How much can a thousand dollars grow over time? You might be surprised. If invested in an exchange-traded fund (ETF) with a low expense ratio and held for decades, it can turn into quite a lot.
With that much time to work with, two things become critical to consider:
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Even little differences in average annual performance can lead to big differences in the value of your investments.
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Diversification helps eliminate the possibility of one or two companies tanking your plans and keeps the focus on long-term growth without needing to pick winners.
If that sounds simple, it actually is. The ETF marketplace offers dozens of funds that offer access to hundreds if not thousands of companies with fees that could be less than a cup of coffee. That’s how you create long-term wealth without overthinking it.
I have three ETFs that I think fit the bill. One is a broad market ETF. One is more heavily tilted toward growth. One is a bit under-the-radar and invests in an underappreciated area of the market.
Vanguard Total Stock Market ETF
This one probably shouldn’t come as a surprise. The Vanguard Total Stock Market ETF (NYSEMKT: VTI) is my favorite core equity ETF because it covers the entire investable U.S. stock universe. It includes large-, mid-, and small-cap stocks across all sectors, making it one of the most diversified equity ETFs in the world. The fact that you can own it for an expense ratio of just 0.03% makes it all the more impressive.
Over the long term, I believe it’s important to own U.S. companies of all sizes in your portfolio, not just the S&P 500 (SNPINDEX: ^GSPC). As we saw earlier this year, market leadership can change quickly when the economic outlook changes. When the data indicated that it was unlikely the Fed would cut rates in 2026, investors pivoted to value, defensive, and dividend stocks. For a time, tech was one of the worst-performing sectors year to date. Small-caps also performed comparatively well during that value shift.
In short, different segments of the market will go in and out of favor over time. It’s just easier to assume large-cap leadership because that’s what has worked over much of the past decade. But owning everything helps smooth out the ride and capture leadership wherever it can be found.
