ETF investing done right

For the most safety, go with ETFs that track the major asset classes and come from a provider with a long, stable history (the big three: Barclays iShares, State Street, and Vanguard). "You can build a portfolio with just four or five funds that will give you plenty of diversification," says investment adviser Rick Ferri, author of "The ETF Book" (for his suggestions, see graphic on this slide and next).

NEXT: 2. Make sure your pick is really an index ETF