Why I Chose ETFs Over Individual Stocks in My First Year of Investing
When I first decided to start investing, I’ll admit — I was overwhelmed. There were thousands of stocks, endless financial jargon, and advice coming from every corner of the internet. Like many beginners, I felt the pressure to pick "the next big thing" or time the market just right. But after weeks of research and a few hard lessons, I made a decision that shaped my first year of investing: I chose ETFs over individual stocks.
This wasn’t just a random choice — it was a calculated move rooted in my own experience, goals, and risk tolerance. In this article, I’ll explain why ETFs became my go-to strategy, what I learned in the process, and why I believe this path is ideal for many first-time investors.
What Are ETFs, and Why Do They Matter?
Before diving into my personal story, it’s important to understand what ETFs are. An Exchange-Traded Fund (ETF) is a basket of securities — like stocks, bonds, or commodities — that trade on a stock exchange just like a single stock. One ETF might hold hundreds of companies from the S&P 500, while another might focus on tech, clean energy, or even international markets.
The key advantage? Instant diversification. By buying one share of an ETF, I was instantly exposed to dozens or even hundreds of companies. That was a game-changer for me.
The Temptation of Picking Individual Stocks
Like many beginners, I was drawn to the idea of stock picking. The headlines made it seem easy: “Tesla up 200% this year!” or “Apple announces new product line — stock soars!” I thought, If I can just find the right stock, I’ll be rich.
So I tried. I bought shares of a popular e-commerce company because it was trending on social media. Then I invested in a tech startup I barely understood. The results? One stock tanked 30% after earnings. The other was flat for months while I anxiously refreshed my portfolio every morning.
That’s when it hit me — I wasn’t investing. I was gambling.
Why I Switched to ETFs
After realizing how emotionally exhausting and risky stock picking was for a beginner like me, I took a step back. I reassessed what I really wanted from investing: steady growth, peace of mind, and a system I could stick to.
Here’s why I ultimately chose ETFs:
1. Diversification Without the Headache
By investing in broad-market ETFs like VOO (S&P 500) or VT (Total World Stock), I didn’t have to worry about one bad earnings report wiping out my gains. The losses of one company were balanced by the gains of others. This reduced my stress — and my risk.
2. Low Fees, High Flexibility
Most ETFs charge expense ratios as low as 0.03% — basically pennies per $100 invested. That meant I could invest confidently without losing money to hidden costs. Plus, I could buy and sell ETFs as easily as individual stocks, giving me full control over my portfolio.
3. Automatic Exposure to Winners
ETFs like VOO automatically adjust their holdings to include top-performing companies. I didn’t need to guess who the next big winner would be — the ETF did that for me.
4. Emotion-Free Investing
With ETFs, I stopped obsessing over company news or price charts. I focused on consistent contributions instead of reacting to every market move. This helped me build better habits and a healthier mindset toward money.
My ETF Strategy in Year One
I kept it simple. I allocated monthly contributions into three main ETFs:
- VOO – for exposure to U.S. large-cap stocks
- VXUS – for international diversification
- BND – for bond exposure to reduce volatility
I set up automatic investments on the same day each month — a strategy known as Dollar-Cost Averaging. This meant I bought more shares when prices were low and fewer when prices were high, smoothing out my cost over time.
Within a year, I had built a well-balanced portfolio with less stress and more confidence. My returns weren’t flashy — but they were steady. And more importantly, I slept well at night.
Lessons I Learned by Choosing ETFs
1. Simplicity Wins
You don’t need to trade daily or chase trends to grow wealth. A simple ETF strategy outperformed many individual stock portfolios in my circle of beginner friends.
2. Consistency Beats Timing
While others tried to time the bottom, I just kept investing — rain or shine. Over time, this paid off as markets recovered and grew.
3. Investing Is Personal
Some people thrive on analyzing companies and studying fundamentals. That’s great. But for me, ETFs offered a balanced approach that fit my lifestyle and temperament.
Will I Ever Pick Individual Stocks Again?
Maybe. Now that I understand the basics, I feel more equipped to analyze companies and make informed decisions. But even if I start picking individual stocks, ETFs will always be the core of my portfolio — the reliable engine behind my long-term goals.
I’ve also learned that investing isn’t about bragging rights or trying to “beat the market.” It’s about building habits, minimizing risk, and staying the course. ETFs helped me do all three.
Final Thoughts
If you’re new to investing, you might feel pressured to make big moves or chase hype. But there’s nothing wrong with starting simple. In fact, choosing ETFs was the smartest move I made in my first year — and I believe it laid the foundation for everything that comes next.
Don’t let complexity or fear hold you back. Focus on consistency, diversification, and learning as you go. The stock market rewards patience — and ETFs are one of the best tools to build it.
Ayzalme
Just a calm man, enthusiast for investing and technology.