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1 ETF I'm Going to Hold for Decades

By Katie Brockman - Apr 14, 2021 at 8:00AM

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I plan on investing in this fund for as long as I can.

One of the most effective ways to make a lot of money in the stock market is to buy quality investments and hold them for the long term.

Finding those quality investments can sometimes be challenging, though. Not all stocks are created equal and choosing the wrong investments could wreak havoc on your savings.

My portfolio is filled with a variety of exchange-traded funds (ETFs), and while I believe all of them are good investments, there's one ETF in particular that I plan to hold for as long as I can.

A jar full of hundred dollar bills.

Image source: Getty Images.

Choosing the right ETF

There are seemingly endless options when choosing ETFs. Some funds are riskier than others, though, so not all of them make for good long-term investments.

One ETF that's relatively safe and has still earned healthy long-term returns is the Vanguard Total Stock Market ETF (VTI 1.05%).

This fund includes nearly 3,700 different stocks from large, midsize, and smaller companies in the U.S., and there are a few reasons why I intend to hold this ETF for decades.

For one, it's more likely to recover from stock market crashes. This ETF is designed to replicate the market as a whole. Although the stock market is always subject to volatility, it has an incredible track record. Despite experiencing many crashes over the years, it's recovered from every one of them.

VTI Chart

VTI data by YCharts

When the stock market inevitably experiences another downturn, this ETF will likely see its price drop in the short term. However, it's almost guaranteed to bounce back over time.

Another advantage of this fund is that it provides more diversification than many other ETFs. Other broad-market funds like S&P 500 ETFs only contain stocks from larger companies, even though mid-cap and small-cap stocks often outperform large-cap stocks.

VTI includes large-, mid-, and small-cap stocks, which creates the best of both worlds. Not only are you limiting your risk by investing in large, established companies, but you also have more potential for growth by investing in smaller corporations as well.

Can you get rich with VTI?

By holding this ETF for the long term, it's possible to make a lot of money.

Since its inception in 2001, this fund has earned an average rate of return of around 8% per year. Say you're investing a healthy $300 per month in this fund while earning an 8% annual return. Here's roughly how much you'd have saved over time:

Number of Years Total Savings
5 $21,000
10 $52,000
20 $165,000
30 $408,000
40 $933,000

Source: Author's calculations.

Keep in mind, too, that this ETF is a hands-off type of investment. You never need to worry about picking stocks or deciding whether it's time to sell. All you have to do is invest consistently, then sit back and let the fund do all the work for you.

There are countless ETFs out there, and many of them are solid investments. But this ETF, in particular, has a long list of advantages that make it hard to beat. For those reasons, I plan to continue investing in this fund for as long as possible.

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Vanguard Index Funds - Vanguard Total Stock Market ETF Stock Quote
Vanguard Index Funds - Vanguard Total Stock Market ETF
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