These 2 Vanguard ETFs are a retiree’s best friend

Not all investors are the same. What is suitable for investors in their 20s is unlikely to suit the objectives and risk tolerance of investors in their 60s, 70s or 80s. Similarly, not all retirees are the same. Some focus directly on revenue generation, while others may need a more aggressive mix of revenue and growth.

Here, I’ll explore two Vanguard exchange-traded funds (ETFs) that offer a useful combination of both income and growth.

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Vanguard Real Estate ETF

Let’s start with Vanguard Real Estate ETF (VNQ -0.88%). This fund provides a cheap and easy way to invest in real estate investment trusts (REITs). REITs there are companies that owns, finances or operates real estate that generates income. By law, REITs must invest at least 75% of their assets in real estate and distribute 90% or more of their annual taxable income to shareholders.

There are many varieties of REITs. For example, Public Storage owns and operates self-storage facilities. Meanwhile, VICI properties operates entertainment, gaming and hospitality properties, including iconic venues on the Las Vegas Strip such as Caesars Palace and The Venetian.

This Vanguard fund counts both REITs among its holdingsalong with many others. The fund could be particularly attractive to retirees who don’t have direct exposure to real estate — in other words, those who don’t own a house, condo, apartment, etc. By investing in this fund, retirees win some exposure to the real estate market and can benefit from rising prices without taking on the risk and costs of directly owning real estate.

The fund is current dividend yield of 3.6% and a minimum expense report of 0.12%. Over the past 10 years, the fund has achieved a compound annual growth rate (CAGR) of 7.2%, meaning that $10,000 invested in 2014 would be worth $20,350 today.

Vanguard Utilities ETF

The next one is Vanguard Utilities ETF (VPU -0.24%). What is compelling about this fund is its focus on a commonly undervalued sector. Quite simply, the utility industry is essential to the American economy. However, given its nature as a highly regulated, slow-growing industry, is often overlooked by investors.

However, that is changing, especially when it comes to electricity producers. That’s because the world is desperate for more power. In particular, advances in artificial intelligence (AI) and electric vehicles (EVs) have led to greater demands on the power grid. In response, some utility providers are increasing supply by opening new facilities or reopening closed power plants.

In any case, what retirees should know is that this Vanguard fund is a great way to capitalize on such trends. The ETF boasts holdings in major regional utilities including lead Energy, south Companyand Dominion Energyamong many others.

The fund’s low expense ratio of 0.10% means investors pay just $10 a year for every $10,000 invested in the fund. Plus, its 2.8% dividend yield provides a solid annual payout for retirees looking for income.

Finally, the fund’s 10-year performance is excellent. Generated a 10-year CAGR of 10.1%, which equates to an investment of $10,000 made in 2014 it would have risen to $26,100 today.

In short, these two ETFs offer retirees a mix of income and growth — something worth considering for many at this stage of life.