3 Simple Vanguard ETFs to Buy With $1,000 and Hold for a Lifetime

Anyone can invest successfully. All it takes is some money, a little know-how, and time.

With that in mind, let's examine three simple exchange-traded funds (ETFs) that are worth holding for the long term.

Image source: Getty Images.

Vanguard Growth ETF

At the top of my list is the Vanguard Growth ETF(NYSEMKT: VUG).

VUG Total Return Level data by YCharts

What's great about this index-linked ETF is that it tracks many of the biggest and best stocks at a reasonable price. The fund is linked to an index that mirrors about 400 growth stocks, ranging from megacap giants like Microsoft and Nvidia to smaller names like Equinix and Synopsys.

Source: Vanguard fund filings

When it comes to fees, this fund gives cost-conscious investors plenty to smile about. The fund boasts a tiny 0.04% expense ratio, meaning investors pay only $4 a year for every $10,000 invested in the fund.

As for risks and downsides, the fund has a few.

First, this fund isn't a great choice for income-seeking investors. With a dividend yield of only 0.5%, the fund simply doesn't generate enough cash for investors who need passive income.

Second, since the fund is focused on growth stocks, the fund will experience greater declines during periods of volatility compared to most value-oriented funds.

That said, the Vanguard Growth ETF remains a solid choice for growth-seeking investors with a medium to long-term time horizon.

Vanguard Value ETF

Next up is the Vanguard Value ETF(NYSEMKT: VTV).

VTV Total Return Level data by YCharts

For those investors looking for a value fund, this is one I would recommend. Like its growth-oriented cousin, this fund tracks an index of 400 stocks -- but with a focus on value. Therefore, top holdings aren't Microsoft and Nvidia, but ratherBerkshireHathaway and ExxonMobil.

Source: Vanguard fund filings

As such, the fund also generates much more income for investors. It has a dividend yield of 2.3%, meaning a $10,000 investment should generate about $230 in annual dividend income.

As for costs, the fund's expense ratio of 0.04% is about as low as expense ratios go for ETFs. That means investors keep more of their money hard at work in the stock market -- which is a good thing.

Finally, turning to risks and downsides, the fund's focus on value does present a risk of underperformance. During the past 10 years, the Vanguard Growth ETF has outperformed the Vanguard Value ETF by more than 150%, which includes a significant advantage for the value fund from dividends paid and reinvested.

In short, investors with many decades left until retirement may be better served to increase their risk levels, so that they don't underperform the market. However, for investors looking for passive income or those who want to take on less risk, the Vanguard Value ETF could be the right choice.

Vanguard Total Stock Market ETF

Finally, there's the Vanguard Total Stock Market ETF(NYSEMKT: VTI).

What's special about this fund is that it occupies a space between the growth and value funds noted earlier. As an index-tracking fund that seeks to provide a broad exposure to the U.S. stock market, this fund has a little bit of everything.

Source: Vanguard fund filings

Similarly, its 10-year performance fits right in between the growth and value funds. It has generated a 10-year compound annual growth rate (CAGR) of 13.5%. That compares to 16.4% for the Vanguard Growth ETF and 11.5% for the Vanguard Value ETF.

VUG Total Return Level data by YCharts

Turning to fees, the fund is even cheaper than the growth and value funds. Its expense ratio of 0.03% means investors only pay $3 a year for every $10,000 invested in the fund.

As for passive income, the fund has a dividend yield of 1.3% -- not great, but not terrible and roughly in line with the S&P 500 average.

Finally, regarding risks and downsides, the fund lacks any majorrisks, since it is so diversified. In truth, its main downside is that it has such a broad exposure to the market that it could be considered over-diversified.

Nevertheless, the fund will still decrease in value when the stock market falls, or enters a bear market. However, one shouldn't forget that's normal, and, over time, the stock market has always recovered and made new highs after every bear market.

Therefore, for investors looking for a diversified, cheap, and middle-of-the-road fund, the Vanguard Total Stock Market ETF could be a wise choice.

Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now?

Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $880,670!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of October 21, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Alphabet, Amazon, ExxonMobil, Nvidia, Procter & Gamble, Tesla, and Visa. The Motley Fool has positions in and recommends AbbVie, Alphabet, Amazon, Apple, Berkshire Hathaway, Equinix, Home Depot, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Synopsys, Tesla, Vanguard Index Funds-Vanguard Growth ETF, Vanguard Index Funds-Vanguard Value ETF, Vanguard Total Stock Market ETF, Visa, and Walmart. The Motley Fool recommends Broadcom, Johnson & Johnson, and UnitedHealth Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.