Exchange-traded funds (ETFs) are an excellent choice for investors who want to diversify their holdings across many stocks without making individual stock picks. And Vanguard has a long history of offering top-notch ETFs to investors at some of the lowest costs.
ETFs are bought and sold like stocks, making them easy to own, and many brokerages allow for fractional investing in ETFs, meaning that you can purchase a portion of them with $100, even if the share price is higher.
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Here’s why these three Vanguard ETFs are some of the best to buy and hold forever.
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Plenty of great companies are worth investing in these days, spanning across all industries. What’s more, major growth trends like artificial intelligence (AI), rising energy demand, and safe havens like consumer staples make it difficult to narrow down which areas of the market are best to invest in and when.
So, why not just buy it all?
That’s the strategy of the Vanguard S&P 500 ETF (NYSEMKT: VOO), which tracks the S&P 500 (SNPINDEX: ^GSPC) and invests in the largest 500 publicly traded companies in the U.S. This means that whether AI is booming, energy stocks are soaring, or consumer goods companies are winning, you’ll benefit from each sector when it’s doing well. If the stock market is gaining ground, this Vanguard ETF is likely doing well, too.
This ETF has been a personal favorite of mine, and I’ve been invested in it for years. While I enjoy looking into new areas of growth that can beat the market, like AI stocks, I think there’s a lot of wisdom in spreading your investment across many stocks and industries and letting it grow slowly over time.
The S&P 500 has had an average annual historical return of about 10% since 1957. There’s no guarantee of those returns in the future, but that long track record of success points to a winning strategy of diversification. And with the Vanguard S&P 500 ETF charging just 0.03% for its annual expense ratio, you’ll be paying the lowest fees of any ETF.
One of the best things about ETFs is that many focus on specific market sectors, making it easy to benefit from emerging trends while still being invested in a basket of stocks.
The Vanguard Information Technology ETF (NYSEMKT: VGT) is the perfect example of this. The fund tracks the MSCI US Investable Market Information Technology 25/50 index, composed of 300 small- and large-cap tech companies. So, while you’ll be focused on technology investments, your money is also spread across many companies.
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The big benefit of this one is that technology stocks are a major catalyst for the stock market. Artificial intelligence is the obvious tech trend that’s underway, and this fund is riding the wave with its investments in Nvidia, Microsoft, Micron Technology, Broadcom, and many other tech companies.
And it’s also betting on other emerging technologies, like quantum computing stocks. Quantum computing could be worth an estimated $100 billion by 2035. To help catch this potential wave, the Vanguard Information Technology ETF owns shares of quantum computing start-ups, including D-Wave Quantum and IonQ.
One major recurring theme for investors is finding growth stocks that have the potential to beat the market, regardless of industry or business model. That’s what makes the Vanguard Growth ETF (NYSEMKT: VUG), which tracks the CRSP US Large Cap Growth Index, such a great fund.
This Vanguard ETF gives you exposure to 151 large U.S. growth companies across all sectors, allowing you to benefit from companies that are leading the pack in their respective industries. Unsurprisingly, this means there are a lot of technology companies in the fund but also pharmaceutical companies, including Eli Lily; consumer goods, including Costco; and financial stocks, including Mastercard.
Topping off this fund’s benefits is the fact that it charges just an 0.03% annual expense ratio, allowing you to keep the lion’s share of your growth stock returns, all without having to pick the winners yourself.
Before you buy stock in Vanguard Information Technology ETF, consider this:
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Chris Neiger has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Costco Wholesale, IonQ, Mastercard, Micron Technology, Microsoft, Nvidia, Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
3 Vanguard ETFs to Buy With $100 and Hold Forever was originally published by The Motley Fool
