David Assmann reports a remarkable day in the market, marking the Dow Jones Industrial Average hitting $52,000 for the first time ever. SpaceX’s stock climbed over 16%, outpacing Amazon in market capitalization.
There’s a common belief that investing requires a hefty sum of money to get started. But nowadays, it’s entirely possible to open a brokerage account with no initial deposit and even buy just a single stock. In fact, you could begin investing for even less than the cost of a DoorDash delivery.
If you’re either beginning your investment journey or looking to expand your portfolio, low-cost index ETFs usually make for the best options. A lot of these ETFs encompass a broad spectrum of markets, making them perfect for long-term core holdings.
Here are five ETFs that stand out with their low fees, diversification, smart index structures, and solid long-term performance.
Could the Vanguard S&P 500 ETF be your path to stock market millionaire status?
1. Vanguard Total Stock Market ETF
This ETF is likely the best foundational ETF to consider. It tracks an index that essentially covers the entire U.S. stock market, representing around 3,500 stocks of various sizes and sectors.
Some investors prefer the Vanguard S&P 500 ETF as their primary selection, but I find the Vanguard Total Stock Market ETF more appealing because it offers broader exposure. It’s beneficial to include mid-cap and small-cap stocks, as they can offer different sector compositions and growth potential, which enhances diversification.
2. Schwab US Dividend Stock ETF
This ETF stands out as a top pick for dividends, thanks to its strong selection strategy focusing on stocks that balance quality balance sheets with long-term dividend growth and yield.
Here’s a popular ETF you can invest $1,000 in now that has outperformed major indexes this year.
3. Invesco NASDAQ-100 ETF
The Invesco Nasdaq-100 ETF is often seen as a go-to for the U.S. tech sector. While it holds mostly tech stocks, it features all the significant tech and AI stocks that are currently in vogue.
It’s evident that technology and growth stocks are crucial for driving returns in the U.S. market. Plus, with the current AI boom, this sector is typically a hub for innovation, making it a vital component of any long-term portfolio. Interestingly, the expense ratio for the Invesco Nasdaq-100 ETF is more favorable compared to the Invesco QQQ ETF.
4. Vanguard Mid-Cap ETF
This ETF invests in a segment of the market that lies between large and small-cap stocks, an area historically noted for competitive risk-adjusted returns that shouldn’t be overlooked.
Mid-cap stocks may have lagged behind during the AI surge, yet they’ve actually outperformed the Vanguard S&P 500 ETF by over 1% year-to-date. As growth sees expansion beyond just a handful of companies, mid-caps offer a sweet spot for growth potential combined with lower volatility compared to smaller, more speculative firms.
5. Vanguard Small Cap ETF
This ETF focuses on the higher-risk, higher-potential segments of the U.S. stock market. While these companies are often less established, they are also frequently fast-growing and could yield significant returns given the right conditions.
This area of the market typically includes a higher number of unprofitable companies, which is expected as many are still in growth phases. However, there’s also the risk that some may not achieve substantial growth. With over 1,300 stocks in the fund, the impact of any single failure would be minimal. Diversifying in this way tends to make a lot of sense.
All these ETFs embody the characteristics sought after in a buy-and-hold investment. They cover different sectors, so they can be combined according to individual needs. They are low-cost with a wide variety. For anyone with a job and some funds to invest, even if it’s just a small amount, these five ETFs are worth considering.
