ETFs, Baby Boomers and Turning 60

ETFs, Baby Boomers and Turning 60

Our generation needs to think about ETFs differently.

Reviewed by: Staff
Edited by: James Rubin

Today, I turned 60. It didn’t hit me until a few weeks ago when, at an early birthday celebration, I saw that number and my name in the same short sentence atop a cake. Oh boy, this stuff’s getting real. 

And as I cross that threshold with my Baby Boomer peers (I was born during the last year of that boom, which started right after World War II), and realize that 12,000 people a day in the United States will turn 65 this year, I wish to emphasize a message my colleagues at and I have been shouting through our words and podcasts about ETFs.  

ETFs: Aligning Perception and Reality 

My primary concern is that the Baby Boomer generation still thinks of ETFs as quirky little index funds to own “the whole market.” Nearly every word of that statement is inaccurate or at least leaves a lot of meat on the proverbial bone. 

As popular as this $11 trillion industry is, I still see their greatest features and differentiators from other security types ignored. Referring to that statement I made just above, ETFs are not simply “index funds.” If that were the case, the product innovators in this field could have stopped after making 34 of them, instead of 3,400 and counting.  

ETFs Solve Investment Puzzles! 

The real attraction to investors goes beyond planting money in the SPDR S&P 500 Trust (SPY). While no longer an advisor, I do comment on trends I see in investor behavior. There are constant messages out there regarding ETFs, but I fear a lot of it just gets swiped left…or right, whichever one of those means “not interested.”  

For investors with 30 or 40 years until they pivot from building wealth to sustaining and spending it, they can more afford to limit ETFs to a verb (“I just take my savings and SPY it”). But for my boomer peers, ETFs represent an elegant, robust set of “puzzle pieces” to build and manage portfolios, actively or passively.  

High Points of ETFs 

Or, as Fonzie from Happy Days might have said, some boomers are “cruisin’ for a bruisin’.” And this is no time in our lives to put our market exposure totally on cruise control. So, here’s my tight summary of high points about ETFs that I want to document upon my 60th birthday. Because I’m so much of an ETF geek, this easily qualifies as a present to me…and hopefully for others.  

  1. ETFs are more than broad market index funds. In fact, the S&P 500 and Nasdaq 100 are so crowded at the top, they are not diversifiers like they used to be. That’s due in large part to SPY gaining 32% over the past three years, while the average stock among the top 1,000 gained only 4%. The Invesco Russell 1000 Equal Weight ETF (EQAL) tracks the latter measure.  
  2. The range of possibilities with ETFs is nearly endless, as my colleagues and I have covered here at sectors, industries, and themes. Bitcoin, individual commodities, and ETFs go up when some slice of the market goes down. It is all within reach. There are ETFs that efficiently own T-bills and other types of bond investments, and leveraged ETFs that trade off more risk for less capital outlay. We even have ETFs that apply leverage or inverse techniques to owning high-profile stocks. I have tried every single one of those ETF “genres” in my own portfolio the past several years. From an investing and intellectual standpoint, it is liberating, and provides a sense of control over one’s retirement destiny. 
  3. It is all there for the taking. So, take it! Boomers simply need to spend time learning more and personalizing their use of ETFs, rather than default to what “everyone else does.” Or find a pro, or explore the robust field of investment research, which expanded amid a surge in self-directed investing during the pandemic. 
  4. Choose your own path but do choose a path! I have always approached investing as more about understanding all the routes that can be taken, then choosing which ones I want to take. And I’d be very upset as an investment industry “lifer” that my Baby Boomer brethren had a chance to avoid having their wealth path become as cyclical as modern markets are, without ever having put in the effort to know what risks and rewards were a few clicks away. 

So, whether you are 60 or within 20 years either side of that age range, there has never been a better time to go beyond the “same old same old” investment approaches. When markets fall hard, nearly all stocks go down. And we have learned in this new inflation era that bonds are not what they once were. ETFs help fill in the gaps, or they complete the puzzle all by themselves. Take it from one new member of the 60+ club: it is worth the effort. 

Rob Isbitts' Wall Street career spans 5 decades and multiple roles, all dedicated to providing clarity to investors by busting classic myths and providing uncommon perspective. He did so as a fiduciary investment advisor, Chief Investment Officer and fund manager for 27 years before selling his practice in 2020. His efforts now focus exclusively on investment research, education and multimedia. He started ETFYourself and SungardenInvestment to provide straightforward commentary and access to his investment intellectual property for portfolio construction, stocks and ETFs. Originally from New Jersey, Rob and his wife Dana have 3 adult children and have lived in Weston, Florida for more than 25 years.