When you think of investing in stocks, you probably think of considering each company one by one, researching that particular player -- and then buying if the investment case looks solid. And this is a key part of building your path to wealth. But along with that, there's another almost effortless way of investing that could significantly increase the value of your portfolio.
It involves investing, with one simple move, in many leading companies all at once. You can do this by getting in on a good exchange-traded fund (ETF), an asset that includes a number of stocks according to a particular theme such as an industry or investment style. Today, at the start of a new investing year, it's a great idea to consider two particular themes that should serve you well in the current bull market and over the long term. The following Vanguard ETFs fit the bill, making them the perfect choices to buy right now with a little more than $500 and hold forever.
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1. The Vanguard S&P 500 Growth ETF
The Vanguard S&P 500 Growth ETF (VOOG +0.59%) offers you exposure to more than 200 large-cap growth stocks, making this an investment that's likely to boost your portfolio during times of market growth. And since it favors well-established companies with solid track records, you can count on performance to hold up even during difficult times.
The fund tracks the S&P 500 Growth Index, and mirroring this benchmark, invests most heavily today in technology stocks, which represent 39% of the fund in terms of weight. And the most heavily weighted tech stocks include some of the biggest winners of the moment -- and stocks that have proved themselves over time -- including Nvidia, Apple, and Microsoft. They're each weighted between 6% and 12% in the fund.
Though tech is the place to be these days, the great thing about this ETF is it gives you exposure to 11 industries, and that translates into instant diversification. Communication services and consumer discretionary make up the second and third biggest industries right now in the ETF, with weightings of 14% and 13%, respectively. On top of this, the ETF, following the index it tracks, may change composition over time with the idea of always offering you exposure to the top growth buys of the day. This Vanguard ETF has demonstrated its strength over time, delivering a gain of more than 110% over the past five years.
2. The Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF (VIG +0.44%), tracking the S&P U.S. Dividend Growers index, favors stocks that have a proven track record of dividend growth. An investment in this ETF brings you more than 300 solid large-cap stocks with this bonus: a focus on passive income. Dividends during strong market times will add to your winnings, and even better, during down times they can limit your losses -- and offer you recurrent income you can count on no matter what the market is doing.
Like the Vanguard Growth fund, this ETF also is heavily weighted in tech stocks -- here at 25%. But industries known for dividend payments, such as financials and healthcare, follow closely behind. Financials hold a weight of 21%, while healthcare stocks have a weighting of 14% in the ETF. Among the top 10 stocks in this fund, you'll find Broadcom, JPMorgan Chase, and UnitedHealth Group.
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Key Data Points
Why is it important to focus on stocks that have a track record of dividend appreciation? Because by consistently increasing their dividends, these players have shown that rewarding shareholders is important to them. This suggests they may stick with the policy. And these market giants also have the financial resources to support ongoing dividend payments.
This Vanguard fund hasn't soared as much as the growth ETF I mentioned -- it's climbed 55% over five years -- but it offers you a stability over time that makes it a fantastic forever holding.
One final thing about ETFs...
You can easily buy ETFs as you would a stock as they trade throughout daily trading sessions just like a stock. That means you don't need any special expertise to buy them. One point to be aware of, though, is they come with fees as expressed by the expense ratio. To ensure these fees don't eat into your performance over time, choose an ETF with an expense ratio of less than 1%. The Vanguard Growth and Vanguard Dividend Appreciation ETFs are right on target, with expense ratios of 0.1% and 0.06%, respectively.
All of this makes these ETFs fantastic "no effort" and inexpensive additions to your investment portfolio in 2025 and beyond.
