3 Stock ETFs to Buy with $1,000 and Hold Forever

Investing can be simpler than most would probably like to admit. You don’t have to be a stock picking wizard to make money in the market; buying and holding a few high-quality exchange-traded funds (ETFs) can be a simple winning strategy. ETFs are groups of stocks or other assets packed together based on a theme that trade under a ticker symbol.

Exchange traded funds are fantastic for investors because they are an easy way to diversify your investments.

Whether you’re looking for dividend income, big growth, or something in between, there are ETFs for you. Here are three of the best money can buy, and you can own shares in all three for less than $1,000.

1. Invest for growing dividend income

Investors can hold a portfolio of dividend-paying blue-chip stocks with Schwab US Dividend Equity ETF (SHD 0.95%). This ETF contains 103 high-quality dividend stocks, including Lockheed Martin, AbbVie, Home Depotand Coca cola. The fund pays a distribution yield (ETF speak for dividend yield) of 3.4%. These companies not only pay a generous dividend, but regularly increase their payouts. The fund has increased its quarterly distribution by more than 220% over the past decade. This means investors have significant and growing passive income that can be reinvested or spent on living expenses.

The fund has also generated solid returns. In the last decade, it has largely kept pace with S&P 500lagging in recent years due to the run of large technology companies to which the Schwab US Dividend Equity ETF is underexposed. That’s a pretty solid performance over the long term, given that the fund’s distribution yield far exceeds the S&P 500’s 1.3% yield. Investors looking for dividend growth with the added benefit of stock price appreciation should take a look close to the Schwab US Dividend Equity ETF.

2. Take a more growth-focused approach

For others, maximizing share price growth is the primary objective. You might even want to outperform the S&P 500. If so, then Vanguard Growth ETF (VUG -0.38%) it could be perfect for you. This fund contains 188 stocks, focusing primarily on large growth companies such as the Magnificent Seven, as well as blue chip names such as Visa and Eli Lilly. These companies have higher-than-average growth performance, which can lead to higher long-term investment returns. The fund has returned 310% over the past decade, compared to 240% for the S&P 500.

However, there is no such thing as a free lunch. Growth stocks like those in the Vanguard Growth ETF are generally more volatile and prone to large swings in either direction. When the S&P 500 falls, the Vanguard Growth ETF tends to fall further. Those looking to invest in this Vanguard ETF should know that the ride can be bumpy at times. That being said, the fund’s long-term performance undoubtedly makes it worth the ups and downs.

3. Keep it simple: Own the best companies in America

Those looking for a balanced approach can ride the S&P 500 to riches with Vanguard S&P 500 ETF (VOO 0.15%). The S&P 500 is the most popular index, for good reason: It has historically averaged 10% annualized returns over generations. Wars, recessions and a global pandemic have not stopped the index from regularly setting new highs over time. The index’s formula for success is simple; contains 500 of the most important publicly traded companies in America. The better a stock performs, the more weight it has in the index. It rewards successful companies, which helps the index grow.

The S&P 500 is so efficient that about 9 out of 10 professional fund managers fail to beat it over the long term. The Vanguard S&P 500 ETF is one of two ETFs that the great Warren Buffett owns through his holding company. Berkshire Hathaway. It’s a simple option for any long-term investor and a great way to build a strong portfolio foundation that will let you sleep well at night.