Two ETFs Worth Investing in and Maintaining Ownership Until 2025
Investing in exchange-traded funds (ETFs) has become increasingly popular over the past few decades, thanks to their ease of use and low expense ratios compared to traditional mutual funds. One of the most recognized ETF providers is Vanguard, known for its index-tracking ETFs and low fees. Two of their top ETFs are the Vanguard S&P 500 ETF (VOO) and the Vanguard S&P 500 Growth ETF (VOOG).
The Vanguard S&P 500 ETF (VOO) follows the S&P 500 index, giving investors exposure to 500 of the largest U.S. companies. The ETF's low expense ratio of 0.03% makes it an attractive choice for investors looking to minimize costs. Over the past year, VOO has returned 26.31%, making it an excellent choice for both short-term and long-term investors.
On the other hand, the Vanguard S&P 500 Growth ETF (VOOG) targets the growth-focused S&P 500 Growth Index, comprising around 200 stocks with higher-than-average revenue and earnings growth. This ETF has delivered impressive results, with a 1-year return of 38.06% as of January 9, 2025. The growth-oriented focus of VOOG can result in higher potential returns, but it comes with increased volatility due to its more prohibitive sector allocation.
Comparing the two, VOO is a balanced choice, providing a wider scope of investment opportunities with a lower risk profile. However, investors seeking higher returns and willing to accept the associated risk could opt for VOOG.
Interestingly, both ETFs have a strong positive relationship with each other, as they follow the same underlying U.S. stock market. This correlation should be considered when determining portfolio allocation, as investing in both might not offer the expected diversification benefits.
In summary, Vanguard's S&P 500 ETFs (VOO and VOOG) cater to different investment styles and risk profiles, offering investors two highly-regarded options for gaining exposure to U.S. large-cap equities.
Investing in either the Vanguard S&P 500 ETF (VOO) or the Vanguard S&P 500 Growth ETF (VOOG) requires some financial commitment, as each fund requires a minimum initial investment.
Managing funds in these ETFs requires a good understanding of finance, as investors need to consider factors such as their risk tolerance, investment horizon, and overall portfolio strategy before making a decision.
