2 Vanguard ETFs to Buy With $100 and Hold Forever

The article highlights a long-term investment strategy utilizing Vanguard's ultra-low-cost ETFs, VTI and BND, to construct a 60/40 portfolio. VTI offers broad exposure to over 3,500 U.S. stocks, including significant allocations to major tech companies, with a 0.03% expense ratio and a 10-year return of 14.7%. Complementing this, BND provides diversified access to nearly 11,400 investment-grade U.S. dollar bonds, yielding over 4% with an identical 0.03% expense ratio, designed to reduce portfolio volatility. This combination is presented as an efficient, low-cost approach to achieve an attractive risk-adjusted return, historically averaging 8.8% annually, by balancing equity growth with bond stability.

Analysis

The article details a long-term investment strategy utilizing Vanguard's VTI (Total Stock Market ETF) and BND (Total Bond Market ETF) to construct a 60/40 portfolio, emphasizing Vanguard's low-cost structure with a 0.03% expense ratio for both funds. This approach aims to balance growth and stability, historically achieving an 8.8% average annual return for the 60/40 mix while significantly reducing volatility compared to an all-stock portfolio.

VTI provides broad exposure to over 3,500 U.S. stocks, tracking the CRSP US Total Market Index, with notable allocations to large-cap tech companies such as Nvidia (6.5%), Microsoft (6.1%), and Apple (5.6%). The fund has demonstrated robust historical performance, including a 10-year return of 14.7% and a 9.2% return since inception, closely mirroring its benchmark due to its minimal fees.

Complementing VTI, BND offers diversified access to nearly 11,400 taxable investment-grade U.S. dollar-denominated bonds, including government and corporate issues, currently yielding over 4%. While bonds typically offer lower returns (BND's 10-year return was 1.8%), they are crucial for portfolio diversification and risk reduction, ensuring investors retain more interest income due to the fund's ultra-low expense ratio.

Key Decisions for Investors

• Investors should consider the Vanguard 60/40 VTI/BND portfolio for long-term, low-cost, diversified exposure to U.S. stocks and investment-grade bonds, aiming for balanced risk-adjusted returns.