3 ETFs to own until you die

There are some products we simply can't live without.

By InvestorPlace Oct 23, 2013 1:02PM

Portfolio account statement © Alamy Creativity, AlamyBy Lawrence Meyers

 

iplogoEvery now and then, it's good to do a reality check and take a hard look at your portfolio. Is there something missing from the long-term portion of it that you need to fill in?

 

If you do find yourself lacking some surefire, forever holdings, consider simply picking the best ETFs in the best long-term sectors.

 

See, there are some sectors that I want to hold forever because I consider them to be intrinsic to our lives as human being on planet Earth. It may sound exaggerated, but there really are some products that it's nearly impossible to imagine life without. If they were to vanish, people would be at a loss.

 

The companies that cater to such products are thus great buy-and-hold investments. But rather than choosing individual stocks in a sector, it's smart to take a more conservative approach and buy the best ETFs. They provide diversification in the event one chosen company blows up.

 

Take a look at the three best ETFs to own until you die.

 

Energy SPDR

Energy holdings of some kind are a must, as energy is a massive, massive industry with a foothold in every developed nation ... and in many emerging ones as well. Heck, the world has wars over oil, the technology used to extract and refine it continues to evolve, and it remains absolutely essential to everyday life.

 

That's why a good buy-and-hold stock would be an energy stock like BP (BP). Of course, you sure didn't want to be a BP shareholder during the Deepwater Horizon debacle ... which is why an energy ETF is an even smarter way to play the space.

 

The best energy ETF is the Energy SPDR (XLE). It holds all the important names, with top holding ExxonMobil (XOM) taking up 15 percent of the fund, followed by Chevron (CVX) and Schlumberger (SLB), which just posted killer earnings.

 

Plus, this energy ETF pays a solid dividend just under 2 percent, is highly liquid and can be yours for a mere 0.18 percent in expenses. That makes the XLE a critical component of any long-term portfolio.

 

Consumer Staples SPDR

ext up, we have an ETF that encompasses some of the most famous names in the world. And those names -- and the stocks associated with them -- are famous because their founders figured out decades ago that certain products must always be purchased by human beings, particularly in developed nations.

 

That's why those products are called "staples."

 

The best ETF for must-have consumer products is pretty obvious as well: The Consumer Staples SPDR (XLP). The XLP includes a wide range of companies, which provide everything you could possibly need.

 

There are basic healthcare and hygiene products from Procter & Gamble (PG), beverages that are cheap from Coca-Cola (KO), tobacco from Philip Morris International (PM) and the catch-all store that is Walmart (WMT).

 

Investors even get a 2.5 percent yield out of it, all for that reasonable expense ratio of 0.18 percent.

 

Financial SPDR

Lastly, we have the Financial SPDR (XLF), which may surprise some people since many think that we are going to suffer at least one more financial crisis in the future.

 

I disagree -- I guarantee we'll have even more than one.

 

But still, financial services are completely wrapped around everything we do. That's because consumption is what we do best ... and you can’t consume unless you purchase, and you can't purchase unless you have at least one financial service company involved.

 

And those services I'm referring to go way beyond banking, by the way. There's so much infrastructure associated with financial services, it would make your head spin.

 

The good news is that all aspects of the financial world are wrapped up nicely in the XLF, with Warren Buffett's Berkshire Hathaway (BRK.B) stealing the title of the fund's largest holding. And again, this SPDR comes with rock-bottom expense ratio of 0.18 percent.

 

The XLF may have some volatility here and there, but over the long term it remains one of the best ETFs you can buy, and an obvious core holding for any portfolio.

 

As of this writing, Lawrence Meyers owned shares of XLE, XLF and XLP.

 

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43Comments
Oct 23, 2013 3:28PM
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Well, XLE and XLP are good ETF's (the financial-XLF-that's a sucker's bet), BUT they are all at their 10 year highs. You can do what you want, but if I were inclined to buy either of the two good ones, I might want to wait for a pull back, even if it's a year or two down the road.

 

Funny how these "must buy" articles always seem to be written when the investments they're pushing are at their peaks. Just once, I'd like to see an article that's pushing something BEFORE it doubles in price. Where was this article in 2009 when XLP was $20, or XLE was $42, hmmm?

 

 

Oct 23, 2013 3:30PM
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Why buy any fund whose largest holding is Berkshire when you can buy the stock outright and not have some fund manager clipping 1%-2% off of your gains in BS load fees?  Berkshire is pretty much a fund in and of itself.
Oct 23, 2013 2:31PM
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Did the manipulators get together and decide not to let the Dow rise above 15400 today!?
Oct 23, 2013 2:28PM
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Like this advice. Except for XLF. A wise investor told me early on to stay away from financials.

He was right.  Worked for me too. Especially in 2008.

You can do fine over the long run without them.

Just stick with the tangibles.

Oct 23, 2013 2:53PM
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I can think of several things that seem someone could not do without and would go on forever back when I was younger-Diaper services, landline telephone companies, bookstores, magazine, newspaper and book publishers.  K-Mart once seemed unstoppable, who would have thought Sears would ever have collapsed?  Could it be some of thes buy and hold forever businesses might end up the same way?  Make a note to check up on this article in about 30 years.
Oct 23, 2013 3:14PM
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There may be a ton of Products we can't live without, although we actually can, but the landscape in the time-frame described should be totally different than now. Anyone suggesting buy and hold to infinity in face of what we currently face as a Global Society is just plain insane. I suggest Buy and Hold until you make a decent profit, Fundamentals and or the investing climate changes. That could be tomorrow.

We can only go by we know and not rely on past results as any promise of our future. I happen to find an Article talking about the remarkable stock moves of the 1990s. Now that was a heck of a period of making profits. Unless you held to infinity. Folks rarely however talk about the extended periods where Stock didn't go anywhere. I can easily see Global Stocks entering another long period of nothing, after the Current Impressive Bull Run Ends. It's really not about how, it's about can you take advantage. Some folks will get in while others won't. That's a personal choice. You don't tell folks they Have to get in. They Don't.

Soaring National Debt, Massive Global Fed Printing, and a massively unsolved Derivative Bubble Problem. But sure, everyone just forget about that and own until you die.

Oct 23, 2013 2:58PM
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Remember Citi going from 50 something to 2 and change in 08?

How did that work for anyone then who didn't stop out early on?

Financials?  XLF?

Not so much.

Oct 23, 2013 3:52PM
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the manipulators have pushed the markets to ridiculously high levels for a couple of years with nothing but world crisis happening
Oct 23, 2013 4:09PM
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This is not picking great companies, it's just trying to cherry-pick sectors. Sectors are constantly getting hot or cold based on speculation. Sometimes that continues, sometimes not. I doubt this particular investment plan would even hold up to back-testing, compared to just investing in SPY. And even back-testing is not a panacea for what might happen in the future.
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No stock goes up forever...timing is everything...Do your own research...pick your entry and exit strategies before you invest...sell when a stock doubles your entry point and take a vacation with 1/2 and give the other 1/2 to your kids.
Oct 23, 2013 6:52PM
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If you invest based on other people's advice, you will go broke soon enough. Stay away from CNBC and ignore stupid articles like this one. I remember back in 1999, some analyst on CNBC was touting BEA Systems after the stock had hit a new high. Sure enough that was the top and stock tanked ever since and never recovered.
Oct 23, 2013 5:15PM
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Why hold onto anything until you die???? So someone else can inherit it??? 
Oct 23, 2013 7:32PM
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No16

 

Another thing, just watch and see what happens to cable and satellite companies. From what I've been hearing, they're next on the list of the industries you've mentioned. I thought the same thing about some of those industries you mentioned, especially bookstores like B&N and Borders. When Borders went out of business a couple of years ago [coincidentally right about when I got my kindle], I started to take a real hard look around, and you're right. I think satellite and cable providers are next, even though I could be wrong. Also take a look at what happened to the music industry.

Oct 23, 2013 2:57PM
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It's refreshing to see a writer, put out an Article and actually have "skin in the game" that he writes about or suggest ideas that may be good investments..."Hats off to Larry"
Oct 23, 2013 3:58PM
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Yeah -- the market must be under manipulation, since it is not following what I think it should be doing.
Oct 23, 2013 5:44PM
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I don't see buying ETF's as a "hold for life" kind of strategy.  It can work, but it won't work any better than carefully buying the right individual stocks.  And the ETF's can work a lot worse than individual stocks if the individual stocks are chosen based on a strong value proposition.

 

Look at a stock that most would say is one of the very worst individual stocks in the financial sector.  Twenty-five years ago it sold for about $7 a share.  Since then it has paid almost $21 a share in dividends.  Today it sells for about $14 a share.  So, tell me... would you not like to hold stocks like this.  One that returns over 300% in dividends in 25 years and still grows by a compounded 2.5% per year.

 

Take a look at the last 25 years of history for Bank of America.  That's what you will see.

 

Then look at Walgreens.  $10,000 invested in Walgreens 50 years ago is worth millions today and that doesn't even count the dividends.

 

There are other stocks out there like these.  You have to hunt for them and you won't always get it right.  But then you don't have to always be right.  If you only land on one of these stocks in a lifetime and you hold it for a lifetime, it will take care of you during your old age.  Isn't that what we are investing for in the first place?

Oct 24, 2013 8:25AM
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I would never and I mean never buy everything from one Company !!!!!!!

 

This is nothing more than a Glorified Advertisment for State Street !!!

 

Shame on you Lawrence Myers !!!!!!!

 

You can achieve the same thing through other Fund Families folks - Don't buy into this Bull !

Oct 23, 2013 4:10PM
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Also realize that all the Capital Growth gains (not dividends) may never be taxed. When you die and give the shares to children the basis is reset to the value of the share when you die.  So if a share grew from $10 to $100 that $90 per share gain is gone. If you kids sell the day they receive the shares at $100 the gain will be considered $0. This is a tax loophole that the top 1% dont like talked about.
Oct 24, 2013 6:55AM
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There must be contest to see who can write the dumbest article each day. Today's winner is this one. Frankly, only folks in comas don't see the adverse effect of fiat money printing, no economy and an overwhelming stagnation caused by greedy people worldwide. All this-- fails, and the best guess is- that it's coming toward us like a Tsunami Wave. Go ahead and invest... fools and their money are easily parted. 
Oct 23, 2013 3:02PM
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I would agree with the Financials XLF, ProfitProphet.....BUT recently depending on what is held in the Fund, some Banks and Institutions have came back nicely since Meltdown,Recession, & Recovery.

And haven't checked to see how old the ETF/XLF is, doubt it is over 5 years. 

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