Building a Long-Term Portfolio: 3 Vanguard ETFs to Consider

Being a long-term investor is awesome, partly because you have so much control over the process. You can make investing as simple or complicated as you would like, though I recommend a simple approach for most people. That means diversifying your investments and letting time and the market do the heavy lifting for your portfolio.

There’s no better way to do that than exchange-traded funds (ETFs), buckets of individual stocks that trade under a single ticker symbol. You can build a diverse portfolio with just a small handful of ETFs, and Vanguard might be the best name in the ETF game.

Investors can trust Vanguard, which has been around for decades. Plus, the fundholders, those who invest in Vanguard’s investment products, own the company, so there’s no conflict of interest.

Here are three top Vanguard ETFs that can help you easily build a diversified long-term portfolio with investments across different types of stocks, industries, and geographic markets.

1. Vanguard S&P 500 ETF

The U.S. stock market is the world’s largest and most successful, so it’s a no-brainer. The S&P 500 is a legendary stock market index that features 500 prominent U.S. companies. You can’t directly invest in the S&P 500, but you can invest in the Vanguard S&P 500 ETF (VOO -0.57%), a Vanguard ETF that follows it.

Data by YCharts.

Buying the Vanguard S&P 500 ETF instantly gives you widespread exposure to each primary sector in the U.S. economy. The index’s highest-weighted members include America’s leading technology companies, the Magnificent Seven, Broadcom, Warren Buffett’s Berkshire Hathaway, and JPMorgan Chase, America’s largest bank.

There is always an inherent risk in investing. Still, the S&P 500 is arguably one of the safest investments. It can be volatile sometimes, but the index has historically continued to recover and make new highs. The Vanguard S&P 500 ETF is well known and charges a low fee of 0.03%, with just a $1 minimum investment.

2. Vanguard Real Estate ETF

Real estate is an excellent investment and society’s longest-standing asset class. Unfortunately, most individuals lack the funds or knowledge to participate, especially in commercial property. ETFs are a great solution. That’s why investors should consider the Vanguard Real Estate ETF (VNQ 0.15%).

Data by YCharts.

This ETF holds over 150 real estate stocks, primarily real estate investment trusts (REITs), companies that acquire and lease properties. The Vanguard Real Estate ETF holds REITs specializing in various submarkets, including healthcare, retail, telecommunications, industrial facilities, data centers, and more.

Investors will also share in the cash flow these properties produce. The Vanguard Real Estate ETF pays quarterly distributions and has an adjusted effective SEC yield of 2.8%. The ETF’s fee is also just 0.13% with a $1 minimum investment. Investing in real estate doesn’t get any simpler than this, and it’s a nice way to diversify beyond stocks in typical industries.

3. Vanguard Total International Stock Index Fund

Just because the U.S. market is the largest doesn’t mean there aren’t fantastic opportunities abroad. Unfortunately, some of the world’s best non-U.S. companies sometimes report in foreign languages or currencies or don’t list on U.S. exchanges. You can avoid those headaches with the Vanguard Total International Stock Index Fund (VTIAX).

Data by YCharts.

This one ticker symbol casts a wide net; the ETF holds over 8,500 stocks of all sizes and industries from developed and emerging markets worldwide. However, you’ll probably recognize some of the fund’s top holdings, which include Taiwan Semiconductor, Tencent Holdings, SAP, Nestlé, ASML Holding, Alibaba Group, Novartis, Roche Holding, Toyota Motor, and AstraZeneca.

Non-U.S. stocks can be riskier, due to factors like geopolitics or if the companies are in emerging markets with less stable governments. Still, having some foreign investment exposure is wise and can occasionally outperform the U.S. market. The ETF’s fee is only 0.09%, which seems like a bargain for how complicated it can be for most people to track foreign companies. The only catch here is that the fund has a $3,000 minimum investment, so investors may need to buy in with a lump sum instead of a few dollars here or there.