Host David Asman reports on a strong market day, with the Dow Jones Industrials reaching 52,000 for the first time. SpaceX stock rose as much as 16%, overtaking Amazon by market capitalization.
Exchange-traded funds (ETFs) are great investment vehicles for gaining immediate exposure to different sectors at prices that are often lower than those of other top ETF stocks.
For example, Space Exploration Technologies, or SpaceX, closed its first day of trading at just under $161. But the Tema Space Innovators ETF, which holds SpaceX and other space-related investments, is trading below $35 per share.
That said, with so many different options to choose from, there is one important question to consider before adding the first ETF to any portfolio.
US stocks are hovering near record highs, along with metals including silver and gold. (Michael M. Santiago/Getty Images)
It's a big question to ask yourself
The question you should answer before buying an ETF is, “What role will this ETF play in my portfolio?”
5 BEST ETFS YOU CAN BUY FOR $500 AND HOLD FOR LIFE
For example, an investor may want to generate more income. With that goal in mind, one investment worth considering is the Schwab US Dividend Equity ETF, which tracks US companies with high dividend yields. That ETF pays dividends that yield more than 3%. For investors who want greater access to thematic investments with the potential to appreciate higher prices, there are ETFs that focus on fields such as artificial intelligence (AI).
COULD THE VANGUARD S&P 500 ETF BE YOUR TICKET TO BECOMING A STOCKSET MILLIONAIRE?
| A ticker | Security | Finally | Change | change % |
|---|---|---|---|---|
| SCHD | SCHWAB STRATEGIC TR US DIVIDEND EQUITY ETF | 31.86 | -0.07 |
-0.22% |
| VTI | VANGUARD TOTAL STOCK MARKET ETF – USD DIS | 369.95 | +4.05 |
+1.11% |
When it comes to the very first ETF to add to a portfolio, however, the Vanguard Total Stock Market ETF offers a solid starting point. Its investment philosophy is straightforward and helps investors build long-term wealth.
How the Vanguard Total Market ETF works
The Vanguard Total Stock Market ETF is designed to track the CRSP US Market index, which represents 100% of the investable US stock market. Its holdings include large-cap, mid-cap, and small-cap stocks, with approximately 3,500 stocks. Nvidia is the leader, with a portfolio weight of 6.6%.
The question you should answer before buying an ETF is, “What role will this ETF play in my portfolio?” (Reuters/Jeenah Moon)
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It is a tech-heavy ETF, however, so this may not be suitable for investors who already have heavy exposure to technology stocks. However, this ETF offers great diversification, a consistent return history, and a dividend payout. As of May 31, the Vanguard Total Stock Market ETF is up more than 308% over the past 10 years, and its dividend yield is 1%, increasing that return potential.
Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Nvidia. The Motley Fool has disclosure policy.
