Picking and choosing individual stocks to include in your portfolio is a great way to benefit from some of the market's biggest winners. For example, if you bought semiconductor company Nvidia five years ago, you would be up more than 1,200% today.
But there are also inherent risks associated with investing too much money in a single stock, or even a handful of them. If you've been betting on Intel's turnaround over the past five years, your investment would be down about 26%.
That's why buying a basket of stocks to spread around your investments can be a great strategy. Exchange-traded funds (ETFs) make this process extremely easy and inexpensive, making them a fantastic way to invest. Here are three that are worth putting $1,000 toward and holding forever.
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1. Bet on tech with the Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT 0.43%) tracks the MSCI US Investable Market Information Technology 25/50 index, giving you exposure to more than 300 small- and large-cap technology companies. This focus on tech stocks has been especially beneficial lately as the tech industry has invested heavily in artificial intelligence.
With many AI stocks in the fund -- including Nvidia, Microsoft, Alphabet, and others -- you'll easily be invested in the world's leading artificial intelligence companies. But you'll also have exposure to small tech start-ups, including emerging quantum computing players like IonQ.
In short, no matter what tech trends emerge in the coming years or which companies benefit from them, owning this Vanguard ETF will likely help you benefit. What's more, the Vanguard Information Technology ETF charges an expense ratio of just 0.09% -- compared to the industry average of 0.94%. Which means you'll pay just $0.90 in annual fees for every $1,000 you have invested.
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2. Choose Buffett's recommendation in the Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (VOO +0.58%) is the standard-bearer if you want to spread your portfolio out among some of the largest and most profitable publicly traded companies. That's because this fund simply tracks the S&P 500, ensuring that you benefit from the market's gains, whether they come from technology, energy, consumer goods, or elsewhere.
I've taken the advice of legendary Warren Buffett and have a good portion of my investments in this fund. Buffett has famously told investors that buying and owning an S&P 500 index fund is the best long-term investment strategy for most people and even recommended Vanguard's fund on several occasions.
In addition to its diversification and stamp of approval from Buffett, the Vanguard S&P 500 ETF charges just 0.03% annually, one of the lowest expense ratios out there. That translates to just $0.30 in annual fees for every $1,000 in your portfolio.
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3. Follow growth stocks with the Vanguard Growth ETF
If following growth stocks sounds appealing to you, consider investing your $1,000 in the Vanguard Growth ETF (VUG +1.28%). This fund tracks more than 300 large U.S. growth companies that comprise the CRSP US Large Cap Growth Index.
Growth companies can be a great place to earn some gains, but they also tend to be more volatile. The benefit of the Vanguard Growth ETF is that your money will be spread across several hundred companies, which helps limit some of that volatility. And because the fund focuses on large companies, you'll be invested in major tech players, including Nvidia, as well as other large companies, including McDonald's and Costco Wholesale.
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And finally, like the other funds on this list, the fund is inexpensive to own, with an expense ratio of just 0.04%, which is significantly lower than the average expense ratio of comparable funds, at 0.93%.
Each of these funds offers a unique take on investing in the market, and all of them give you a low-cost way to benefit from stocks over the long term -- while spreading out some of the risk.
