Key Points
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Ideal long-term investments are broadly diversified, ultra-cheap, and offer solid growth opportunities.
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Equities are generally the best option, but different categories have different risk/reward profiles.
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Here are four Vanguard ETFs that have demonstrated the ability to create long-term wealth over years.
A lot of people view stocks and ETFs through the lens of whether or not it’s a good buy today. Is it a buy-low candidate? How will it do over the next 6 to 12 months? If you’re a long-term investor, the better question is, how will it do over the next few decades?
After all, if you’re funding goals many years down the road, such as retirement, how an investment performs over the next few months doesn’t really matter. Short-term conditions don’t really matter either. In reality, it comes down to whether it has the potential to build wealth and grow into a substantial amount of money when you ultimately need it.
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If you’re building a portfolio today that you’ll need to draw from 20 years from now, you still need to be diversified. Loading up on the best tech ETFs or the hottest artificial intelligence (AI) stocks may sound like a good plan. But when this theme turns out of favor, there’s almost no downside protection to help you out. A bit of balance may limit your upside, but it’ll also provide a degree of protection to smooth out the ride.
I’m thinking that just four ETFs can do the trick, each targeting a different market with a different purpose. Together or separately, they each have a long-term bullish investment case that can build for years.
Vanguard Total Stock Market ETF
I’m pretty much always going to choose the Vanguard Total Stock Market ETF(NYSEMKT: VTI) for the core position in a portfolio. By owning the entire investable U.S. equity universe, more than 3,500 stocks in all, it’s simply the best option for full U.S. stock market coverage. And it comes with a minuscule 0.03% expense ratio.
A lot of people prefer the Vanguard S&P 500 ETF(NYSEMKT: VOO) for this purpose, and I understand that. But I want the small-cap coverage. It’s only about 10% to 15% of the Vanguard Total Stock Market ETF‘s total portfolio, which means it doesn’t impact returns a great deal. But the diversification and higher return potential over the long term are advantages.
Vanguard Dividend Appreciation ETF
Even though they’re not terribly exciting, especially during the AI boom period, dividend stocks deserve at least some allocation in almost any portfolio. Because you have a 20-year time horizon in this scenario, you have the ability to take a little more risk. That’s why the Vanguard Dividend Appreciation ETF(NYSEMKT: VIG) is my choice for this category.
It targets only those stocks with 10+ years of consecutive annual dividend growth. But because it weights the portfolio by market cap, the big qualifying tech companies, including Microsoft, Apple, and Broadcom, are getting the biggest individual weights. That gives it a tech/growth tilt that a lot of other dividend ETFs don’t have. But it works as a long-term holding.
Vanguard Total International Stock ETF
International stocks might seem like an unnecessary drag on your portfolio, especially since they’ve lagged the S&P 500 for much of the past 15 years. But because global equity leadership tends to rotate in multiyear cycles, it’s still an important asset class to own.
The Vanguard Total International Stock ETF(NASDAQ: VXUS) gives you the most comprehensive and straightforward coverage of overseas stocks that you’ll find. It includes nearly 8,800 stocks across developed and emerging markets. And it works as a great opportunity when global economic conditions shift. Since the beginning of 2025, this ETF has beaten the S&P 500 by a wide margin as investors become more considerate of debt, inflation, and valuation risks.
Vanguard Growth ETF
With 20 years to invest, you have the ability to take on more risk in order to try to receive better returns. Yes, growth has produced stellar returns over the past several years. But there should still be plenty of additional opportunities ahead over the next two decades.
The Vanguard Growth ETF(NYSEMKT: VUG) is my choice for this theme. Investors might consider a pure tech ETF for this purpose. But I prefer the Vanguard Growth ETF because it targets economic growth wherever it’s coming from, not just a single sector. That ability to rotate and evolve is what makes the fund attractive as a long-term holding.
These ETFs can either be used individually or collectively. But the key will be to buy and hold and keep contributing over time. Let the long-term power of compounding do its thing and avoid the temptation to time your investments based on market conditions.
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David Dierking has positions in Apple, Vanguard Dividend Appreciation ETF, Vanguard Morningstar Total Stock Market ETF, and Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Apple, Broadcom, Microsoft, Vanguard Dividend Appreciation ETF, Vanguard Morningstar Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.