Can These 4 ETFs Build a Retirement Portfolio on Their Own?
These four ETFs will give you instant exposure to the stock, bond, and real estate markets.
John Bogle, founder of Vanguard, advocated investing in broad-based index funds rather than individual stocks. This philosophy led to the creation of Vanguard’s S&P 500 index fund, now managed by the company as one of the world’s largest asset managers. Vanguard also offers a range of ETFs covering domestic and international stocks, bonds, and real estate.
Two of the most popular are the Morningstar Total Stock Market ETF (VTI) and the Total International Stock ETF (VXUS). These two ETFs together provide exposure to over 90% of global equities. VTI, with a lower expense ratio of 0.03% and a yield of around 1%, has returned 634% over ten years. VXUS, with a higher yield of around 3% and an expense ratio of 0.05%, has returned 165% over the same period.
While VTI may face a slowdown in U.S. tech stock growth, VXUS could benefit from overseas growth. For more stable income, investors can consider the Vanguard Total Bond Market ETF (BND) and Vanguard Real Estate ETF (VNQ). BND, with an expense ratio of 0.03% and a yield of 5.1%, invests in U.S. bonds. VNQ, with a higher expense ratio of 0.13% and a yield of 4%-5%, invests in U.S. real estate through REITs and companies.
These ETFs can be combined to build a retirement portfolio, with a higher allocation to growth-oriented VTI for long-term investors and a greater emphasis on stable income from BND and VNQ for those closer to retirement.
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