The Vanguard S&P 500 ETF (VOO) tracks the S&P 500 index. This index is seen as a measure of how the U.S. stock market is doing. Over time, the S&P 500 has given returns of about 9% to 10% each year.
For example, if you put $1,000 into this ETF and it grew by 10% each year for 40 years, you would have over $45,000. Many people who became millionaires from stocks used this plan of investing regularly over a long time. The Vanguard Real Estate ETF (VNQ) lets you invest in real estate.
It follows an index that has a lot of Real Estate Investment Trusts (REITs). REITs include companies like Prologis, Public Storage, and Simon Property Group. REITs have to pay out at least 90% of their taxable income to shareholders.
This makes them good for dividends. The Vanguard Real Estate ETF has a dividend yield of about 3.8% right now.
Investing strategies with Vanguard ETFs
Over time, the dividends plus the growth in real estate values can lead to big total returns. The Vanguard Russell 2000 ETF (VTWO) tracks the Russell 2000 index of small company stocks. Small company stocks look appealing now for a few reasons.
They often do well when interest rates fall, since small companies tend to have more debt than big companies. Small companies could also benefit a lot from cuts in regulations. Right now, small company stocks are the cheapest compared to big company stocks they have been in over 25 years.
In the past, when this happened, small companies often did better afterward. This was seen in 1999 when small companies went on to beat big companies for more than 10 years. Putting $1,000 into any of these Vanguard ETFs can be a smart move if you want to build a diverse portfolio for growth.
You can choose the steadiness of the S&P 500, the income and growth potential of real estate, or the possible big gains in small companies. All of these ETFs provide great ways to invest for success over the long term.