When it is okay to use ETFs

There is a lot of debate on whether or not ETFs are a good investment. I am not sure that I want to open that can of worms, but for student investors, I think that ETFs are quite useful in accessing markets not offered by your broker. That is to say, most students use online discount brokers that often only offer equity trading on the three major exchanges. With this restriction, I see a few great opportunities to use ETFs.

1) Bonds (e.g. Blackrock Municipal Bond Trust)
2) Foreign market investments (e.g. iShares Malaysia Index Fund)
3) Commodities (e.g. United States Natural Gas Fund)
4) Entire market investing (e.g iShares NYSE Composite Index Fund)
5) Currencies (e.g. Currencyshares Euro Trust)

Each of the markets listed above is likely to be a market you are locked out of with your standard discount broker. ETFs make these markets tradable as a regular equity. As always with ETFs, be aware that fees will bring down the return of your investment somewhat. The fees are clearly listed for most ETFs on the pages linked above. Examples provided are not recommendations to buy or sell. Please engage in the appropriate due diligence before making any investment.