The Only 3 Vanguard ETFs You Need for the Next 30 Years

Investors often overthink when it comes to building a long-term investment portfolio. With multiple sectors, companies, investment options, and alternatives, they tend to chase returns and forget about the long-term investment growth. Whether you’re a newbie or close to your retirement, if long-term investment is your goal, consider investing in exchange-traded funds (ETFs).

While it is possible to generate impressive returns through individual stocks, an ETF will give you a basket of stocks at a low cost. This will reduce risk and ensure steady returns. You’d be surprised at the wealth-generation potential of the top ETFs. There are hundreds of ETFs available today, but Vanguard stands out as one of the top performers. It offers a range of ETFs ideal for every investor type and risk profile. But if you’re investing for the next 30 years, here are only 3 Vanguard ETFs you need. Here’s a look at them. 

Vanguard S&P 500

One of the top Vanguard ETFs, the Vanguard S&P 500 ETF (NYSEARCA:VOO) tracks the S&P 500 large-cap stock index. It mimics the performance of the index and offers broad diversification. It holds about 500 stocks across different business sectors and offers exposure to them. 

VOO has a yield of 1.08% and an expense ratio of 0.03%. The fund offers high growth potential by investing in the top U.S. blue chip stocks. Whether it is technology, consumer discretionary, consumer staples, financials, industrials, or utilities, you get multi-sector stock exposure. 

It has generated a cumulative 1-year return of 16.39%, a 3-year return of 77.52%, and a 5-year return of 100.86%. VOO has the highest allocation to the technology sector (34.40%), followed by financials (13.40%) and communication services (10.60%). It includes companies that see earnings growth over time and have a good track record. The top 10 stock holdings include the Magnificent Seven, such as Apple, Microsoft, Nvidia, Amazon, Alphabet, and Tesla. If a business fails and is out of the S&P 500, you’ll not see it in the VOO ETF as well. 

VOO has a long-term focus and is a tried and tested index fund ideal for the next 30 years. It has low fees, and the annual dividend yield will more than make up for the fees. The fund has gained 14.70% in the year and is exchanging hands for $636.35 as of writing. 

Vanguard High Dividend Yield ETF 

Next on the list of Vanguard ETFs is the highly acclaimed Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM). It is a great choice for the long term. As the name suggests, the fund is known for steady passive income through dividends, and you won’t likely go wrong with it.

It tracks the performance of the FTSE High Dividend Yield Index and invests in stocks that have a strong dividend history and high yield. VYM holds $88.5B in assets and was launched in 2006. It has maintained a 19-year uninterrupted payment history since inception. 

The fund has an expense ratio of 0.04% and a yield of 2.34%. It has some overlap with the VOO but offers a higher yield. The fund invests in about 560 stocks with the highest allocation to the financial sector (21.90%), followed by technology (13.40%), industrials (13.20%), and healthcare (12.90%). It offers exposure to top-quality stocks like Procter & Gamble, Exxon Mobil, Broadcom, JPMorgan Chase, and Walmart.

It has generated a cumulative 1-year return of 16.26%, 3-year returns of 47.65% and a 5-year return of 91.02%. VYM is ideal for investors who simply want to sit back and collect periodic payments. A combination of VOO and VYM could be a smart way to build wealth. The fund has gained 17.54% in the past year and is exchanging hands for $156.50. 

Since the fund spreads risk across hundreds of holdings, the dividend growth has remained slow in recent years. However, it doesn’t chase aggressive dividend growers and focuses on payment stability for the long term. 

Vanguard Total Stock Market Index Fund ETF

The Vanguard Total Stock Market ETF (NYSEARCA:VTI) works as a backbone for your long-term portfolio. It offers broad diversification and exposure to multiple sectors. The fund tracks the performance of the CRSP US Total Market Index and has an expense ratio of 0.03%.

It holds about 3,500 stocks and has a yield of 1.08%. Each company is weighted by the market cap, and as the economy grows, the portfolio grows with it. This allows investors to capture the market’s growth without worrying about fees. If you’re here for the long term, you’ll be able to enjoy steady growth.

The fund is tech-heavy with an allocation of 38.50% in the sector. This is followed by consumer discretionary (13.90%) and industrials (12.10%). Its top 10 holdings are tech-focused and include Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta Platforms. The top three stocks, Apple, Nvidia, and Microsoft, make up 18% of the portfolio. Hence, the gains are amplified in a tech rally. 

VTI has generated a cumulative 1-year return of 15.44%, a 3-year return of 73.60%, and a 5-year return of 88.51%. If you’re looking for direct access to the overall stock market without picking individual stocks, VTI will do it for you. The fund has gained 14.30% in the past year and is exchanging hands for $341.47.