The Power of Long-Term Investing: 7 Best ETFs to Buy and Hold

The efficacy of low-cost index funds in delivering long-term returns is widely recognized. These funds provide one of the simplest ways to nurture your nest egg – provided you have the patience to let your investments flourish. Countless studies have revealed that a buy-and-hold strategy often outperforms the pursuit of trendy investments. Despite occasional bad months or even bad years for stocks, historical data shows that, over any 10-year period, investors enjoy an average annual return of approximately 12%.

This strategy not only requires less effort but also significantly reduces the stress factor, all while accumulating substantial profits. If you are willing to let your investments grow over the years without being swayed by daily market fluctuations, consider the following ETFs as some of the best long-term investments to buy and hold:

1. iShares Core S&P 500 ETF (IVV)

• Assets under management: $340 billion

• Expense ratio: 0.03%

As the second-largest ETF on Wall Street, IVV is a favorite among long-term investors seeking exposure to the largest U.S. stocks. Benchmarking the S&P 500, including tech giants like Microsoft and Apple, this ETF leans toward the tech sector, offering substantial long-term performance potential.

2. Vanguard High Dividend Yield ETF (VYM)

• Assets under management: $48 billion

• Expense ratio: 0.06%

VYM, comprised of approximately 460 companies, prioritizes income-generating corporations with above-average yields. Holdings include Exxon Mobil and JPMorgan Chase, focusing on sectors like financial services and consumer staples. With a 3.3% yield, this ETF caters to income-focused investors.

3. Vanguard Growth ETF (VUG)

• Assets under management: $89 billion

• Expense ratio: 0.04%

For those looking to embrace the growth potential of technology and innovative sectors, VUG, the largest dedicated growth ETF, is an ideal choice. With a focus on faster-growing companies, particularly in the information technology sector, this ETF is well-suited for long-term investors seeking substantial returns.

4. Vanguard Total Stock Market ETF (VTI)

• Assets under management: $304 billion

• Expense ratio: 0.03%

VTI offers broad diversification by holding more than 3,800 total stocks, including large-cap blue-chip companies. With weight in tech, healthcare, and financial services, this ETF suits investors looking for general stock market growth potential over the long term.

5. Vanguard Total International Stock ETF (VXUS)

• Assets under management: $56 billion

• Expense ratio: 0.07%

VXUS provides exposure to overseas stock markets, allowing geographic diversification and access to emerging markets. With a global approach encompassing approximately 7,900 international stocks, this ETF offers a broad and compelling long-term investment opportunity.

6. iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

• Assets under management: $28 billion

• Expense ratio: 0.14%

Beyond stocks, LQD provides access to over 2,600 investment-grade corporate bonds. These bonds, from creditworthy corporations like Pfizer and Goldman Sachs, offer reliable debt repayment. LQD is a solid choice for investors looking for long-term income in the current rising-interest-rate environment.

7. iShares iBoxx $ High Yield Corporate Bond ETF (HYG)

• Assets under management: $14 billion

• Expense ratio: 0.49%

For investors seeking higher yields, HYG offers a significant annual return, though it comes with added risk due to its high-yield or "junk" bond focus. With about 1,200 positions, this ETF provides diversification, but investors should be aware of the increased inherent risk. The bigger potential return, along with a slightly higher fee, can offer a more substantial income stream over the long term.

Incorporating these long-term ETFs into your investment portfolio is a sound strategy for building wealth over time. With patience, a steadfast approach, and these well-chosen funds, you can achieve your financial goals and secure your future.

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