ETF investing done right

A slew of ETFs now track narrow or exotic markets, everything from crude oil to Colombian stocks. They often fail to attract enough investors, so many close down; 92 ETFs have slammed shut in the past 12 months, including offerings from PowerShares, Northern Trust, and Claymore. More liquidations are likely. You get your money back when an ETF closes, but you may incur an unpleasant taxable gain or realized loss.

So unless you really want to take a flier, shun funds that follow a narrow strategy. And make sure any ETF you buy has accumulated assets of $50 million or more.

NEXT: 4. Leverage? Are you nuts?