5 ETFs to BUY & HOLD FOREVER
Summary
TLDRIn this financial advice video, Mark Rusen, a CPA, discusses the importance of a strong core in one's investment portfolio for long-term wealth building. He emphasizes the role of ETFs in diversification and consistency, highlighting five top ETFs: Vanguard S&P 500 ETF (VO), Invesco NASDAQ 100 ETF (QQQM), Schwab US Dividend Equity ETF (SD), iShares Core High Dividend ETF (HDV), and Vanguard Total Stock Market ETF (VTI). These ETFs offer a range of exposure from broad market participation to sector-specific focuses, providing a foundation for building generational wealth.
Takeaways
- 📈 Investing in ETFs is a strategy for long-term wealth building, offering diversification and consistent results.
- 🧩 Warren Buffett emphasizes the importance of patience and diversification in building wealth over time.
- 🏦 ETFs act as baskets of stocks, offering various sizes and focuses, such as dividend, growth, or sector-specific.
- 🌟 The top five ETFs discussed are considered strong core investments for a diversified portfolio.
- 🇺🇸 Vanguard S&P 500 ETF (VO) is recommended as a foundational investment, representing 500 top US and global companies.
- 📊 VO has a low expense fee and a significant asset base, with technology as its top sector and a 31% allocation.
- 💻 Invesco NASDAQ 100 ETF (QQQM) is a growth-focused ETF with a lower expense ratio than its popular counterpart QQQ.
- 💡 Schwab US Dividend Equity ETF (SD) offers a balance of high yield and growth, with a focus on dividend-paying stocks.
- 🛡 iShares Core High Dividend ETF (HDV) is geared towards quality and stability, with a higher dividend yield and mature companies.
- 🌍 Vanguard Total Stock Market ETF (VTI) provides broad diversification by investing in every public company in the US.
- 📊 VTI has a similar sector allocation to VO but with a more extensive range of holdings and lower top stock concentration.
Q & A
What is the importance of having a strong core in a portfolio for long-term wealth building?
-A strong core in a portfolio is important for long-term wealth building as it helps to reduce volatility and provides consistent results year after year, ensuring stability and growth over time.
Why do investors like Warren Buffett emphasize patience and diversification in wealth building?
-Patience and diversification are key because they allow investors to spread risk across various assets and avoid the pitfalls of short-term market fluctuations, leading to more reliable long-term gains.
What are ETFs and how do they help in diversifying a portfolio?
-ETFs, or Exchange Traded Funds, are investment funds that can be bought and sold like individual stocks and represent a basket of stocks. They help diversify a portfolio by offering exposure to a wide range of assets within a single investment, reducing risk and providing access to various sectors or investment strategies.
What are the key features of the Vanguard S&P 500 ETF (VO)?
-The Vanguard S&P 500 ETF (VO) is a widely owned fund with $1.1 trillion in assets under management and an expense fee of 0.3%. It provides ownership in 500 of the best US and global companies, offering solid diversification with a sector breakdown led by technology, health care, and financials.
How does the Invesco NASDAQ 100 ETF (QQQM) differ from the popular QQQ ETF?
-The Invesco NASDAQ 100 ETF (QQQM) is similar to the QQQ ETF but has a lower expense ratio of 0.15% compared to QQQ's 0.2%. It focuses on growth with heavy exposure to the technology sector, making it a suitable choice for buy-and-hold investors looking for a lower cost option.
What makes the Schwab US Dividend Equity ETF (SDY) a favorite among dividend-focused ETFs?
-The Schwab US Dividend Equity ETF (SDY) is favored due to its high yield, strong dividend growth, and a balance between high yield and growth. It has a 3.4% dividend yield and a 5-year dividend growth rate of 12%, making it a great complement to technology-heavy ETFs.
Outlines
💼 Building Long-Term Wealth Through ETFs
The first paragraph emphasizes the importance of a strong core for a long-term investment portfolio to reduce volatility and ensure consistent returns. It highlights the wisdom of investors like Warren Buffett on patience and diversification. The speaker introduces the concept of ETFs, or Exchange Traded Funds, as a diversified investment tool that can range from broad to focused baskets of stocks. The video promises to discuss five top ETFs that can anchor a portfolio, and the speaker reminds viewers that he is a CPA, not a financial advisor, urging them to take the content as informational rather than financial advice. The video is sponsored by The Motley Fool, offering resources for investors and a promotion for their '10 best stocks to buy now'.
📈 Top ETFs for Diversification and Growth
The second paragraph delves into the specifics of the first two ETFs: the Vanguard S&P 500 ETF (VO) and the Invesco NASDAQ 100 ETF (QQQM). VO is presented as a foundational investment, owning a piece of 500 top US and global companies, with a significant focus on technology and health care sectors. It has a low expense fee and has shown substantial growth over the past decade. QQQM, a growth-focused ETF with a lower expense ratio than its counterpart QQQ, is heavily invested in the technology sector, offering high exposure and growth potential. Both ETFs are discussed in terms of their assets, performance, and top holdings, which include major tech companies like Microsoft, Apple, and Amazon.
💰 High Dividend and Broad Market Exposure ETFs
The third paragraph introduces three more ETFs: the Schwab US Dividend Equity ETF (SDD), the iShares Core High Dividend ETF (HDV), and the Vanguard Total Stock Market ETF (VTI). SDD is a favorite for its dividend yield and growth, providing a balance to technology-heavy ETFs. HDV is highlighted for its focus on quality and stability, offering a higher income stream from mature, high-dividend companies. Lastly, VTI is presented as the ultimate diversification play, giving investors a stake in every public company in the US. The paragraph discusses the sector breakdown, top holdings, and the rationale behind choosing these ETFs for long-term, buy-and-hold strategies.
Mindmap
Keywords
💡Investing
💡Portfolio
💡Volatility
💡Warren Buffett
💡ETFs (Exchange Traded Funds)
💡Diversification
💡Vanguard S&P 500 ETF
💡Sector Breakdown
💡Dividend Yield
💡Buy and Hold
💡Generational Wealth
Highlights
Importance of having a strong core in a portfolio for long-term wealth building.
Diversification is key to mitigating risks in investment.
Transcripts
when it comes to investing in building
long-term wealth it's very important to
have a strong core to your portfolio not
only does this wean out some of the
volatility but it gives you consistent
results year in and year out great
investors like Warren Buffett over the
years have talked about the importance
of Building Wealth long term and a few
ways they do this is through patience
and diversification one of the easiest
ways to diversify your portfolio right
from the start is by investing in ETFs
or exchange traded funds
ETFs can be thought of as a basket of
stocks you could have larger baskets
where there's hundreds or even thousands
of stocks within an ETF or smaller
baskets where maybe you see 30 different
stocks within a particular ETF you could
have dividend focused ETF or growth
focused ETFs or even sector focused ETFs
there are thousands of options out there
but in today's video we're going to talk
about five of the top ETFs in my opinion
alone and all of these ETFs differ in
some shape or form and could help anchor
your portfolio so before we begin do me
a huge favor click that like button down
below subscribe to the channel so you're
notified anytime we drop new content and
let's jump into
[Music]
it hey everyone Mark rusen here back for
another video as always I'm a CPA and
not a financial adviser so please do not
take this as Financial advice and before
we begin let me thank today's video
sponsor which is the mle fool the mon fo
has a ton of great resources and
products available for investors of all
different levels and right now if you go
to fool.com forward slm Mark you could
sign up to receive their 10 best stocks
to buy right now all right let's jump
back into today's video taking a look at
five of the top ETFs to help anchor your
portfolio beginning with the first which
is the Vanguard S&P 500 ETF stock ticker
vo this is where I believe every single
portfolio should start this is 500 of
the best companies here in the US vo or
an S&P 500 ETF is my top position and
that likely won't change for decades we
are talking about owning 500 of the best
companies here in the US and really
around the world so when we look closer
here at vo it's one of the most widely
owned ETFs it has assets under
management of $1.1 trillion an expense
fee of
.3% making it extremely low cost over
the past decade vo is up 76% and the
dividend yield comes in at
1.4% again vo gives you that ownership
to 500 of the best companies but it also
gives you solid diversification here's a
look at the sector breakdown the top
sectors are technology which is 31% of
the fund followed by healthc care
equating to 133% financials at 133%
consumer discretionary at 11% and
communication Services coming in at 9%
the top 10 Holdings include Microsoft
Apple Nvidia Amazon meta platforms
alphabet Burkshire alphabet Class C
shares Eli Lily and broadcom the top 10
stocks here account for 32% of the ETF
and in total vo has 8 positions and you
may be asking yourself why does this ETF
have 508 total positions doesn't it
track the S&P 500 well as we saw in the
top 10 list there's alphabet on there
twice multiple companies out there have
multiple classes of stocks Burkshire
being one of them and alphabet being one
of them so when you invest in the S&P
500 you're getting broad exposure and
exposure to some of the top companies
here in the US although it has been
growing its technology exposure as that
sector has been booming over the past
year now let's move on to buy and hold
ETF number two which is QQQ M which is
the Invesco NASDAQ 100 ETF this is the
sister fund to the very popular QQQ but
again this is a video focused on Buy and
Hold and although QQQ m is very similar
almost exact to that of QQQ it does have
one thing that we like for Buy and Hold
investors that is a lower expense ratio
as you can see here assets under
management are $23 billion and again
this is a newer ETF so much smaller in
size than that of QQQ which has 255
billion in assets under management the
expense fee though is 0.15% compared to
QQQ having an expense ratio of. 2% over
the past 12 months QQQ m is up 41% and
it has a dividend yield of just
66% so this ETF is focused much more on
growth and heavy exposure to that
technology sector so you are going to
have a lot of crossover when you're
looking at something like vo and QQ qm
so make sure you take that into
consideration before investing here
looking here you could see a breakdown
of those sectors which led by technology
even higher exposure to technology than
that of the S&P 500 50% exposure here
followed by communication services at
16% consumer discretionary at 133%
Health Care at 6% and Consumer Staples
at 6% as well so much heavier focus on
technology and less on the other sectors
there now let's take a look at the top
positions which again you'll see a lot
of similar names that we just looked at
the top dog is Microsoft followed by
Apple Nvidia Amazon meta platforms
broadcom both shares of alphabet Tesla
and then rounding out the top 10 is
Costco the top 10 stocks account for 47%
and total positions here in this fund is
104 so much smaller in terms of size and
much higher in terms of exposure to that
technology sector that brings us to buy
and hold ETF number three which is the
Schwab us dividend Equity ETF stock
ticker
SD you didn't think we were going to be
doing a top ETF video and not mention
one of my favorite or in fact my
favorite dividend focused ETF which is
SCD it just checks a lot of the boxes
there's a lot of different dividend
focused ETFs out there some focus more
on dividend growth some focus more on
higher yield CHD has higher yield than
some of those high yield ETFs and faster
growth than some of those dividend
growth focused ETFs SCD currently has 55
billion in assets under management a
very low expense fee of just
.6% over the past decade SCD is up 110%
it has a dividend yield of 3.4% and a
5-year dividend growth rate of 12% why
do I like SD so much well we just
touched on the dividend component but
another component on why I like it so
much is the fact that it is a great
compliment to the likes of both ETFs we
just looked at vo as well as QQ qm both
of them heavy techn techology exposure
you're going to see here in a second
thatd doesn't have that much in terms of
Technology exposure so this is going to
further broaden out our portfolio so
when the market is rallying and we're
seeing a broad rally SCD is going to do
quite well here's a look at that sector
breakdown where the top sectors include
financials which are 177% of the fund
followed by healthc Care at 15%
Industrials at 14% Consumer Staples 14%
and energy 14% much more broad not
overly exposed to one single sector and
you don't see technology in the top five
as it only accounts for 8.6% ofd here's
a look at the top stocks which include
Chevron Lockheed Martin Verizon
communications Texas Instruments UPS
PepsiCo Cisco Systems Bristol Meyers
Black Rock and fiser the top 10 stocks
account for 39% ofd and in total it has
104 total positions again SD checks a
lot of boxes for me it diversifies my
portfolio it complements the likes of
the S&P 500 ETFs as well as the
technology heavy ETFs it's got a great
dividend yield and strong dividend
growth now let's take a look at Buy and
Hold ETF number four which is the I
shares core High dividend ETF stock tier
hdv let's continue on with another
dividend focused ETF much different than
that ofd or the other ETFs that we've
looked at so far if you're looking more
for stability higher quality but still
some income some higher income here then
hdv is a great spot to look at it
focuses more on quality over growth and
most of that quality coincides with
higher dividend payers taking a look
here you could see that hdv has 10
billion in assets under management it
has a low expense fee of just
8% and over the past decade the fund is
up nearly 50% it does have a dividend
yield of 3.4% when you see the top 10
stocks within this ETF again you're
going to notice that there's going to be
a lot of notable names that you're quite
familiar with but again they're very
mature names so they're not going to be
high flying in terms of growth but more
mature more stable and higher dividends
but first let's take a look at the top
sectors which are LED off by energy at
27% Consumer Staples at 18% followed by
healthare at 177% technology at 9% and
utilities at 8 1.2% much more defensive
sectors but the larger exposure to
energy actually makes this ETF a big
outperformer over the group over this
past month here's a look at the top
stocks which include Exxon Chevron
Verizon communications Johnson and
Johnson Avy Philip Morris MK PepsiCo
Coca-Cola and ultria group these top 10
stocks account for 51% of the ETF and
total positions equal only 81 much more
stable companies there and a different
group different sectors involved there
which again complements the other ETFs
that we've already looked at and that
leads us to buy and hold ETF number five
which is the Vanguard Total Stock Market
ETF stock ticker vti now if you're
looking for diversification and maybe
even some more hands-off then vti is a
great spot to look why is it so
Diversified because with vti you have an
ownership percentage in every single
public company within the US so for
starters again this is a market cap
weighted index or ETF I should say so at
the top you're going to see a lot of
similarity to that of VO because those
are the largest companies here in the US
but the exposure rate is going to be
much less because there's thousands of
stocks to invest in rather than just 500
in terms of assets under management vti
has 1.6 trillion making it a very large
and very popular ETF the expense fee
very low at
0.3% over the past decade vti is up
163% and it has a dividend yield of
1.4% again a lot of similarities with
the S&P 500 ETF but weightings are going
to be a lot lower let's first look at
the sector breakdown where you see
technology as the top sector accounting
for 30% followed by financials at 133%
healthc Care at 12 1.5% followed by
consumer discretionary at 11% and
rounding out the top five is Industrials
accounting for 9 1.5% of the ETF here's
a look at the top 10 positions which
include Microsoft Apple Nvidia Amazon
meta Google Berkshire Google Shares C
Eli Lily and broadcom these top 10
stocks account for only 28% and again
total positions
3,7 and 33 different companies do you
have an ownership percentage in so again
that is the ultimate diversification
play there every single stock in the US
they even have ETFs that invest in every
single public company around the world
that's VT but I like to focus more on
the us as a whole so that's our video
for today five top ETFs to buy and hold
over the long term to help not only
diversify but build that generational
wealth that we're always chasing after
down in the comment section below let me
know what would your top five list be
for Buy and Hold not things we're going
in and out of but something you're going
to buy today and hold for decades let me
know down in the comments section and if
you haven't done so yet make sure you
smash that like button button down below
subscribe to the channel and we'll see
you in the next one take
[Music]
care
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