Exchange-traded funds, or ETFs, let you buy hundreds of stocks or bonds in a single share. They trade like stocks, carry low fees, and have become the go-to building block for long-term investors.
The challenge is choosing from more than 3,000 ETFs in the U.S. alone. Below are five highly rated options that cover the most important parts of a long-term portfolio. If you are brand new to fund investing, our index funds primer is a good companion read.
Our Top Picks
These picks come from major issuers like Vanguard, Schwab, and Invesco. They are not Firstcard partners, but you can buy any of them through a brokerage account. Public is one popular option for commission-free ETF trades, and you can open a Public account here to start building your portfolio.
1. VOO (Vanguard S&P 500 ETF)
VOO tracks the S&P 500, giving you exposure to the 500 largest U.S. companies in one fund. See our SPY vs VOO comparison if you are deciding between the two big S&P 500 ETFs.
- Expense ratio: 0.03 percent
- Standout feature: One of the cheapest ways to own large-cap America
- Best for: A simple, long-term core holding
VOO holds names like Apple, Microsoft, and Amazon, with the rest of the market's biggest companies. For most investors, an S&P 500 fund is the foundation of the entire portfolio.
2. VTI (Vanguard Total Stock Market ETF)
VTI goes one step further than VOO. It tracks the entire U.S. stock market, including mid-cap and small-cap companies.
- Expense ratio: 0.03 percent
- Standout feature: Broader diversification across all market sizes
- Best for: Investors who want one fund covering everything
If you can only hold one U.S. stock ETF, VTI is hard to beat. Small companies have historically delivered strong long-term returns, and VTI captures that growth alongside the giants.
3. QQQ (Invesco Nasdaq-100 ETF)
QQQ tracks the Nasdaq-100, which leans heavily on tech and growth names like Nvidia, Meta, and Google. Our SPY vs QQQ writeup explains the trade-offs in detail.
- Expense ratio: 0.18 percent
- Standout feature: Higher growth potential through tech-heavy exposure
- Best for: Investors who want a growth tilt
QQQ has outperformed the broader market over the past decade, though with more volatility. A smaller slice, like 10 to 20 percent of your stock allocation, can boost growth without overdoing the concentration.
4. SCHD (Schwab U.S. Dividend Equity ETF)
SCHD focuses on high-quality U.S. companies with strong dividend histories.
- Expense ratio: 0.06 percent
- Standout feature: Solid dividend yield plus growth potential
- Best for: Income-focused investors and pre-retirees
The fund screens for companies with consistent dividends, healthy balance sheets, and a track record of raising payouts. It is a popular choice for investors who want cash flow without giving up on growth.
5. BND (Vanguard Total Bond Market ETF)
BND holds thousands of U.S. investment-grade bonds, including Treasuries, corporate bonds, and mortgage-backed securities.
- Expense ratio: 0.03 percent
- Standout feature: One-stop bond exposure for any age
- Best for: Adding stability and reducing portfolio swings
Most portfolios benefit from at least some bonds. BND smooths out the ride during stock market drops and provides modest income. The closer you are to needing the money, the bigger your bond slice usually gets.
Public
Public
Investing for those who take it seriously. Invest in stocks, bonds, options, crypto & more.
Standout feature
A 5%+ yield Bond Account paired with 3.3% APY on cash — Public is one of the only consumer apps where idle and conservative money is treated as seriously as the equity portfolio.
Fees
Free
Pros
• Invest in stocks, bonds, crypto & more• Earn 3.3% APY* on your cash with no fees• 1% match when you transfer your portfolio• Lock in a 5%+ yield with a Bond Account
Cons
Customer support is in-app and email only, no phone
What Makes an ETF Good for the Long Run?
Not every ETF deserves a 20-year commitment. The strongest long-term ETFs share a few traits.
Look for low expense ratios, ideally under 0.10 percent for broad funds. Check that the fund has been around for at least five years and holds billions in assets, which signals stability. Finally, make sure the index it tracks is broad and rules-based, not a narrow theme that may fade. Sector-specific picks like bank ETFs sit a step out from this rule and should be sized carefully.
How to Combine These ETFs
A simple long-term portfolio can be built with just two or three of these funds. Here is one common framework:
- 60 percent in VTI or VOO for U.S. stocks
- 20 percent in QQQ or SCHD for growth or dividend tilt
- 20 percent in BND for stability
Your exact split depends on age, goals, and risk tolerance. Younger investors often skip bonds entirely, while retirees may keep 30 to 50 percent in BND.
Rebalance once a year so winners do not crowd out the rest of your plan. Investors going all-in at once should also read our notes on putting a lump sum into VOO.
ETFs vs. Mutual Funds for the Long Term
For most long-term investors, the differences between ETFs and index mutual funds are small. Both offer diversification and low fees.
ETFs tend to be more tax-efficient in taxable accounts. Mutual funds can be easier for automatic recurring investments since they trade at the end of the day in fixed dollar amounts. Either works for a buy-and-hold plan.
Many brokers, including Public, let you buy fractional shares of ETFs so you can invest exact dollar amounts.
Common Mistakes With ETFs
ETFs are simple, but investors still trip themselves up. Watch out for these habits:
- Buying too many overlapping funds that hold the same stocks.
- Chasing last year's top performer.
- Trading ETFs like stocks instead of holding them.
- Picking narrow theme ETFs without a real thesis.
A 4-fund portfolio is rarely worse than a 14-fund portfolio, and it is much easier to manage. Beginners just starting out may also like our good ETFs to buy list.
Risks to Keep in Mind
ETFs are not risk-free. Stock ETFs can drop 30 percent or more in a bad year. Bond ETFs can lose value when interest rates rise.
Investing involves risk and past performance does not guarantee future results. The long-term track record of broad market ETFs is strong, but no future return is promised.
Keep an emergency fund in cash so you never have to sell ETFs at a bad time. If you only have a little to put in, see how much money you need to start investing.
Frequently Asked Questions
What is the safest ETF for beginners?
No ETF is completely safe, but broad index funds like VOO, VTI, and BND tend to be the most beginner-friendly. They are diversified, low-cost, and well-understood. Pairing a stock ETF with a bond ETF reduces the size of bad-year drops.
How many ETFs should I own?
Most investors are well-served with three to five ETFs. That is enough to cover U.S. stocks, international stocks, and bonds without too much overlap. Owning 15 ETFs rarely improves diversification and makes rebalancing a headache.
Can I lose all my money in an ETF?
Losing 100 percent of a diversified ETF is extremely unlikely because it holds many companies or bonds. A single-stock or narrow theme ETF could come close to zero if its market collapses. Sticking to broad funds protects against that worst case.
Are ETFs better than picking individual stocks?
For most long-term investors, yes. Picking winning stocks consistently is very difficult, even for professionals. An ETF gives you the market's average return with far less effort and stress, which has historically beaten most individual stock pickers over time.
