Is the Vanguard Morningstar Total Stock Market ETF Still the Best Long-Term Core Holding for Most Investors?

Many newcomers to investing are advised to diversify their portfolios, spreading risk across various stocks. The ideal long-term strategy for diversification is the Vanguard Morningstar Total Stock Market ETF (VTI), which holds 3,531 U.S. stocks across all market caps. This fund mirrors the entire U.S. stock market and boasts an extremely low expense ratio of 0.03%.

The total stock market ETF outperformed the S&P 500, which tracks the 500 largest companies in America, over the past decade. The VTI holds top U.S. stocks such as Alphabet, Amazon, Apple, Microsoft, and Nvidia, similar to an S&P 500 ETF. However, its broader holdings of mid- and small-cap stocks ensure it captures potential gains from other market segments.

While owning only S&P 500 ETFs might be sufficient for some investors, the VTI's inclusion of a wide array of U.S. companies allows for a more robust, long-term investment approach.