When a New Year dawns on Wall Street, you never know what to expect. Consider that at the beginning of 2022, many investors were optimistic about a reopened economy after the COVID-19 pandemic. Unfortunately, they were saddled with an ugly 18% decline for the S&P 500 on the year. Then again, 2023 began with continued concerns about inflation and interest rates — yet wound up with a roughly 25% gain on the year to impress and surprise many of us.
[Sign up for stock news with our Invested newsletter.]
There’s no doubt that fashionable trades and well-timed moves can make some investors a bundle when they play their cards right. But unfortunately, most of us don’t have the talent to pull that kind of feat off.
Instead, we are often better off just buying and holding low-cost index funds for a few decades instead of just a few weeks or months. Not only does that keep costs down, it allows you to tap into the long-term upside of the global economy in general and the U.S. economy in particular.
If you want to take some of the drama and guesswork out of 2024, then consider putting your cash patiently behind some of these long-term ETFs to buy and hold:
| ETF | Assets under management | Expense ratio |
| iShares Core S&P 500 ETF (ticker: IVV) | $378 billion | 0.03% |
| Vanguard Growth ETF (VUG) | $105 billion | 0.04% |
| Vanguard Information Technology ETF (VGT) | $60 billion | 0.10% |
| Schwab US Dividend Equity ETF (SCHD) | $52 billion | 0.06% |
| Vanguard Total Stock Market ETF (VTI) | $348 billion | 0.03% |
| Vanguard Total International Stock ETF (VXUS) | $63 billion | 0.07% |
| Vanguard Total Bond Market ETF (BND) | $105 billion | 0.03% |
iShares Core S&P 500 ETF (IVV)
— Assets under management (AUM): $378 billion
— Expense ratio: 0.03%, or $3 annually for every $10,000 invested
While the SPDR S&P 500 ETF Trust (SPY) is one of the largest ETFs on Wall Street, IVV is a popular look-alike fund that offers similar exposure to the S&P 500 index of large U.S. companies but at a smaller fee structure. For those unfamiliar, this index tracks the largest 500 domestic stocks including familiar names like Microsoft Corp. (MSFT) and Apple Inc. (AAPL). Over the long run, these large companies are very likely to stick around and thrive alongside the U.S. economy in the decades to come. That makes an investment in the S&P 500 via an index fund like IVV a great long-term plan.
Vanguard Growth ETF (VUG)
— AUM: $105 billion
— Expense ratio: 0.04%
If you are particularly optimistic about the long-term growth potential of the stock market, this Vanguard fund skews towards the more dynamic companies that make up the largest players on Wall Street. Roughly 46% of VUG is in large tech stocks, for instance, with less than 5% of total assets in the four lowest-growth sectors that include utilities, materials, real estate and energy. The total portfolio is about 220 stocks, providing a pretty diversified investment across Silicon Valley tech stocks as well as pharma leader Eli Lilly & Co. (LLY), payments giant Visa Inc. (V) and others.
Vanguard Information Technology ETF (VGT)
— AUM: $60 billion
— Expense ratio: 0.10%
Of course, there are some investors who are most interested in the growth potential of the technology sector and don’t care too much about a diversified exposure across all corners of the economy. That’s where this sector-focused ETF from Vanguard comes in, with an affordable way to gain exposure to more than 300 top U.S. technology companies. Its portfolio includes Big Tech mainstays like Apple but also cybersecurity companies like CrowdStrike Holdings Inc. (CRWD) or small and specialized software firms like Procore Technologies Inc. (PCOR). Just keep in mind the focused investment in tech comes with higher risk as well as the potential for higher returns.
[READ: 8 Best Consumer Staples Stocks to Buy Now]
Schwab US Dividend Equity ETF (SCHD)
— AUM: $52 billion
— Expense ratio: 0.06%
The flip side of growth-oriented stocks are solid value-oriented stocks that offer consistent profits and consistent profit-sharing via regular dividends to shareholders. When dividends are reinvested, returns for the S&P 500 from 1960 to 2020 increase sixfold, according to research from the Hartford Funds. If you have a long time horizon then, consider a fund like SCHD that offers a roughly 3.6% dividend at present — more than double the typical dividend of the S&P 500. And with a portfolio of 100 very large and established stocks like Home Depot Inc. (HD) and chipmaker Broadcom Inc. (AVGO), this dividend ETF pulls that off without chasing obscure names or relying on an elevated risk profile.
Vanguard Total Stock Market ETF (VTI)
— AUM: $348 billion
— Expense ratio: 0.03%
Of course, if you can’t decide which flavor of these long-term ETFs is the best to buy now, there’s a simple one-stop investment from Vanguard that can make things very straightforward for long-term investors. As the name implies, this “total stock market” ETF provides a footprint in nearly every U.S. company that offers publicly traded stock on a major exchange. That’s nearly 3,800 total corporations at present. The portfolio is biased towards the larger companies out there, with roughly 6% of all assets in tech giant Apple right now, but it does provide exposure to a deep bench of investments in one simple and cost-effective holding.
Vanguard Total International Stock ETF (VXUS)
— AUM: $63 billion
— Expense ratio: 0.07%
An element of long-term investing we haven’t yet covered is geographic diversification to smooth over some of the local challenges that the U.S. economy may experience. The VXUS fund is an “ex-U.S.” offering that excludes all domestic companies and instead looks to provide holistic exposure to every other geographic region through a list of about 8,500 different holdings. It places a priority on developed markets, with about 16% of total assets in Japan and about 9% in the U.K. as the top two regions of focus. However, there’s also a bit of exposure to emerging markets like China and India, too. You may not want to put all your eggs in this basket, as you’ll overlook some powerful U.S. companies. But as a supplemental investment, VXUS has a lot to offer from a diversification perspective.
Vanguard Total Bond Market ETF (BND)
— AUM: $105 billion
— Expense ratio: 0.03%
Keeping with this theme of important supplemental investments, BND is a one-stop investment that can give you exposure to the entirety of the bond market — from corporate debt to U.S. Treasury notes to mortgage-related bonds. This fund is limited to the universe of investment-grade bonds and excludes the riskier “junk” bonds that carry higher interest rates but also a much higher risk of default. But thanks to rising interest rates, these high-quality bonds offer decent paydays in 2024 and BND’s current yield is roughly 4.4%. Keep in mind that bond ETFs do not generate as much growth potential in share prices, however, and investors mainly use this asset class for income potential. But if you’re looking for diversification in an asset class other than stocks, this Vanguard bond ETF is worth considering.
More from U.S. News
8 Dividend Stocks With Growing Payouts
8 Best Real Estate Stocks to Buy
7 Best Long-Term ETFs to Buy and Hold originally appeared on usnews.com
Update 12/29/23: This story was previously published at an earlier date and has been updated with new information.
