Long-term Investment Option: Notable Vanguard ETF Worth Permanent Ownership
Long-term Investment Option: Notable Vanguard ETF Worth Permanent Ownership
There aren't many investments I'd feel secure keeping for an extended period or simply purchasing and neglecting. Economical and market circumstances can shift swiftly, and what initially appeared secure might not seem as robust anymore. In narrative terms of 20- or 30-year spans, predicting the future of the markets collectively, let alone for individual stocks, becomes a near-impossibility.
This is where an exchange-traded fund (ETF) becomes an outstanding choice if you're investing for the long term. With an ETF, you're spared the burden of handpicking stocks or updating your portfolio based on the latest trends. Furthermore, lots of Vanguard ETFs offer exceptional diversification at minimal costs. One ETF that could prove an excellent investment for buy-and-hold investors is the Vanguard S&P 500 ETF (VOO -2.94%).
Replicating the S&P 500 could be the most secure and uncomplicated strategy
For decades, billionaire investor Warren Buffett has advocated for investors to simply invest in the S&P 500. Given its collection of top global stocks, it's an effortless means for even inexperienced investors to build their portfolios over the long term. During an interview with CNBC in 2017, Buffett expressed: "The secret isn't to pick the right company. The secret is to essentially invest in all the prominent companies through the S&P 500 and maintain this commitment in a low-cost manner."
And if you're in search of low-cost funds, Vanguard becomes an essential resource. The Vanguard S&P 500 ETF boasts a minimal expense ratio of 0.03%. In exchange for such a modest fee, you attain access to the S&P 500 index. It's an investment that investors can purchase and forget about, offering a viable strategy to bet on the economy's future growth. Over the years, it's demonstrated remarkable competence in tracking the broad index.
Short-term volatility could be forthcoming, but in the long run, the S&P remains unchallenged
Though the S&P 500 may represent an outstanding strategy for long-term investing, it's important to remember that volatility can, and will, occur; it won't be a linear upward trend in terms of value. A reminder about this can be found in 2022, during which the index suffered close to a 20% decline in value. And depending on which financial analyst you consult today, some anticipate even more significant losses in the upcoming year, considering the valuation of today's markets.
However, if your investment horizon reaches beyond only a few years but stretches to decades or even the remainder of your life, you can rest assured that a poor year won't matter much. Historically, the index has exhibited a tendency to recover, just as it has in the past. The predominant long-term trend is that the index will appreciate in value, and it merely remains to determine the average return. Its annual return has been around 10% per year, but it could be lower in the future as it reaches new heights in 2024.
Nevertheless, regardless of the annual rate that will be realized within the following 20- or 30-plus years, it's likely that tracking the S&P 500 and securing exposure to it today will prove more beneficial than delaying and attempting to forecast the market. Including the Vanguard S&P 500 ETF in your investment portfolio is one of the safest ways to venture into stock market investing over the long term and can help you replicate the index's returns, while minimizing high fees.
Investing in the Vanguard S&P 500 ETF, like the VOO, is an excellent long-term strategy, as it offers access to a diverse range of top global stocks at a low expense ratio, allowing investors to build their portfolios with minimal effort and cost. Furthermore, closely following Warren Buffett's advice and investing in the S&P 500 indirectly through an ETF like VOO can provide a secure and uncomplicated approach to wealth accumulation.