3 Vanguard ETFs to Buy With $1,000 and Hold Forever

When the market is near all-time highs, the instinct for some investors is to sit on their hands and wait for a pullback. But that impulse usually costs investors more than it saves. New highs are more common than you think, with analysts at J.P. Morgan noting that the S&P 500 actually hits a new all-time high on about 7% of all trading days. And of those highs, a third go on to become new market floors, meaning investors never see a lower price.

At the same time, even if an investor encounters a dip, they then need to time the market correctly on the way up. A separate J.P. Morgan study found that the market's best days often come after its worst days, when many investors freeze up waiting for stocks to fall further. It was found that if you missed the market's 10 best days over the past 20 years, your return would be cut nearly in half.

That's why market timing is generally a bad idea.

Image source: Getty Images.

The better strategy is to invest consistently at regular intervals. This is called dollar-cost averaging, and it takes the guesswork out of timing the market. It's also one of the easiest ways to build wealth over time, and exchange-traded funds (ETFs) are one of the best ways to implement this investing strategy.

If you just start with $1,000 and invest the same amount each month, it could turn into over $3 million in 30 years with a 12% average annual return and more than $5.5 million with a 15% yearly return.

Let's look at three low-cost Vanguard ETFs you can begin dollar-cost averaging into today.

Vanguard S&P 500 ETF

If you want a single, simple investment that you can hold for decades, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is it. This fund mirrors the S&P 500, giving you a diversified portfolio of the 500 largest companies in the U.S.

Over long stretches, the index's winners help propel the fund forward while the losers fade away. This dynamic has led to strong returns for the ETF over time, with it generating an average annual return of 15.3% during the past 10 years.

As with all Vanguard ETFs, the Vanguard S&P 500 ETF carries a low expense ratio (in this case, 0.03%), which means you get to keep nearly all the returns. Expenses, even as seemingly low as 1%, can greatly eat into your returns over time, so between its performance and low costs, this is as close to a set-it-and-forget-it investment as you can make.

Vanguard Growth ETF

Growth stocks have been leading the market higher for much of the 2000s, which is why the Vanguard Growth ETF (NYSEMKT: VUG) is a great investment option. The ETF tracks the performance of the CRSP US Large Cap Growth Index, which, in essence, is the growth portion of the S&P 500.

While it is less diversified and only carries around 165 stocks, the ETF has nicely outperformed over the years. One of the main reasons is that it is heavily weighted toward the technology sector, which makes up more than 60% of the ETF.

Over the past decade, the ETF has generated a yearly average return of 18%, easily outpacing the S&P's 15.3% return. While that may not sound like a lot, if you had invested $1,000 a month in the Vanguard Growth ETF over the past 10 years, you'd have approximately $310,000 today compared to around $268,000 with an S&P ETF. It also has a low expense ratio of just 0.04%.

Vanguard Information Technology ETF

With artificial intelligence (AI) looking like it could be in its early innings, investing in technology stocks could be a smart move. One way to get concentrated exposure to top tech stocks is through the Vanguard Information Technology ETF (NYSEMKT: VGT). The fund tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index and has a 0.09% expense ratio, which is cheap for a sector-focused fund.

The ETF is very top-heavy, with its top-three holdings of Nvidia, Microsoft, and Apple making up 44% of its portfolio. For that reason, I would not put all my eggs in one basket and make this my only investment. However, its returns speak for themselves, with the ETF producing an average annual return of 23.4% over the past decade. That's tough to beat.

JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Nvidia, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.