The 1 Vanguard ETF I'd Tell You to Buy Right Now in a Heartbeat

If you're trying to build long-term wealth, one of the biggest challenges isn't deciding whether to invest. Rather, it's deciding what to invest in.

Should you buy tech stocks? Financial stocks? Small-cap stocks?

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It's easy to get caught up in trying to build the perfect portfolio. But the more time you spend trying to figure out how to invest, the longer it may take you to actually start putting your money to work in the market. And the more time your portfolio has to grow, the richer you might become.

That's why if there's one exchange-traded fund (ETF) I'd recommend to retail investors today, it's the Vanguard Total Stock Market ETF (NYSEMKT: VTI). It's a great bet for people who want a simpler approach to investing, so there's no reason not to get started right away.

Why the Vanguard Total Stock Market ETF stands out

As the name implies, the Vanguard Total Stock Market ETF tracks the U.S. stock market as a whole. Investing in it gives you exposure to thousands of publicly traded U.S. companies, from the tech titans that tend to make the news to a host of smaller companies you may not have heard of.

This broad diversification is possibly the fund's biggest strength. Instead of betting on a handful of companies or a specific market sector, you're investing in every corner of the U.S. stock market. When one sector struggles, another's successes may help offset those losses.

The Vanguard Total Stock Market ETF also embodies one of Vanguard's biggest advantages -- low costs. The fund carries an expense ratio of just 0.03%, meaning you'll only pay about $3 annually for every $10,000 invested. Low fees can make a meaningful difference in your returns over the long haul because more of your money stays invested and continues to benefit from the power of compound growth.

Another benefit is simplicity. With the Vanguard Total Stock Market ETF, you don't have to read earnings reports or keep tabs on specific companies' financials. You also don't have to worry about whether you're diversified enough.

That makes the fund an excellent choice for anyone who's willing to take a buy-and-hold approach to investing -- meaning, put money into quality assets and hold them for decades.

What to know before investing in the Vanguard Total Stock Market ETF

There's inherent protection in a well-diversified portfolio because, as mentioned earlier, even if a single company or sector fumbles, your money is spread out. But that doesn't make the Vanguard Total Stock Market ETF a risk-free investment by any means.

The fund is invested entirely in the stock market, which means its value will fluctuate -- sometimes by a lot in a short period of time. During economic downturns and bear markets, the fund's value could plummet. And if you're someone who's likely to react to seeing the value of your portfolio shrink by selling in a panic and locking in losses, the Vanguard Total Stock Market ETF may not be the right investment for you.

On the other hand, if you're decades away from retirement, or whatever milestone you're investing for, then near-term declines don't have to be a problem. If you trust yourself to stick to your plan, you can give your portfolio time to recover. Better yet, in some cases, market downturns actually work in your favor by allowing you to buy additional shares at lower prices.

Now, if you're nearing retirement or expect to start tapping your portfolio within the next few years, you may want to be cautious about adding the Vanguard Total Stock Market ETF to your investment mix. Also, despite the simplicity and diversification, it shouldn't be the only asset you invest in.

But if your goal is to gradually build wealth and you have time on your side, the Vanguard Total Stock Market ETF provides wide diversification, low costs, and a simple way to let the economic growth of the entire country do the heavy lifting in your portfolio.

Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.