2 Low-Cost Vanguard ETFs for Set-and-Forget Investors
Tuesday, Oct 22, 2024 5:36 am ET
2min read Investing doesn't have to be a time-consuming or complex endeavor. Vanguard, a leading investment company, offers a range of low-cost exchange-traded funds (ETFs) that cater to set-and-forget investors seeking a hands-off approach. This article explores two Vanguard ETFs that are particularly well-suited for this investment strategy: the Vanguard S&P 500 ETF (VOO) and the Vanguard Total Bond Market ETF (BND).
The Vanguard S&P 500 ETF (VOO) is an excellent choice for investors looking to gain broad exposure to the U.S. stock market. This ETF tracks the performance of the S&P 500 index, providing investors with exposure to 500 of the largest U.S. companies. With an expense ratio of just 0.03%, VOO is one of the cheapest ways to invest in the U.S. stock market. This low fee structure means more of your money stays invested and working for you.
VOO's top holdings include tech giants like Apple, Microsoft, and Nvidia, which have been key drivers of the fund's performance in recent years. The ETF has delivered a total return of 592% since its inception, outperforming many actively managed funds. This broad market exposure and low cost make VOO an ideal choice for set-and-forget investors.
The Vanguard Total Bond Market ETF (BND) offers investors broad exposure to the U.S. investment-grade bond market, including Treasuries and mortgage-backed securities of all maturities. This ETF is an excellent choice for investors seeking a core bond holding to add stability to their portfolio. Like its equity counterpart, BND has a low expense ratio of 0.03%, significantly lower than the average expense ratio of 0.56% for similar funds.
BND holds 11,341 bonds with an average effective maturity of 8.3 years and an average duration of 6.0 years, suggesting a moderate level of interest rate sensitivity. The fund's yield to maturity of 4.2% provides a steady income stream for investors. This combination of broad diversification, low cost, and steady income makes BND an attractive choice for set-and-forget investors.
The combination of VOO and BND aligns closely with Warren Buffett's famous 90/10 investment strategy, which recommends allocating 90% of investments to low-cost S&P 500 index funds and 10% to short-term government bonds. This approach capitalizes on the long-term growth potential of the U.S. economy while providing some cushion against market volatility.
For investors who prefer a set-and-forget strategy, these Vanguard ETFs offer a compelling solution. Both funds feature rock-bottom expense ratios, ensuring that more of your money stays invested and compounds over time. Their broad diversification helps mitigate the risk of any single company or sector dragging down your entire portfolio.
Remember, being a set-and-forget investor doesn't mean being careless. It means choosing a sound, long-term strategy and sticking to it. By regularly investing in these Vanguard ETFs, you're positioning yourself to capture the long-term growth of the U.S. economy while maintaining a balanced and diversified portfolio. This approach is a simple yet powerful strategy that has stood the test of time.
The Vanguard S&P 500 ETF (VOO) is an excellent choice for investors looking to gain broad exposure to the U.S. stock market. This ETF tracks the performance of the S&P 500 index, providing investors with exposure to 500 of the largest U.S. companies. With an expense ratio of just 0.03%, VOO is one of the cheapest ways to invest in the U.S. stock market. This low fee structure means more of your money stays invested and working for you.
VOO's top holdings include tech giants like Apple, Microsoft, and Nvidia, which have been key drivers of the fund's performance in recent years. The ETF has delivered a total return of 592% since its inception, outperforming many actively managed funds. This broad market exposure and low cost make VOO an ideal choice for set-and-forget investors.
The Vanguard Total Bond Market ETF (BND) offers investors broad exposure to the U.S. investment-grade bond market, including Treasuries and mortgage-backed securities of all maturities. This ETF is an excellent choice for investors seeking a core bond holding to add stability to their portfolio. Like its equity counterpart, BND has a low expense ratio of 0.03%, significantly lower than the average expense ratio of 0.56% for similar funds.
BND holds 11,341 bonds with an average effective maturity of 8.3 years and an average duration of 6.0 years, suggesting a moderate level of interest rate sensitivity. The fund's yield to maturity of 4.2% provides a steady income stream for investors. This combination of broad diversification, low cost, and steady income makes BND an attractive choice for set-and-forget investors.
The combination of VOO and BND aligns closely with Warren Buffett's famous 90/10 investment strategy, which recommends allocating 90% of investments to low-cost S&P 500 index funds and 10% to short-term government bonds. This approach capitalizes on the long-term growth potential of the U.S. economy while providing some cushion against market volatility.
For investors who prefer a set-and-forget strategy, these Vanguard ETFs offer a compelling solution. Both funds feature rock-bottom expense ratios, ensuring that more of your money stays invested and compounds over time. Their broad diversification helps mitigate the risk of any single company or sector dragging down your entire portfolio.
Remember, being a set-and-forget investor doesn't mean being careless. It means choosing a sound, long-term strategy and sticking to it. By regularly investing in these Vanguard ETFs, you're positioning yourself to capture the long-term growth of the U.S. economy while maintaining a balanced and diversified portfolio. This approach is a simple yet powerful strategy that has stood the test of time.
