If you can buy just one share, this is it

I love picking stocks. Nothing beats the thrill of researching a company, analyzing its finances, delving into its business model, and determining where its investment reserves are headed. And I’ll show you the whole process, from finding the first glimmer of promise to slamming the “buy” button with both hands. I have no intention of changing it.

But picking stocks one by one works only if you can get a lot of stocks. I know what they say about eggs and baskets.

Stockpicking thrills and spills

There is no such thing as a risk-free investment.

for example, netflix (NFLX 8.46%) We continue to deliver excellent results and significant shareholder value. This stock has made me a ton of money over the years, but media-streaming expert stocks tend to plummet every now and then. What if you need to liquidate your Netflix shares after the market has slowed and the stock has dropped 77%? Clearly, this ticker is not suitable for an outright commitment to a single ticker.

And Netflix isn’t the only one at risk. In fact, every business faces a mix of obvious and unknown risks at all times. Parent of Google alphabet (GOOG 5.72%) (Google 5.34%) It may have seemed invincible for years, but now everyone is concerned about artificial intelligence bots stealing the online search market. chevron (CVX 1.06%) When exxon mobil (XOM 1.82%) Once an impregnable paragon of value, it now faces challenges from renewable energy sources and electric vehicles.

And it gets worse, too. Enron was a highly respected blue-chip company where people could comfortably park their life savings and nest eggs. Lehman Brothers was America’s fourth largest investment bank and was actively advising people on how to manage their money. Lehman in 2008 or he went all-in on Enron in 2001 and you’re not going to be left with anything anytime soon. Remember, these were very respectable businesses until they weren’t.

Find inspiration at Berkshire Hathaway

Stock selection works, but only if you set up a diverse portfolio across different industries, geographies, and business models.

Look at Warren Buffett Berkshire Hathaway (BRK.A 1.67%) (BRK.B 1.52%) As a great example to follow. To simplify Berkshire’s investment history, its portfolio was built around insurance companies and banks, then expanded into retailers and restaurant chains. Berkshire’s holdings now extend into sectors Buffett never touched a decade or two ago, including video game studios and microchip makers.

When apple (AAPL 1.92%) It represents 42% of Berkshire’s invested assets. The iPhone maker’s portion of Berkshire’s collection is so large that I wouldn’t be surprised to see Buffett’s team take some of Apple’s profits off the table and relocate it to other ideas. It’s one thing to let it and it’s one thing to let it dominate the portfolio.

I don’t care how respectable your favorite company is, how guaranteed its long-term success is, or how much you trust its management team. No single stock, bond, cryptocurrency, real estate parcel, or other one-trick pony can be trusted to carry your entire net worth.

Even the safest bets aren’t worth the risk. No, even Berkshire Hathaway has a broadly diversified portfolio of its own investments. How deep is Berkshire’s bench when Warren Buffett and Charlie Munger are no longer running the show? can be centered. But it shouldn’t be 100% of the eggs in your nest.

ETFs: The Ultimate Stock Market Safety Net

If you really can’t or don’t want to combine your stock collection with a few dozen tickers, there’s an easy way out. The trick is to choose a passive Exchange Traded Fund (ETF) that simply tracks popular market indices on tens, hundreds, or even thousands of stocks. If one or more of the individual companies in your chosen index turns out to be bad eggs, the ETF price will drop to a limited extent, but life goes on. Failed stocks are immediately exchanged and continue to share in the broader market’s profits.

Popular options include ETFs that reflect their constituents. S&P 500 (^GSPC 1.89%) Also Russell 3000 index.passive funds such as Vanguard 500 Index Fund (VOO 1.84%) When iShares Russell 3000 (IWV 1.88%) We offer a large collection of diverse stocks, featuring low expense ratios due to the automated nature of index tracking investments.

So if I could pick just one ticker to keep my life savings, it would be one of these index-tracking ETFs.

And here is the best part. You can always start your investment experience with one of these safe and sound ETFs and add specific tickers on top of that fundamental base as you become more familiar with the stock market.

And at the end of the day, if stock selection proves not to be your cup of tea, you can always go back to the index-based ETFs you started with. Beating the market is a lofty goal, but the S&P 500 Nothing wrong with simply matching the long-term returns of a healthy index like . Triple in 12 years.