Investment Strategies: Easy-to-Purchase ETFs Worth Less than $500 for Long-Term Investment
In the realm of investing, implementing a dollar-cost averaging (DCA) strategy has become increasingly popular. This approach involves regularly purchasing a fixed amount of a particular asset regardless of its price, aiming to reduce the impact of market volatility. For those seeking a well-rounded portfolio with a focus on performance, diversification, and sector allocation over the past decade, several low-cost ETFs stand out based on their historical returns, broad market coverage, and expense ratios.
One such option is the Vanguard Total Stock Market ETF (VTI), which covers nearly all U.S. equities, including large-, mid-, and small-cap stocks. With a low expense ratio of 0.03%, this ETF provides broad sector diversification and has delivered robust total returns reflecting the growth of the U.S. market.
Another strong performer is the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO), both tracking the performance of the S&P 500 index, consisting of around 500 of the largest U.S. companies. These ETFs have expense ratios of 0.03%, ensuring cost-effectiveness, and have averaged a 12.8% and 12.7% average annual return over the past decade, respectively.
For those seeking a growth-focused ETF, the Vanguard S&P Growth ETF (VUG) is another great option. This ETF, which tracks the CRSP US Large Cap Growth Index, has an average annual return of 15.3% over the past decade and has been a strong performer, with growth stocks growing their earnings at an average annual rate of 27.5%.
Investors looking for income might find the Schwab U.S. Dividend Equity ETF (SCHD) appealing, as it has a yield of nearly 4%. With an average annual return of 10.6% over the past 10 years, as of the end of May, this ETF has outperformed other large-cap value ETFs during this period.
The Vanguard Information Technology ETF (VGT) is a great way to invest in the technology sector, while the Schwab U.S. Dividend Equity ETF offers less technology exposure for investors seeking income. On the other hand, the Invesco QQQ Trust (QQQ) replicates the performance of the Nasdaq-100 index, consisting of about the 100 largest non-financial stocks that trade on the Nasdaq exchange. This ETF has an average annual return of 18.1% over the past 10 years, as of the end of May, and has outperformed the S&P 500 more than 87% of the time on a rolling 12-month basis.
In conclusion, a combination of the Vanguard Total Stock Market ETF (VTI) for broad market coverage, iShares Core S&P 500 ETF (IVV) or Vanguard S&P 500 ETF (VOO) for large-cap steady growth, and optionally the SPDR S&P 600 Small Cap Growth ETF (SLYG) for added small-cap growth exposure offers diversified sector allocation with low costs and proven historical performance, making it well-suited for consistent investing via dollar-cost averaging.
- While implementing a dollar-cost averaging strategy, investors might consider the Vanguard Total Stock Market ETF (VTI), which, with a low expense ratio, provides broad sector diversification in U.S. equities and has delivered robust returns.
- For those seeking large-cap steady growth, the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO) are strong performers, both tracking the S&P 500 index and offering low expense ratios.
- The Vanguard S&P Growth ETF (VUG), with its focus on growth stocks, has delivered a high average annual return and could be a suitable option for those seeking a growth-focused ETF.
- Investors looking for income might favor the Schwab U.S. Dividend Equity ETF (SCHD), which yields nearly 4% and has outperformed other large-cap value ETFs over the past decade. For those preferring less technology exposure, the Invesco QQQ Trust (QQQ) could be an option, as it replicates the performance of the Nasdaq-100 index and has outperformed the S&P 500 significantly.
