More than $11 trillion now sits in U.S. exchange-traded funds, and that number keeps climbing. ETFs have become the default tool for both new investors and large pension plans because they combine diversification, low fees, and easy trading.
This guide walks through good ETFs to buy across core, dividend, international, bond, and sector categories. Each pick is meant as a starting point for research, not a personalized recommendation. Investing involves risk, including possible loss of principal, and past performance does not guarantee future results.
What Makes an ETF a Good Buy
A strong ETF usually shares a few traits. The expense ratio is low, often under 0.20%, which keeps more of the return in the investor's pocket. The fund tracks a clear, well-known index, and it has enough assets and daily volume to trade with tight bid-ask spreads.
Tax efficiency also matters. ETFs typically distribute fewer capital gains than mutual funds, which can help long-term investors keep more of their growth.
Finally, the ETF should match the goal. A retirement saver may want broad market exposure, while a near-retiree may want more bonds. The label "good" depends on the role the fund plays in the portfolio.
Core Index ETFs That Fit Most Portfolios
Core ETFs are the foundation. They aim to track broad markets with low fees and minimal turnover. For a deeper look at the most popular pick, see our breakdown of the best S&P 500 ETF options.
- Vanguard S&P 500 ETF (VOO): Tracks the S&P 500 with a 0.03% expense ratio. The classic VFIAX vs VOO debate covers whether the mutual fund or ETF version fits you better.
- Vanguard Total Stock Market ETF (VTI): Covers nearly all U.S. publicly traded stocks at 0.03%.
- iShares Core S&P Total U.S. Stock Market ETF (ITOT): A close cousin to VTI at 0.03%.
- Schwab U.S. Broad Market ETF (SCHB): Another total market option at 0.03%.
These funds typically move in lockstep with the broader U.S. stock market. Investors often pick one as their primary equity holding and add other ETFs around it.
International and Emerging Market ETFs
U.S. stocks make up about 60% of global market value, so leaving international exposure out can mean missing major opportunities. International ETFs round out a portfolio and reduce single-country risk.
Popular options include:
- Vanguard Total International Stock ETF (VXUS): Covers developed and emerging markets outside the U.S.
- iShares Core MSCI EAFE ETF (IEFA): Focuses on developed markets in Europe, Australasia, and the Far East.
- Vanguard FTSE Emerging Markets ETF (VWO): Targets faster-growing economies like India, China, and Brazil.
Emerging market funds tend to be more volatile, so many investors limit them to a smaller slice of the overall mix. A common starting point is 20% to 30% of equities in international funds, but the right share depends on personal goals.
Good ETFs to Buy for Dividend Income
Dividend ETFs appeal to investors who want regular cash payouts, often for retirement or supplemental income. They typically focus on companies with long histories of paying or growing dividends.
Well-known dividend ETFs include:
- Schwab U.S. Dividend Equity ETF (SCHD): Targets quality U.S. dividend payers at 0.06%.
- Vanguard Dividend Appreciation ETF (VIG): Focuses on companies that have grown dividends for at least 10 years.
- iShares Core Dividend Growth ETF (DGRO): A similar tilt toward dividend growth at low cost.
- JPMorgan Equity Premium Income ETF (JEPI): Combines stocks with options for higher monthly income.
Dividend yields can change over time, and a high yield is not always a sign of strength. Companies with stable cash flow tend to hold up better in downturns, though no fund eliminates market risk.
Bond ETFs for Stability
Bond ETFs help smooth out the bumps in a portfolio. They are not risk-free, but they generally move less than stocks and can soften losses during big sell-offs.
- Vanguard Total Bond Market ETF (BND): Broad U.S. investment-grade bond exposure at 0.03%.
- iShares Core U.S. Aggregate Bond ETF (AGG): A direct competitor to BND at similar cost.
- Vanguard Short-Term Treasury ETF (VGSH): Lower interest rate sensitivity for cautious investors.
- iShares TIPS Bond ETF (TIP): Inflation-protected Treasury exposure.
As interest rates change, bond prices can move in the opposite direction. Investors typically use bonds to balance equity risk rather than to chase high returns.
Sector and Thematic ETFs to Consider
Sector ETFs let investors tilt toward specific parts of the economy. They tend to carry more concentrated risk than broad market funds, so position sizing matters.
Commonly held options include:
- Technology Select Sector SPDR Fund (XLK): Concentrated U.S. tech exposure.
- Health Care Select Sector SPDR Fund (XLV): Large U.S. health care companies.
- Vanguard Real Estate ETF (VNQ): Real estate investment trusts in one fund. If you want direct exposure too, our notes on real estate investing walk through other ways in.
- iShares Semiconductor ETF (SOXX): Focused exposure to chipmakers.
These funds can outperform during certain cycles and underperform sharply during others. Many planners suggest keeping sector tilts to a small portion of the overall portfolio. The same applies to picking index funds more broadly.
Good ETFs to Buy in a Beginner Portfolio
New investors often do well with a simple, low-cost mix of just two or three funds. A classic example is 60% in a total U.S. stock ETF like VTI, 20% in an international ETF like VXUS, and 20% in a bond ETF like BND.
You can build that mix on most brokerage apps with fractional shares. Platforms like Robinhood let users buy ETFs commission-free, including fractional shares starting at $1, which can help newer investors get started even with modest cash. Our full Robinhood review breaks down the ETF trading experience. Terms and conditions apply.
Robinhood
Robinhood
Robinhood is a trading platform that brings stocks, ETFs, options, futures, prediction markets, crypto, and retirement accounts together in one app.
Standout feature
One platform for stocks, ETFs, options, futures, prediction markets, and crypto
Fees
$0 commission on stocks, ETFs, and options.
Pros
Zero-commission trading on stocks, ETFs, and options
Cons
Best perks (high APY, lower margin rates) require Gold subscription ($5/month)
Recurring contributions can also help. Auto-investing the same dollar amount each month can smooth out market swings over time, sometimes referred to as dollar-cost averaging. Investors holding ETFs inside a Robinhood IRA get the added bonus of the platform's IRA match on contributions.
How Credit and Cash Flow Fit Into Investing
Investing works best when the rest of your finances are in order. Maintaining an emergency fund, paying off high-interest debt, and managing credit utilization can all help free up cash for regular contributions.
A solid credit profile can also reduce financing costs on car loans, mortgages, and even some insurance products. Lower borrowing costs leave more room in the budget for investing in good ETFs and other long-term assets.
Frequently Asked Questions
How many ETFs should I own?
Most long-term investors do fine with three to five funds. Holding too many can create overlap, where multiple ETFs end up owning the same large companies. A simple mix of U.S., international, and bond ETFs may cover most needs.
Are ETFs better than mutual funds?
ETFs often have lower expense ratios and tend to be more tax-efficient than mutual funds. Mutual funds may still make sense in 401(k) accounts or for investors who prefer automatic dollar amount purchases instead of share-based trades.
What is a safe ETF for beginners?
No investment is truly safe, but broad index ETFs like VOO, VTI, and BND are generally considered low risk relative to single stocks or sector funds. Diversification and low fees help reduce the chance of large losses from any one company or industry.
How much money do I need to start buying ETFs?
Many brokerages now allow fractional ETF purchases starting at $1 or $5. That means new investors do not need thousands of dollars to begin building a diversified portfolio of good ETFs.
