Low-cost exchange-traded funds (ETFs) can give you a great way to grow your portfolio’s value over the years without worrying about fees chipping away at your returns. Vanguard has many solid ETFs which can help in this regard.
The Vanguard Total Stock Market Index Fund (NYSE Arca:VTI) can provide you with some excellent diversification and it comes with a very low expense ratio of 0.03%. The Vanguard fund gives you a great way to invest in the overall stock market, as it has more than 3,600 holdings.
With that many stocks, you’re bound to get some broad diversification with this ETF. Tech stocks account for 35% of its total holdings, followed by 14% for consumer discretionary stocks, 12% for industrials, and 11% for healthcare. And the three largest stocks in the fund – Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Nvidia (NASDAQ:NVDA) – account for just 18% of the fund’s total weight. In many other ETFs, their representation is far higher. And outside of those three stocks, no other stock accounts for more than 3% of its total weight. That’s a good thing for risk-averse investors as it means you don’t have to worry about if one particular stock will weigh down the fund’s overall performance.
If you want an easy way to invest in the overall stock market without incurring significant fees along the way, the fund can be a great way to accomplish that. In five years, the Vanguard Total Stock Market ETF has generated total returns (including dividends) of 89%, versus 96% with the S&P 500.
If you’re a buy-and-hold investor looking for an easy place to put your money into, this fund can make for an excellent option.
