1 Vanguard ETF I'm Buying in 2026 and Holding Forever

While it probably won't ever be considered exciting, long-term buy-and-hold investing is one of the best paths to wealth creation. The ability to buy an investment, give it the time to ride out the highs and lows, and avoid short-term emotional decisions can improve your returns over time.

A Morningstar study found that investors earned about 1.7% less than a fund's total return. The primary reason for this was ill-timed buying and selling. If you're able to simply "set it and forget it," you can easily become an above-average investor!

Choosing which fund to buy and hold forever doesn't need to be complicated. Those that are broadly diversified, have a low expense ratio, and a long-term growth objective usually fit the bill. One ETF in particular, in my opinion, is an especially good candidate.

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What is the Vanguard Total Stock Market ETF?

The Vanguard Total Stock Market ETF (NYSEMKT: VTI) invests in more than 3,500 U.S. stocks. It tracks the CRSP US Total Market Index, which is designed to invest in nearly 100% of the entire U.S. equity universe, including large-, mid-, small-, and micro-cap stocks.

When building the cornerstone of your portfolio, total market ETFs make a lot of sense. Their broad coverage easily solves any diversification concerns. VTI's 0.03% expense ratio means it costs almost nothing to own it. Because the fund's index is market cap-weighted, it still maintains exposure to some of the largest companies in the world, including Nvidia, Microsoft, Apple, Amazon, and Alphabet.

Why the total U.S. stock market instead of the S&P 500?

For broad U.S. stock exposure, many investors prefer the Vanguard S&P 500 ETF (NYSEMKT: VOO) or the Invesco QQQ Trust (NASDAQ: QQQ). Why should investors look at VTI instead of those two ultra-popular ETFs? The answer lies in VTI's diversification.

QQQ has been an elite performer for nearly the past two decades. But it's also more than 70% concentrated in tech and communication services combined. Plus, it has nearly half of the fund invested in just the "Magnificent Seven" stocks. That's a little too much concentration for my liking, especially at a time when the tech and growth rally is probably overdue for a breather.

VOO would certainly be an easily defensible choice, but it's also entirely invested in large-cap stocks.

I prefer VTI because it includes mid- and small-cap stocks without overexposure. The fund is currently a mix of about 75% large-cap and 25% small-cap. That makes it only a minor tilt away from the S&P 500 and still gives the largest weightings to the biggest companies.

Yet, the potential of small-caps makes a lot of sense right now, given how much value is built into them and the fact that they're long overdue for a stretch of leadership.

Who should consider VTI as a forever holding?

The Vanguard Total Stock Market ETF makes sense in almost any portfolio that needs an allocation to equities. Its broad diversification across U.S. stocks, while still favoring large caps, makes it an ideal portfolio tentpole.

It's those same characteristics that make it a strong long-term "buy and hold forever" ETF. While it may be tempting to chase the recent returns of tech and growth stocks, simply buying the entire U.S. stock market and giving it decades to grow makes more sense.

Whether you're experienced or just starting out, passive or active, young or in retirement, VTI is a fund that can be a fit for almost anyone.

David Dierking has positions in Apple and Vanguard Total Stock Market ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, Vanguard S&P 500 ETF, and Vanguard Total Stock Market ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.