New to Investing? Build Your Portfolio Around These 2 Rock-Solid ETFs

If you’re getting started with investing, the process can seem overwhelming. There are thousands of stocks you can choose from, and it can be challenging to pick which ones may be the best ones for your portfolio. It can be discouraging to start with a loss out of the gate, and a good way to stay motivated is to get some early wins and keep your overall risk low.

To accomplish this, you may want to consider building your portfolio around a couple of exchange-traded funds (ETFs). These investments can give you exposure to hundreds, or even thousands, of stocks. That means the money you invest isn’t heavily dependent on just a handful of stocks.

Two funds that can be ideal for long-term investors today are the Vanguard S&P 500 ETF (VOO +0.54%) and the iShares Russell 1000 Growth ETF (IWF +0.39%). Here’s an overview of these ETFs, and why they can be no-brainer buys for the long haul.

Vanguard S&P 500 ETF

Many successful, well-known investors, including Warren Buffett, suggest that investors track the S&P 500 index. Since it’s a collection of the leading 500 companies on the U.S. stock exchanges, the index gives you exposure to the best stocks in the world. It isn’t stale, either. Over time, stocks will get bumped from the index if they aren’t doing well, and new ones will be added. It’s like having someone manage a portfolio for you.

While you can’t technically invest directly in the index, you can track it through an index fund. This is where the Vanguard S&P 500 ETF comes into play. It tracks the S&P 500. And the best part is that with a low expense ratio of only 0.03%, fees won’t put a big dent in your overall returns.

Historically, tracking the S&P 500 has been a great way to invest, as it has averaged an annual return of around 10% for decades. There will be bad years along the way, but generally speaking, it’s a low-risk way to invest for the long haul. That’s why an ETF such as this can be a good pillar to build around. Many fund managers struggle to outperform the S&P 500, and if you can’t beat it, you may as well simply invest in an ETF that will mirror it.

This year, the ETF has risen by around 14%, and over five years it’s up over 87%. Even if there’s a downturn in the markets, you can be confident that this fund will rebound, as it’ll benefit from the market’s growth in the long run.

iShares Russell 1000 Growth ETF

For long-term investing, the iShares Russell 1000 Growth ETF may be a more suitable option to consider, given its focus on growth. The fund invests in stocks that are expected to grow at higher rates than the overall market, and thus, can give investors exposure to both leading and up-and-coming growth stocks.

There is a bit more risk with this fund than simply mirroring the S&P 500, as it targets both large-cap and mid-cap stocks. But by and large, it’s highly focused on the leaders in tech, including Nvidia, Apple, and Microsoft, which collectively account for around 36% of the fund’s overall holdings. There are close to 400 holdings in the fund, although the vast majority account for less than 1% of the overall portfolio.

At 0.18%, its expense ratio is a bit higher than the Vanguard S&P 500 ETF, but the fees are still relatively low when compared to other funds. This year, the iShares Russell 1000 fund has risen by 15%, and over the past five years, it has more than doubled in value, accumulating gains of around 107%.

There can be some increased volatility with this ETF, particularly if there’s a slowdown in the markets due to its exposure to growth stocks. But if you want an easy way to invest in companies that are experiencing strong growth, this can be an excellent investment to put in your portfolio and hang on to.