A large number of investors get into ETFs for diversification, because these exchange traded funds allow you to spread your money around a certain index or sector.
For even more diversification and to reduce volatility in your portfolio, you can add Bond ETF to your portfolio.
With money markets offering near-zero rates, it's doesn't make sense to just park any of your nest egg in cash.
Bond ETF are growing in popularity and are a better way to go for now, and since you can trade these ETFs just like stocks it's a simple to rotate out of these holdings once interest rates increase down the road.
A good choice in a taxable account, would be the iShares S&P National AMT-Free Municipal Bond Fund (MUB).
It's is a broad, tax-free bond fund that costs 0.
25% annually.
Another good investment could be the short-maturity corporate and municipal Bond ETFs like the Vanguard Short-Term Bond Fund (BSV), or the SPDR Barclays Aggregate Bond ETF (LAG) which is the smallest in the category however is also the most affordable to buy.
Whilst Bond ETF may not double your money overnight they are a good low-risk alternative to cash right now.
I suggest you get fully invested since it's better to put your money to work than to let it simply track the rate of inflation, which we all know gets you no-where fast.
If you're still sitting on cash, this is a great alternative that will provide better returns and very minimal risk!