One of the most effective ways to invest in stocks is through exchange-traded funds (ETFs), which allow you to invest in many companies at once. They may not attract the attention of individual stocks because they are not as flashy, but in many cases they are just as lucrative. They often carry less risk, because they are not dependent on the performance of a single company.
Vanguard, in particular, has a number of ETFs that make excellent long-term investments. If you’re interested in adding some to your portfolio, consider the following two. Each has a different approach that complements the other well.
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Without a doubt, the US economy is going through difficult times, but its growth remains one of the long-term growth bets. That’s why I’m a big fan of investing in an S&P 500 ETF like the Vanguard S&P 500 ETF (NYSEMKT:VOO). It’s not directly tied to the US economy, but it tracks the 500 largest US companies in the market, so they tend to move in the same direction over time.
The S&P 500 has become very tech-heavy in recent years (tech now makes up nearly a third of the index), but it still has representation from all 11 major sectors. Below is how VOO is divided:
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Information technologies: 33.4%
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Finance: 12.9%
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Communication services: 11%
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Consumer Discretionary: 10.4%
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health care: 9.4%
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Industrial stocks: 8.6%
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Consumer staples: 5%
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Energy: 3.2%
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Utilities: 2.2%
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Materials: 2%
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Real estate: 1.9%
More important than simply having sector representation are the companies represented in these sectors. Many of these companies are industry leaders and have had sustained success (which is how they were included in the index to begin with).
It hasn’t been the best start to 2026 for VOO (it’s down about 1% through March 11), but that doesn’t take away from its long-term potential. Past performance is no guarantee of future performance, but historically the S&P 500 has averaged about 10% annual returns over the long term.
These may not be the huge gains we’ve seen in individual stocks over the years, but the ETF has proven to be a real way to build wealth over time. And with VOO’s low 0.03% expense ratio, you can keep more of your profits in your pocket.
While VOO only includes US companies, the Vanguard Total International Stock ETF (NASDAQ: VXUS) It focuses solely on international actions. VXUS has historically underperformed the S&P 500, but it is a great way to protect against difficult periods in the US economy and benefit from thriving companies abroad.