If I Were Starting Over in the Stock Market, I'd Put $1,000 in Each of These 4 ETFs
If you’re starting over as an investor (or just starting out), your focus shouldn’t be on picking the next big winner. It should be on building the foundation of your portfolio, the ETFs that you can hold forever and let grow over time. Once you have that created, then you can think about making more targeted bets.
Foundational ETFs should have a few things in common:
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
-
They’re broadly diversified.
-
They have an ultra-low expense ratio.
-
They effectively represent their target market or theme.
The goal for these funds should be comprehensive, cheap exposure. If you’re looking to use four ETFs to accomplish this, it should be more than enough to get you set up for successful long-term wealth creation.
Here’s where I’d look to drop $1,000 right now:
Start by owning the entire U.S. equity market
The Vanguard Total Stock Market ETF (NYSEMKT: VTI) is the foundational holding in my personal portfolio, so it shouldn’t be surprising that it’s my pick here as well. It’s the simplest and cheapest way to invest in the entire U.S. equity market, owning roughly 3,500 stocks in all at an expense ratio of just 0.03%. There aren’t many better deals available.
The reason I chose this over the Vanguard S&P 500 ETF is that I prefer to have small caps in my U.S. stock coverage, not just large caps. In reality, the overlap is still pretty high, and performance will generally be pretty similar. But even though it hasn’t been the case in a while, small caps still offer higher return potential over the long term.
Add high-quality, high-yield dividend stocks
Just like small caps, dividend stocks haven’t received the appreciation they deserve over the past several years. But they have a really good track record over the past several decades. The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is, in my opinion, the gold standard when it comes to stock selection.
Its methodology considers a stock’s dividend growth history, yield, and several fundamental factors, including return on equity (ROE) and cash-flow-to-debt ratio. It’s one of the few dividend ETFs that considers growth, yield, and quality all in a single strategy. And it limits the final portfolio to just 100 of the best qualifying stocks. It’s an ideal pairing with an S&P 500 fund.
Opportunities within profitable, deep value stocks
The small-cap category is one where I’m a little more hesitant to invest broadly. There’s a lot of poor quality in this group, and I think it’s better long-term to filter most of it out. That’s why I like the Avantis U.S. Small Cap Value ETF (NYSEMKT: AVUV). It focuses on very inexpensive stocks — the portfolio as a whole only has a price-to-earnings (P/E) ratio of around 12 — but only targets the higher profitability names.
That combination of value and quality is, in my opinion, the way to invest in small caps. You maintain the above-average return potential. But the quality tilt is better when investing for long-term capital growth. Plus, this fund is actively managed, so it can quickly adjust to changing market conditions.
Rounding it out with big growth stocks
If you’re willing to ride out the short-term volatility, growth stocks also provide above-average return potential. The Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG) is a straightforward way to invest in this theme. It has roughly 200 stocks screened for six fundamental factors, including revenue and earnings growth. And it charges just 0.04% annually.
The one thing to watch out for right now with growth funds is their high allocation to tech and their overlap with the S&P 500. Over the long term, however, this portfolio will evolve toward whatever is generating big growth at that moment. That flexibility makes it a strong opportunity if you remain invested for years.
Should you buy stock in Vanguard Morningstar Total Stock Market ETF right now?
Before you buy stock in Vanguard Morningstar Total Stock Market 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 Morningstar Total Stock Market ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $380,363!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 19, 2026.
David Dierking has positions in Schwab Strategic Trust-Schwab U.s. Large-Cap Growth ETF, Schwab U.S. Dividend Equity ETF, and Vanguard Morningstar Total Stock Market ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
If I Were Starting Over in the Stock Market, I’d Put $1,000 in Each of These 4 ETFs was originally published by The Motley Fool