The perfect diversification: Three ETFs for long-term success

Investing can be simpler than many would like to admit. One does not need to be a master at stock-picking to make money in the market. Buying and holding a few high-quality Exchange-Traded Funds (ETFs) can be a simple yet effective strategy. These ETFs are collections of stocks or other assets traded under a common ticker symbol. They offer an easy way to diversify one's investments. Whether targeting dividend income, high growth, or a mix of both, there are suitable ETFs for every investor. Three of the best options are available for less than $1,000. The Schwab U.S. Dividend Equity ETF allows investors to own a portfolio of top-tier, dividend-paying blue-chip stocks, including Lockheed Martin, AbbVie, Home Depot, and Coca-Cola. With a distribution yield of 3.4%, the fund not only offers generous dividends but also features regular increases in distributions. Over the past decade, the fund has increased its quarterly distribution by over 220%, ensuring significant and growing passive income. The long-term returns are also impressive. Over the last ten years, the Schwab U.S. Dividend Equity ETF has mostly kept pace with the S&P 500 while providing a significantly higher distribution yield compared to the 1.3% yield of the S&P 500. For investors seeking growing dividends and additional opportunities through stock price appreciation, this ETF is an attractive option. For those focused on maximum capital growth, the Vanguard Growth ETF could be the perfect choice. This fund includes 188 stocks and focuses on high-growth companies like the "Magnificent Seven" as well as notable names like Visa and Eli Lilly. These companies achieve above-average growth rates, which can lead to higher investment returns. Over the past decade, this fund has returned 310%, compared to 240% for the S&P 500. However, growth investing is not easy money. Such stocks are typically more volatile and prone to larger fluctuations. The Vanguard Growth ETF tends to drop more sharply when the S&P 500 falls. Anyone purchasing this ETF should brace for a bumpy ride, but the long-term results can make the thrill worthwhile. Following a balanced investment philosophy, one can build wealth with the Vanguard S&P 500 ETF. The S&P 500 is not the most popular index without reason; historically, it has averaged annual returns of 10% over generations. Neither wars, recessions, nor global pandemics have prevented the index from reaching new highs. The index comprises 500 of America's most prominent publicly traded companies. Successful companies are more heavily weighted, aiding the index's growth. So successful that approximately 90% of professional fund managers fail to outperform the S&P 500 in the long run. The Vanguard S&P 500 ETF is one of only two ETFs owned by legendary investor Warren Buffett through his holding company Berkshire Hathaway. A wise choice for any long-term investor and a solid foundation for any portfolio.