With the stock market causing a lot of angst and fear lately, I figured it was worth highlighting where I'd invest right now.

You can watch the full Selfwealth Live session below, in which I talk about many things like how tax on shares and ETFs works, reveal the most traded shares, answer questions and so on. At about 55 minutes into the session, I get to the meat of the question, where I'd invest right now.

I like boring

On Rask's Australian Finance Podcast, a professor of Melbourne University recently told me something to the effect of 'you should be narrow in your career, becoming a specialist in whatever you're doing; but be diversified with your investment portfolio, to spread the risk.'

I think it's a really apt way to think about earning more (from your career) but financial spreading risk (diversification).

So the investment I'd make today is probably the most boring, diversified investment on the ASX: the Vanguard Diversified High Growth ETF (ASX: VDHG).

Source: Selfwealth brokerage accountRemember, an ETF or Exchange-Traded Fund is like a basket of investments — where you buy the basket. For example, the SPDR ASX 200 ETF (ASX: STW) invests in 200 of the largest Australian shares — you can buy the STW ETF and get a tiny little bit of all 200 shares, instead of buying all 200 shares for yourself.

You can see that ETFs offer a simple, often low-cost way to invest in lots of different companies.I often describe the VDHG ETF as 'a basket of baskets' or 'an ETF of ETFs' (even though it doesn't technically have ETFs inside of it).

VDHG invests 90% of its portfolio in risky assets, like Australian and international shares, and 10% in bonds/fixed interest. Therefore, VDHG probably suits an investor with a high-risk tolerance.Note: there are less risky diversified ETF options provided by Vanguard, including the Vanguard Diversified Balanced ETF (ASX: VDBA), which has 50% growth assets and 50% defensive assets, and Vanguard Diversified Conservative ETF (ASX: VDCA), which has 30% growth assets and 70% defensive assets. 

How VDHG works

VDHG works by combining other funds provided by Vanguard into one larger, "diversified" fund which you can buy.

For example, the BetaShares Australia 200 ETF (ASX: A200) buys 200 Australian blue-chip shares and bundles them up for the A200 ETF — so you can buy A200 instead of all 200 shares one-by-one. Instead of buying blue-chip shares, the VDHG ETF buys other funds — so you don't have to buy 5-10 different ETFs.

A common question I get asked is "do I pay double the amount of fees: fees for each fund inside VDHG and VDHG itself?" The answer is, practically speaking, "no, you only pay one set of fees for VDHG."

VDHG alternatives

Rival ETF provider BetaShares also offers a diversified fund, and with an ethical overlay, called BetaShares Diversified High Growth ETF (ASX: DZZF). DZZF also has 90% invested in shares (Aussie and international) and 10% in bonds, with an ethical filter over the top. BetaShares actually offers the DZZF ETF for cheaper than you can buy each of the individual funds inside it (e.g. ETHI and FAIR are cheaper as a bundle).

Again, Betashares doesn't "double-dip" on fees with DZZF — it pro-rata refunds the fees from the underlying ETFs so you only pay one management fee.

Conclusion

VDHG won't suit every investor due to its higher risk profile, but it's a very convenient and easy way to begin building a diversified portfolio straight out of the gates.

Many investors might choose to invest only in VDHG given its diversified nature. While it may be just a matter of preference, I do like the idea of spreading my risk across multiple funds and ETF providers (i.e., not investing everything in one ETF or even with Vanguard), as well as shares, LICs or REITs around the outside as satellites.

Be sure to read the VDHG Product Disclosure Statement (PDS) and speak to your financial adviser before acting on this article, or based on what you hear and see in the blog. The reason I say that is a financial adviser can help you understand your risk profile and match a portfolio of ETFs or shares to your situation.

Owen Raszkiewicz is the Founder of Rask, a platform helping Aussies invest better. You can take a free course on Rask Education, or follow Owen on Twitter and Instagram.This article contains general financial information only, issued by The Rask Group Pty Ltd. The information does not take into account your needs, goals or objectives, so please speak to a financial adviser before acting on the information.