Investing in individual stocks can be a high-reward strategy, but it’s equally important to put some of your investment dollars on autopilot. This is where top-quality index funds come into play.
For the majority of my portfolio, I’m sticking with individual stocks that align with my expertise. However, as I’ve entered my mid-40s, I’ve started shifting my focus toward building a solid “backbone” with some top-notch index funds. In 2025, I plan to allocate half of any new money in my brokerage account to individual stocks and the other half to ETFs.
My must-have ETF is Vanguard’s S&P 500 Index Fund (VOO), which tracks the S&P 500 (^GSPC) and has a rock-bottom expense ratio of 0.03%. This fund has historically produced average total returns of about 10% annualized, making it an excellent core holding.
My second pick is the Vanguard Russell 2000 ETF (VTWO), which offers exposure to small-cap stocks at a lower price-to-book multiple than large caps. With interest rates starting to fall and a potentially pro-growth environment, I believe this fund has significant upside potential.
Lastly, I’m allocating money to Ark Autonomous Technology and Robotics ETF (ARKQ), which invests in AI-related stocks that could be big winners of the AI revolution. While it’s the highest-cost ETF on this list, its specialized approach makes it an attractive option for those who understand the underlying technology.
By balancing individual stocks with these three ETFs, I’m creating a solid foundation for my portfolio and ensuring long-term growth.
Source: https://www.fool.com/investing/2024/12/08/3-top-etfs-im-planning-to-buy-hand-over-fist-in-20