If I Were Starting Over in the Stock Market, This Is the First ETF I'd Buy Today
Key Points
Many people's portfolios have become collections of stocks and funds rather than actual portfolios.
When you're building a portfolio from scratch, a total stock market ETF should serve as the core.
Here's why the Vanguard Total Stock Market ETF (VTI) would be the first fund I'd consider.
- 10 stocks we like better than Vanguard Morningstar Total Stock Market ETF ›
If you've been investing for years, odds are your portfolio expanded beyond what it originally was or was intended to be. The artificial intelligence (AI) boom has resulted in a lot of folks adding tech, AI, and semiconductor stocks to their portfolios. Maybe you've added some crypto or high-yield products, or even something basic like bonds or international stocks.
Either way, your portfolio may look more like a collection of funds and stocks instead of a portfolio. The asset allocation and sector compositions may have drifted from what you originally intended, which is a dangerous place for any investor to be.
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If you're looking for a portfolio reset, you could take one of two paths. You could execute a series of trades, buying multiple funds and stocks that get your portfolio back into alignment with your long-term goals and objectives. Alternatively, you could opt for simplicity. Simply convert your holdings into a broadly diversified, ultra-low-cost ETF that gives you just about everything you need in a single ticker.
For me, the very first ETF I'd look to buy in that latter scenario is the Vanguard Total Stock Market ETF (NYSEMKT: VTI).
Why simple is often better when it comes to investing in stocks
The Vanguard Total Stock Market ETF is one of the best foundational holdings you can add to your portfolio. While many people use the Vanguard S&P 500 ETF (NYSEMKT: VOO) as their cornerstone, I prefer the Vanguard Total Stock Market ETF's more expansive coverage of the U.S. equity market.
It invests in roughly 3,500 stocks across all market caps. Large caps have clearly outperformed over the past several years, but 2026 is showing the benefits of diversification. The AI rally is starting to show signs of fatigue this year, and it's value stocks, particularly those in small-caps, that have been leading.
Year to date, the Vanguard Russell 2000 ETF (NASDAQ: VTWO) is beating the Vanguard S&P 500 ETF by nearly 9%.
How to build around VTI in your portfolio
Since the Vanguard Total Stock Market ETF only invests in U.S. stocks, it would be incomplete as a fully diversified portfolio. As a first piece of a portfolio, it works great, but it's also important to build around it.
The next ideal additions might be the Vanguard Total Bond Market ETF (NASDAQ: BND) and the Vanguard Total International Stock ETF (NASDAQ: VXUS). Adding foreign stocks gives you exposure to economies with very different compositions that operate on different economic cycles. Bonds, of course, add a lower-risk, higher-income component that can help balance out volatility.
But the foundation is the Vanguard Total Stock Market ETF. That's the optimal core ETF to build your portfolio around.
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David Dierking has positions in Vanguard Total International Stock ETF and Vanguard Total Stock Market ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.
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