5 Simple ETFs to Buy With $1,000 and Hold for a Lifetime

In my opinion, the best wealth creation tool is still long-term buy-and-hold investing.

I understand that it’s not as exciting as trading artificial intelligence (AI) stocks or Bitcoin. But even the best portfolio managers have a hard time beating the major indexes over time. A recent study found that 84% of all large-cap mutual funds trailed their benchmark over the prior 10 years.

That’s how the index fund boom began. Instead of trying to beat the index, why not keep expenses razor-thin and simply try to match the index?

That’s what each of the following ETFs does. They track a broadly diversified index. Their expense ratios are incredibly low. And they can be bought with a low initial investment. Because of this, they’re funds you can buy, hold forever, and let years of compounding growth do the work for you.

Here are five of these long-term gems.

Image source: Getty Images.

1. Vanguard Total Stock Market ETF

The Vanguard Total Stock Market ETF (VTI 0.22%) is the simplest way to own the entire U.S. stock market. It includes more than 3,500 stocks across all market caps. You get the market-dominant, innovative tech names, such as Nvidia, Microsoft, and Apple, as well as the smaller, emerging, more value-oriented companies.

I prefer a total market fund over an S&P 500 fund for exactly the reasons you’re seeing in the market today. Different sectors and styles perform in different cycles. Simply owning everything helps smooth out the ride by not trying to pick individual winners. It’s perhaps the ultimate “set it and forget it” ETF.

Expand

NYSEMKT: VTI

Vanguard Total Stock Market ETF

Today’s Change

(-0.22%) $-0.74

Current Price

$341.09

Key Data Points

Day’s Range

$340.84 - $342.13

52wk Range

$236.42 - $344.42

Volume

780K

2. Vanguard S&P 500 ETF

Alternatively, I understand why people would stick with just large-caps and the Vanguard S&P 500 ETF (VOO 0.42%). Larger companies tend to be more financially healthy, bigger cash-flow generators, and more durable across different economic scenarios.

If you’re focused more on holding something of higher quality as your core portfolio position, this ETF makes a lot of sense. If you want something with better diversification, a total market ETF might be the better choice.

3. Vanguard Total International Stock ETF

The Vanguard Total International Stock ETF (VXUS 0.40%) essentially does for foreign stocks what the Vanguard Total Stock Market ETF does for U.S. stocks. It owns virtually every investable developed and emerging market stock, more than 8,500 in all, and weights the results by market cap, giving larger weights to bigger companies.

Admittedly, international stocks have lagged the S&P 500 consistently for years. Your gut may tell you to stay away from underperformers, but international stocks are vital to any diversified portfolio. They’re much cheaper than U.S. stocks at the moment, they have a much different sector mix, and they’re sensitive to different economic cycles. That makes them a great diversifier and an asset class that should be held in the core of a portfolio.

Expand

NASDAQ: VXUS

Vanguard Total International Stock ETF

Today’s Change

(-0.40%) $-0.34

Current Price

$83.86

Key Data Points

Day’s Range

$83.77 - $84.15

52wk Range

$54.98 - $84.28

Volume

55K

4. Vanguard Dividend Appreciation ETF

The Vanguard Dividend Appreciation ETF (VIG +0.04%) invests in a basket of stocks with long histories of growing their dividends. Because of their ability to continue rewarding shareholders with cash payments, they often have better balance sheet health and generate the cash flows necessary to keep supporting dividend growth for years to come.

Dividend ETFs tend to be more boring than tech stocks, but that’s by design. Dividend stocks tend to be slow, steady, and reliable. That’s something that fits almost any portfolio and can do especially well if the economy slows down or runs into trouble. Plus, the income component helps amplify total returns.

5. Vanguard Total Bond Market ETF

The Vanguard Total Bond Market ETF (BND +0.10%) is, well, you can probably guess. It invests in thousands of U.S. investment-grade bonds and can serve as an essential risk mitigator when paired with a stock portfolio.

Bonds have had a tough go of it over the past several years, but they’re at the point today where they represent an adequate income generator again. Yields of 4% or more can be found in many areas currently. They don’t get much attention when stocks are producing double-digit returns. But when the market turns lower, they usually demonstrate their value.