Investing in the stock market attracts people of all types, with their own unique views on how to make money. Some are more comfortable with a lot of risk, while others look for companies with large and established economic moats. No matter which sector you're interested in or which types of companies you like, there are plenty of individual stocks to choose from to suit your specific investing angle.
But what if you want to invest in a basket of stocks, with a certain theme in mind? That's where exchange-traded funds (ETFs) shine. With ETFs, you can put your money into one fund that follows a specific area of the market, or even the entire market.
Vanguard ETFs are some of the most popular among investors because the company has built a great reputation around charging low fees while giving investors plenty of options to choose from. Here are three of the best Vanguard ETFs you can put $2,000 toward today and feel comfortable holding forever.
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1. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT 0.10%) is a great option for investors who want to benefit from the latest technology trends -- including artificial intelligence (AI), autonomous vehicles, and quantum computing -- but don't want to spend the time picking individual winners themselves.
The beauty of the Vanguard Information Technology ETF is that it tracks the MSCI US Investable Market Information Technology 25/50 index, which includes more than 300 small- and large-cap technology companies. This means your investment will have exposure to some of the most cutting-edge tech stocks, like Palantir, Nvidia, and Microsoft, while tapping into emerging players as well.
Since the Vanguard ETF spreads your investment across hundreds of tech companies, you can be sure that you'll be invested in the latest trends. This has helped the Vanguard Information Technology ETF perform very well, with returns of 132% over the past five years, compared to about 90% for the S&P 500.
What's more, you'll pay a very low annual expense ratio to own it. The average expense ratio for most funds is about 0.41%, but the Vanguard Information Technology ETF charges just 0.09%, which equals just $0.90 for every $1,000 invested.
2. Vanguard S&P 500 Growth Index ETF
The Vanguard S&P 500 Growth Index ETF (VOOG 0.03%) is another fantastic option for investors looking for a unique investment option. This fund focuses specifically on growth stocks across all sectors in the S&P 500. The result is 200 companies in the fund that are chosen based on rising sales and earnings, as well as stock price momentum.
Because many growth companies are also tech companies, there's some overlap with Vanguard's technology fund, including Nvidia and Microsoft. It's also worth pointing out that while some growth stocks can be riskier, the stocks in the fund are still U.S.-based companies in the S&P 500. So, there's no worry you'll be invested in penny stocks or meme stocks.
The fund also charges a low 0.07% expense ratio, which is far below the industry average. As your investments grow over time, you'll be able to keep more of the returns compared to funds that charge higher fees.
3. Vanguard S&P 500 ETF
And last, but not least, is the Vanguard S&P 500 ETF (VOO -0.01%), which, as its name suggests, tracks the S&P 500. This fund is a popular option because it spreads your investment across all sectors and all types of companies in the U.S. economy. In short, if the American economy is doing well, this fund is likely performing well, too.
While I own a handful of stocks, much of my portfolio is in the Vanguard S&P 500 ETF for the simple reason that it's easy to win over the long term with this fund. As legendary investor Warren Buffett once said about index funds, "The trick is not to pick the right company; the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low-cost way."
Not only does this Vanguard ETF give you the exposure Buffett is referring to, but it does it in the low-cost way he recommends as well. The Vanguard S&P 500 ETF charges an industry-low expense ratio of only 0.03%, equaling $0.30 in annual fees for every $1,000 invested.
