If I Were Building an Investment Portfolio From Scratch Today, I'd Start With These 2 ETFs
I'd stick to what has worked so well in the past decade while adding international exposure.
Building a successful investment portfolio can seem daunting, but exchange-traded funds (ETFs) offer a simplified solution. For those starting from scratch, two ETFs stand out: the Vanguard S&P 500 ETF (VOO) and the Vanguard Total International Stock ETF (VXUS).
The first recommendation is the Vanguard S&P 500 ETF. Starting with $10,000, 80% ($8,000) should be allocated to this ETF. It boasts a low expense ratio of just 0.03%, leaving more capital invested. Over the past decade, the ETF has delivered an impressive total return of 318%. This fund tracks the S&P 500, providing broad exposure to 500 large, profitable U.S. companies.
The top 10 positions make up 39.1% of the portfolio, with information technology comprising 39.7% of the holdings. Warren Buffett endorses this ETF as a solid choice for most investors.
The second ETF to consider is the Vanguard Total International Stock ETF. The remaining 20% of the initial $10,000 should be invested here. Its expense ratio is slightly higher at 0.05%, but still very reasonable compared to mutual funds and hedge funds. This ETF invests in 9,000 non-S&P 500 companies, boosting international exposure.
The top three countries represented are Japan, Taiwan, and the United Kingdom, making up 33.5% of the portfolio. Key holdings include Taiwan Semiconductor Manufacturing, Samsung Electronics, and SK Hynix, all benefiting from the AI boom. The concentration risk is lower in this ETF compared to the S&P 500 counterpart.
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