Forget Chasing Trends: Here's What I'd Actually Invest In Right Now

The stock market is doing better than usual. The S&P 500 index (SNPINDEX: ^GSPC) has gained more than 18% in the past year. That's significantly higher than its long-term average of 10% annualized returns. The artificial intelligence (AI) boom has brought hundreds of billions of dollars per year in capital expenditures that have rippled through the economy, but can the good times last? What hot sectors will outperform in 2027?

To me, as a long-term investor, those questions are irrelevant. I'm not worried about whether or not AI is a bubble. I don't care which hot trends other investors are chasing. I hold a diversified portfolio of basically "all the stocks in the world." I try not to bet too heavily on any one stock or sector. I want to own great stocks for the long run. One of the best ways to do that is to start with low-cost index funds.

Let's look at two broadly diversified stock exchange-traded funds that I own in my portfolio -- and why they could be good choices for long-term investors.

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Vanguard Morningstar Total Stock Market ETF: 3,515 U.S. stocks of all sectors and sizes

The Vanguard Morningstar Total Stock Market ETF (NYSEMKT: VTI) is one of the best ways to buy the entire U.S. stock market. Beyond the large-cap stocks like the S&P 500, this total stock market fund holds 3,515 stocks. That includes thousands of smaller companies, including mid-caps and small-caps, and a wide range of sectors representing the entire U.S. economy.

This fund has delivered annualized returns of 14.8% for the past 10 years and 11.7% for the past five years.

Some investors worry that the U.S. stock market has become too top-heavy with major tech names. It's true that VTI consists of about 40% tech stocks. But even if the U.S. economy shifts in a less tech-powered direction, this index fund will adjust to reflect those changes. Over the long term, this fund automatically rebalances with the new growth engines of the American stock market, no matter what hot trend or must-buy sector is popular with investors today.

I'm going to keep buying VTI as my "set it and forget it" way to own U.S. stocks -- all of them.

Vanguard Total International Stock ETF: 8,772 stocks from 43 countries

Many Americans believe that America is the greatest country on Earth and the best place to invest. Indeed, America's stock market has delivered outstanding returns for the past 15 years. But America is not the only place to invest. International stocks sometimes deliver even stronger returns.

I don't want to own "only" American stocks. I want to own the rest of the world, too. Other countries also have great companies, growing economies, and untapped potential for future gains. I don't know which country or companies will do best, so I want to own them all.

The Vanguard Total International Stock ETF (NASDAQ: VXUS) holds a total of 8,772 stocks from 43 countries. In the past 10 years, this fund underperformed the U.S. stock market, with average annual returns of 9.6% by net asset value. In the past year, it delivered an impressive return of about 26% -- much better than America's S&P 500.

Why I own 12,287 stocks

There's no single right answer about the best way to invest, and it's easy to feel confident about buying stocks when the stock market is up 18% in the past year. The next time stocks go into a bear market, I'm sure I'll feel the same emotions of fear and doubt as many other investors. But as long as I have a steady paycheck, I'll keep buying stocks every payday.

I'm in this for the long haul. Every dollar that I invest today will hopefully be left alone to compound and grow for the next 10 to 20 years or more. As part of that long-term investing approach, I want to own a broadly diversified portfolio that includes U.S. and international stocks from every sector and size, growth stocks and value stocks, and large-caps and small-caps.

I don't know what will happen next in the economy or the stock market, but I'm not worried about chasing trends. I believe that the Vanguard Morningstar Total Stock Market ETF and a broad mix of global stocks will pay off for me in the long run.

Ben Gran has positions in Vanguard Morningstar Total Stock Market ETF and Vanguard Total International Stock ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.