Did you miss the bull market comeback? 10 ETFs to help you build wealth for decades.

The stock market, measured by S&P 500 the index of 500 of the largest companies in America, recently increased. At one point in October 2022, the index stood at 3,583. By July 2024 last month, it was up 57% to 5,615. That’s enough to deter many investors, who may think it’s too late to invest in stocks now.

However, this is wrong thinking — because you never know what the stock market will do from day to day or year to year. Consider, for example, that after posting earnings in eight consecutive years from 2009 to 2016 (six of the eight being double-digit gains), when you’d think it should be falling, the S&P 500 went on to gain nearly 22% in 2017. Trying to time the market is a waste of time.

Image source: Getty Images.

If you are many years, if not decades, away from retirement, you should be looking for great investments to buy and hold on to for the long term. Exchange-traded funds (ETFs) are worth considering for this. (An ETF is a mutual fund-like security that trades like a stock.)

10 ETFs to help you build wealth for decades

Here’s a list of ETFs you might consider to help you build wealth over time. Each is on the list because it has a solid (or amazing) track record and/or solid growth potential — plus a reasonable or low expense ratio (annual fee). For context, know that if you invest $10,000 in an ETF with an expense ratio of 0.35%, you’ll pay about $35 in fees for the year.

We’ve ranked them by their five-year average annual return — but keep in mind that past results won’t necessarily reflect future results. A lot depends on how the underlying stocks behave.

Source: Morningstar.com, as of August 2, 2024.

Why these ETFs?

Here’s why we included these 10 ETFs:

• The SPDR S&P 500 ETF is in the mix because it’s a simple S&P 500 index fund, and such a single fund may be all you need if you want to be invested in stocks. Together, its holdings account for about 80% of the US stock market’s value. Investing in an S&P 500 index fund is like betting on the future of the US economy.
• The SPDR Portfolio S&P 500 Growth ETF is invested in the approximately 230 stocks in the S&P 500 that can be considered growth stocks.
• The VanEck Semiconductor ETF and the iShares Semiconductor ETF posted the most impressive returns of the group, as semiconductor stocks — such as Broadcom, Advanced microdevicesand Nvidia — have been great performers in recent years. If you are optimistic about their future, such ETFs will allow you to invest in two to three dozen of them in one fell swoop.
• A bunch of other ETFs on the list are heavily focused on tech stocks in one way or another. The Technology Select Sector SPDR ETF, for example, includes a variety of companies (recently 67 of them) involved in semiconductor equipment, Internet software and services, IT consulting, computers and peripherals. The Vanguard Information Technology ETF casts a much wider net, covering more than 300 companies. It includes most of the “Magnificent Seven” actions such as Microsoft, Appleand Nvidia. The Vanguard Growth ETF tracks the CRSP US Large Cap Growth Index, which focuses on faster-growing large companies. It recently held nearly 200 stocks, with these top known stocks: Microsoft, Apple, and Nvidia. (You’ll notice that many technology-focused ETFs will have similar top holdings. So if you spread your dollars across a few, you won’t be as diversified as you might think.)
• The iShares US Home Construction ETF makes the list because of its excellent track record. Whether it continues will depend on your view of the home building market.
• Finally, the iShares Cybersecurity and Tech ETF and the Fidelity Cloud Computing ETF are here because they focus on technology niches that have many ardent believers. They’re still pretty new, so there aren’t many results to rate, but take a look if you’re interested.

I am many other ETFs have focused on all kinds of fields, such as artificial intelligence (AI), alternative energy, and more. Also note that some of the broad technology ETFs above will also contain a lot of exposure to top companies operating in AI, cloud computing and more. That’s the beauty of fairly broad funds — you don’t have to identify big winners. You can only invest in a wide range of potential winners.

Finally, a reassuring thought: If you’re worried you’ve missed a bull market, note that the S&P 500 is recently down 5% from that July high. So some desirable companies and funds are priced lower and more attractive right now.