Sometimes an ETF will sound like a great idea on the surface, and it very well may be, but is it right for you? There are many questions you should ask yourself and steps you should take before diving in.

1) Watch the taxes and fees. Sure, the fees with ETFs are lower than those of most mutual funds, but some of the more narrowly focused ETFs can have higher fees. You don't want any surprises.

2) Beware of ETFs that are thinly traded. Funds with the higher trading volume tend to save a little more money and can spread expenses over a larger base.

3) Buy and hold. Constant trading is going to cut into your returns.

4)  Ask yourself if your ETF is a good fit for your portfolio, or if it instead leaves you overweight in a volatile sector? See how it fits in, says Thomas Malley for ETF Guide.

5) Does this ETF amplify positions already held? Many ETFs have similar holdings, even thoug their names and focus could be completely different. Look under the hood and make sure you're not unintentionally loading up on a particular company.

6) Do I get it? Make sure you understand how it works. And always, always know what you own.