For Long-Term Growth, Buy These 3,511 Stocks Now
Key Points
This fund holds not only big companies, but small and mid-sized ones, too.
It's a strategy that works -- the fund's performance record is solid.
In keeping with Vanguard's approach, it also charges a miniscule annual fee.
- 10 stocks we like better than Vanguard Total Stock Market ETF ›
Many, if not most of us are in the market for promising stocks that will boost our wealth over time. It can be hard to zero in on the best ones, though -- especially if we feel we don't have the time, skills, or inclination to study the universe of stocks.
Enter index funds. They tend to charge low fees if you buy them in exchange-traded fund (ETF) form. (An ETF is a fund that trades like a stock, making it easy to get in and out of.) If you invest in a good S&P 500 index fund, for example, you'll quickly be a part owner of 500 of America's biggest companies. That's powerful, as the S&P 500 and the overall stock market have notched average annual gains of close to 10% over many decades.
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Permit me to recommend a different index fund, though -- the Vanguard Total Stock Market ETF (NYSEMKT: VTI). While an S&P 500 index fund invests you in huge companies, it ignores the universe of small-cap stocks -- and many mid-sized ones as well. This ETF will have you invested in just about all of the U.S. stock market. It recently encompassed 3,511 stocks, with about 8% of its assets in small companies and about 20% in mid-sized ones.
You'll still have plenty of exposure to the big tech stocks everyone loves, such as Nvidia, its top holding. But you'll be invested in 3,510 other companies, too. The fund's performance has been solid, averaging annual gains of 13.3% over the past 15 years and 20.2% over the past three years. (These periods have seen the overall stock market delivering above-average gains.)
The ETF features a dividend, too, though not a very big one, recently at 1.1%. It charges a tiny expense ratio (annual fee) of 0.03%, meaning you'll pay $3 per year for every $10,000 you have invested in the ETF. (Not bad, right?)
So consider this ETF for your long-term portfolio. And if you're seeking income, consider some excellent dividend-focused ETFs, too.
Should you buy stock in Vanguard Total Stock Market ETF right now?
Before you buy stock in Vanguard Total Stock Market ETF, consider this:
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Selena Maranjian has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.
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