The Best Vanguard ETF to Invest $2,000 in Right Now

Investing can be as simple or complex as you make it. And oftentimes in investing, the simple plan is best. One surefire way to simplify your investing journey is to use exchange-traded funds (ETFs). These are groups of individual stocks that trade under one ticker symbol. An ETF can follow a specific investment strategy or track a stock market index.

Vanguard is a trusted name in the investment community. The company has been around for decades and is one of the world's largest providers of ETFs and other investment funds.

Those looking to simplify their portfolio may want to consider the Vanguard Total Stock Market ETF (NYSEMKT: VTI). I'll explain below why it's arguably the best Vanguard ETF you can invest $2,000 into right now.

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This Vanguard ETF helps diversify your portfolio with a few clicks

A simple investment strategy isn't flashy, but it's far more likely to produce results for you over the long term.

Trying to guess when the market might go up or down -- often called timing the market -- doesn't work, and different types of stocks tend to take turns performing well. For instance, the market is currently in a phase where tech stocks are outperforming most other investments.

Investors will want to maintain a diversified portfolio so that there's always something working, to offset what might not be hot at the moment. Here is where the Vanguard Total Stock Market ETF can really help you.

It contains a whopping 3,529 stocks across all 11 market sectors. The ETF holds a mix of growth stocks and value stocks across a wide range of market caps. Diversifying your portfolio doesn't make it immune to stock market volatility, but it does give investors a great shot at steady wealth-building returns over a long holding period.

The Vanguard Total Stock Market ETF goes back to 2001. It has produced an annualized return of 9.2% since then, meaning your investment would double roughly every eight years. That can be some powerful compounding over a few decades!

What exactly do you get with the Vanguard Total Stock Market ETF?

Let's get into some specifics. The Vanguard Total Stock Market ETF tracks the CRSP US Total Market Index, which focuses on U.S. companies. Currently, the ETF is spread across the 11 stock market sectors as follows:

1. Technology: 38%
2. Consumer Discretionary: 14.3%
3. Industrials: 12.2%
4. Financials: 11.3%
5. Healthcare: 8.9%
6. Consumer Staples: 3.6%
7. Energy: 3.1%
8. Utilities: 2.7%
9. Real Estate: 2.4%
10. Telecommunications: 1.9%
11. Basic Materials: 1.5%

The hefty technology exposure means the ETF's top individual holdings by weight feature a heavy dose of the "Magnificent Seven" stocks, which dominate the technology sector and are among the world's largest companies today. These companies comprise approximately 30% of the Vanguard Total Stock Market ETF.

The Vanguard Total Stock Market ETF is accessible to almost any investor

Vanguard's reputation stems from more than the fact that it has been around for a while.

The company does a lot of things right, especially regarding making its funds accessible to as many investors as possible. For instance, the Vanguard Total Stock Market ETF's expense ratio is just 0.03%, which works out to $0.60 in annual fees on $2,000 invested. That means you keep almost all of your investment gains rather than giving them up to the fund's management team.

On top of that, the ETF has a minimum investment of just $1, so no, you don't actually need $2,000 to invest in the Vanguard Total Stock Market ETF. Lastly, Vanguard's ownership structure is such that its investment funds hold the company's equity. So, in a way, the investors holding Vanguard funds own the company itself. There is minimal risk of conflicts of interest or other shady practices.

The Vanguard Total Stock Market ETF's investor-friendly structure, diverse holdings, and Vanguard name make it an ideal choice for any investor looking to build wealth over time. Its simplicity makes it hard to find a better ETF to invest in.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.