognize what you're buying due to the fact that they way circumstantial indexes, and second, ETFs typically person debased ongoing costs. Simply owed to the options disposable successful the ETF market, it's wholly imaginable to physique a implicit and balanced ETF-only portfolio.

Here's what you request to cognize astir creating 1 yourself.

Will AI make the world's archetypal trillionaire? Our squad conscionable released a study connected the 1 little-known company, called an "Indispensable Monopoly" providing the captious exertion Nvidia and Intel some need. Continue »

3-D letters spelling retired "ETF," with the words "Exchange Traded Fund" below.

Weigh your hazard tolerance

The archetypal measurement is to find however overmuch tolerance you person for taking concern risks. If you're precise adjacent to status oregon simply can't unbend knowing that you're invested successful high-risk holdings, you whitethorn privation to absorption connected broad-market ETFs. Broad-market ETFs supply instant diversification by tracking indexes that screen hundreds oregon adjacent thousands of stocks crossed each markets and sectors.

Let's accidental you're not a large instrumentality of risk, but you are funny successful healthcare stocks. A broad-market ETF is apt to see the top-performing healthcare stocks, but dissimilar with a sector-specific ETF, your full ETF isn't babelike connected healthcare doing well.

Choose the close types of ETFs

A well-balanced passive-income portfolio usually blends categories. While you tin take arsenic galore ETFs arsenic you'd similar to include, you tin besides support it arsenic elemental arsenic buying 2 ETFs. For example:

A full satellite banal marketplace ETF: Index funds that way planetary benchmarks from the U.S., developed countries, and emerging markets. One illustration is the Vanguard Total World Stock ETF (NYSEMKT: VT), which has 10,041 holdings and a year-to-date instrumentality of 10.48% (as of June 11).
A full enslaved marketplace ETF: Tracks the show of a broad, diversified scale of bonds. An illustration is the iShares Core U.S. Aggregate Bond ETF (NYSEMKT: AGG), which covers everything from Treasury bonds to mortgage-backed bonds and investment-grade firm bonds.

Income-producing ETFs

If you're hoping for income, prioritize dividend-paying ETFs. However, if you're comparatively young and inactive increasing your portfolio, you whitethorn beryllium amended disconnected accumulating ETFs that automatically reinvest earnings. One happening to support successful caput is that, dissimilar enslaved coupon payments, ETF dividend payments are not guaranteed.

Before determining however galore ETFs you'd similar successful your portfolio and which operation of ETFs fits your goals and hazard tolerance best, it whitethorn wage to enactment with a fiscal advisor. A fiscal advisor tin tally assorted scenarios for you to exemplify imaginable outcomes.

Read Entire Article