This is not investment advice. Investors should always consult a financial advisor before making investment decisions.
Exchange-traded funds (ETFs) are investment vehicles that allow investors to buy a basket of securities that track a particular index or sector. ETFs are a popular option for long-term investors because they provide diversification and low-cost exposure to the stock market.
When it comes to selecting the best ETF for long-term success, there are several factors to consider. Here are some of the key factors to keep in mind when evaluating ETFs for long-term investment:
- Diversification: One of the primary benefits of investing in ETFs is that they provide diversification. Look for ETFs that provide exposure to a broad range of securities to minimize risk.
- Expense Ratio: ETFs have lower expense ratios compared to mutual funds. Look for ETFs with expense ratios that are lower than 0.2% to keep costs low.
- Liquidity: Make sure the ETF you choose is liquid and has a high trading volume. This will ensure that you can buy and sell the ETF easily without incurring large bid-ask spreads.
- Track Record: Evaluate the ETF’s track record and historical performance. Look for ETFs that have performed well over the long-term and have low volatility.
With those factors in mind, we will explore some of the best ETFs for long-term growth that meet these criteria.
Vanguard Total Stock Market ETF (VTI) 44.78%
The Vanguard Total Stock Market ETF is one of the most popular ETFs for long-term growth. VTI tracks the performance of the entire U.S. stock market, providing investors with exposure to over 3,500 U.S. stocks. The ETF is highly diversified, with holdings across various sectors, including technology, healthcare, and financials. VTI has a low expense ratio of 0.03%, making it one of the most cost-effective ETFs available. It has provided investors with a return of 44%% over the past 5 years.
iShares Russell 2000 ETF (IWM)
The iShares Russell 2000 ETF tracks the performance of the Russell 2000 index, which comprises small-cap U.S. stocks. The ETF is well-diversified, with holdings across various sectors, including consumer discretionary, healthcare, and industrials. IWM has a low expense ratio of 0.19% and has historically performed well, providing investors with a return of 30% over the past 5 years.
Invesco QQQ ETF (QQQ)
The Invesco QQQ ETF tracks the performance of the NASDAQ-100 index, which comprises 100 of the largest non-financial companies listed on the NASDAQ stock exchange. The ETF is heavily weighted towards technology stocks, including companies like Apple, Amazon, and Microsoft. QQQ is highly diversified, with holdings across various sectors, including healthcare and consumer services. The ETF has a low expense ratio of 0.20% and has provided investors with a return of 90% over the past 5 years.
Vanguard Total World Stock ETF (VT)
The Vanguard Total World Stock ETF tracks the performance of the FTSE Global All Cap index, which comprises over 9,000 global stocks across developed and emerging markets. The ETF is well-diversified across various sectors and countries, providing investors with exposure to global growth opportunities. VT has a low expense ratio of 0.08% and has provided investors with a return of 25% over the past 5 years.
The SPDR S&P 500 ETF (SPY)
The SPDR S&P 500 ETF is a popular ETF for long-term growth because it tracks the performance of the S&P 500 index, which is widely considered a benchmark for the U.S. stock market. The S&P 500 comprises 500 of the largest U.S. companies across various sectors, providing investors with broad exposure to the U.S. economy. SPY has a low expense ratio of 0.09%, making it a cost-effective way to invest in the stock market. Furthermore, the ETF has a long history of strong historical performance, providing investors with a return of 53% over the past 5 years. Overall, the SPY ETF is a great option for investors looking for diversified exposure to the U.S. stock market and long-term growth potential.
Investing in ETFs can be an effective way to achieve long-term growth in your portfolio. Investors should look for highly diversified ETFs with low expense ratios and a track record of strong historical performance when selecting ETFs for long-term growth. The ETFs mentioned in this article provide investors with broad exposure to various sectors and markets, and are well-suited for long-term growth investing strategies. However, investors should always consult a financial advisor before making investment decisions.