If I Were in My 20s, I'd Buy These 3 Stocks and Hold Them Until Retirement

The stock market can be an incredible wealth-building machine for patient investors. Over the last 30 years, the S&P 500 (SNPINDEX: ^GSPC) index has delivered a compound annual return of 10.5%, which would have turned an investment of $10,000 into almost $208,760. Many individual stocks have performed even better, albeit with more volatility along the way.

But for young investors in their 20s, taking a little more risk for the opportunity to earn higher returns can be a worthwhile trade-off. If I were that age today, I'd buy these three stocks with the intention of holding them for the next 30 or 40 years until retirement.

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1. Nvidia

Since going public in 1999, Nvidia (NASDAQ: NVDA) stock has returned a mind-boggling 831,900%. That translates to a compound annual return of almost 40% over the last 27 years, four times higher than the average annual gain in the S&P 500 over the same period.

Nvidia created the world's first graphics processing unit (GPU) in the late 1990s, which redefined 3D graphics for personal computers. Today, it makes the best GPUs for data centers, which are designed to handle artificial intelligence (AI) training and inference workloads. Demand is outstripping supply for those chips, and the company's new Vera Rubin generation will only widen the imbalance.

This gives Nvidia the power to dictate prices, which is partly why its revenue soared by 65% to a record $215.9 billion during fiscal 2026 (ended Jan. 25). According to Wall Street's average estimate (provided by Yahoo Finance), the company's revenue could top $393 billion in the current 2027 fiscal year.

Although AI is Nvidia's primary growth driver today, the company is well-positioned to become a top supplier of chips and components for emerging technologies such as autonomous vehicles and robots. Earlier this year, CEO Jensen Huang said the market for humanoid robots alone could top $40 trillion over the long term, dwarfing the current AI data center opportunity.

As a result, while it's unlikely Nvidia stock will maintain a 40% annual return from here because of the company's sheer size, I think it still has the potential to outperform the broader market over the next 30 or 40 years.

2. Amazon

Amazon (NASDAQ: AMZN) stock went public in 1997, and it has since climbed by a staggering 309,230%, or a compound annual rate of 32%. So, like Nvidia, it has obliterated the broader market.

Amazon is an incredibly diverse technology company. Amazon.com is the biggest e-commerce platform in the world, while Amazon Web Services (AWS) dominates the cloud computing industry, and Amazon Prime Video has become a leading streaming platform for movies and television shows. The company is using AI across all of its businesses to unlock new revenue streams, improve efficiency, and create a better customer experience.

For example, Amazon has built an AI shopping assistant for its e-commerce website, which helps customers compare products and make purchase decisions. It has also deployed over 1 million AI-powered robots in its fulfillment centers to speed up its logistics processes. Further, the AWS platform operates some of the best data centers for AI development, which it rents to other businesses for a fee. This has become one of the most profitable practices in the company's history.

Amazon has never rested on its laurels. I think the company's willingness to aggressively enter new, high-growth industries whenever the opportunity arises will be the reason it continues to beat the broader market over the long term.

3. The Vanguard S&P 500 ETF

I want to finish with an asset that even legendary investor Warren Buffett recommends. It isn't a stock in the traditional sense; it's an exchange-traded fund (ETF) that tracks the S&P 500 index: the Vanguard S&P 500 ETF (NYSEMKT: VOO). I know I said younger investors can afford to take more risk, but this could be the ideal asset for those who want to take the tried-and-tested path to stock market returns.

The Vanguard S&P 500 ETF holds 500 stocks across 11 sectors of the economy, making it highly diversified. But since it's weighted by market capitalization, the largest companies in the fund have a greater influence over its performance than the smallest. Given the size of companies like Nvidia, it's no surprise that the technology sector accounts for more than one-third of the value of the ETF's entire portfolio.

That means investors will have ample exposure to the AI boom and every other technological revolution, while also owning a slice of companies in the more defensive sectors of the economy, like financial services and consumer staples, which will help minimize volatility.

The Vanguard S&P 500 ETF is one of the most cost-effective index funds investors can buy. It has an expense ratio of just 0.03%, so annual fees would amount to just $3 per $10,000 invested. As a result, this could be the ultimate set-it-and-forget-it purchase for young investors of all experience levels.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.