First, a quick question. Are you worried that you’ll run out of money in retirement? Maybe you’re not worried enough. Statistics show that most Americans will outlive their retirement savings.

My sainted parents are still alive (thank goodness) and in their 90s. Whenever I visit them, the conversation inevitably turns to their investments. I try to tell them that their nest egg is more than sufficient to maintain their comfortable lifestyle, but…they never quite believe me.

They’re not alone in their financial anxieties. According to a recent report from the World Economic Forum, over half of the working population around the world is worried about their retirement. American workers are particularly unprepared for retirement, with the average 65-year-old saving enough to cover less than a decade of costs.

The average U.S. man faces a savings gap of 8.3 years, while women, who live longer, face a gap of 10.9 years. The report found that the U.S. will have the world’s largest savings shortfall at $137 trillion by 2050.

Now, the good news: The experts at Investing Daily can enhance your financial security, so you don’t have to worry about going broke in your senior years.

Let’s get to my latest advice. Today’s topic concerns a powerful investing tool that can turbocharge your retirement planning. It’s called tactical asset allocation.

In my Mind Over Markets column Wednesday, I advised diversifying your stock portfolio holdings into sectors of the market that have lagged behind in the past year. I noted that we’re undergoing a “sector rotation” whereby value-oriented investments and small- to mid-cap stocks are poised to become market leaders, especially in such sectors as industrials, real estate, utilities, and health care.

Now I’ll show you how to make tactical bets on this investment theme…or any theme, for that matter.

Rather than try to pinpoint individual companies in industries you think will pop as economic growth accelerates, exchange-traded funds (ETFs) are a potent means to that end. The goal of a tactical asset allocation strategy is to seize on fast-moving trends or to take advantage of any short-term view of the markets.

ETFs first burst upon the scene in 1993 and they’ve become wildly popular. There are now about 9,000 ETFs globally, tracking just about any asset imaginable, compared to only about 300 in 2003. ETFs worldwide currently manage assets of about USD10 trillion.

Read This Story: Crypto Bulls Unleashed: SEC Approval of Bitcoin ETFs Sparks Frenzy

The ETF landscape experienced a seismic shift in January, when the U.S. Securities and Exchange Commission (SEC) approved rule changes that paved the way for the creation of ETFs linked to Bitcoin (BTC). Cryptocurrency assets have soared on the news, with new Bitcoin ETFs reporting massive inflows of capital.

The following chart depicts the biggest players in the global ETF realm, as of this month:

Tactical asset allocation doesn’t involve day trading. It’s temporarily changing your mix of investments predicated on trends that you expect to unfold over the next three months to a year. Once you’ve decided which industry to target, ETFs are a great way to accomplish your goal.

You could, of course, buy individual stocks or bonds in the sector of the market that you think will perform well over the short term. The drawback is a lack of diversification. If you buy just one stock in the sector you expect to outperform, you shoulder the risk of being correct about the sector but unlucky with that specific stock.

For example, the aviation industry has rebounded from the COVID pandemic as economic growth gains traction and people start traveling again. A shrewd bet would be to invest in an aviation-oriented ETF. A counterargument: Why not simply buy stock in one of the world’s leading manufacturers of commercial and military aircraft, the mega-cap OEM Boeing (NYSE: BA)? After all, history shows that individual stocks tend to outperform ETFs.

Well, Boeing’s prospects have sharply declined, amid the safety scandal that erupted this year over its 737 MAX series aircraft. BA stock has taken a beating. If you had purchased Boeing as a bet on aviation and the sector surged, your general idea would have been correct but your individual choice would have been a serious mistake.

Year to date, the benchmark aviation ETF, U.S. Global Jets ETF (JETS), has racked up a gain of 6.6%, compared to a decline of 22.8% for the share price of Boeing and a rise of 7.0% for the S&P 500 (data as of market close March 6). I expect JETS to break away and outpace the broader market this year, as global aviation demand surges.

If you decide to seek diversification by selecting a basket of individual company stocks, commission costs can quickly escalate. Using an ETF can be a simpler, safer and cheaper way to spread that risk out among several different companies.

Mutual funds can accomplish tactical asset allocation, but your choices are more limited and you’ll incur higher management fees. If you have an investment goal, chances are good that an ETF exists that matches that idea.

Make sure the ETF’s investment approach mirrors your tactical view. Read the ETF description and mission statement; look at the prospectus and examine the top 10 holdings. The ETF’s portfolio holdings should correspond with what you expect to happen in the market.

Scrutinize the expense ratio. For passive ETFs, the typical ratio is about 0.2%. That’s lower than the average expense ratio for actively managed mutual funds, which hovers between 0.5% and 1.0% and typically goes no higher than 2.5%, although some fund ratios have gone higher.

Don’t overlook liquidity, either. Several new ETFs come to market each month (as we just witnessed with crypto), and it can take time for them to create market awareness and build up enough volume to be reliably tradable. If you buy an ETF that lacks sufficient liquidity, your overall costs could be higher than you anticipate due to bid-ask spreads, or in the worst-case scenario, you might not be able to sell your shares when you want.

Do you have a well-reasoned expectation of what will happen next in the markets? Just as you can buy or sell stocks at any time during the trading day when the market is open, you can also buy or sell ETFs in exactly the same manner. Consequently, you can pursue your investment theme, and tactically change the asset structure of your portfolio, with the press of a button.

Thursday’s market action…

The main U.S. stock market indices continued their winning streak Thursday and closed higher as follows:

• DJIA: +0.34%
• S&P 500: +1.03%
• NASDAQ: +1.51%
• Russell 2000: +0.81%

The benchmark 10-year U.S. Treasury yield (TNX) slipped 0.29% to close at 4.09%.

Editor’s Note: As you pursue greater portfolio diversification, don’t ignore cryptocurrency. The bull market in Bitcoin and other crypto assets shows no signs of abating. The gap between traditional and digital markets is narrowing, as Bitcoin ETFs report vast inflows of new capital.

It’s clear that every portfolio should have exposure to crypto. However, you need to be informed. Pick the right crypto asset and you can reap huge gains in a short amount of time. Pick the wrong one, and you can lose your shirt.

The good news is, in our coverage of the crypto market, we separate fact from myth, the wheat from the chaff. Start receiving our FREE e-letter, Crypto Investing Daily. Click here now!

John Persinos is the editorial director of Investing Daily.

To subscribe to John’s video channel, click this icon: