Ordering a takeout for dinner seems to be an easy option as it does not involve any grocery shopping or meal preparation. But before you set the table, you have to make some decisions. It can be hard to narrow down your choices at the moment (after all, you’re hungry), but the application of a ready-to-eat meal makes it worthwhile. The same goes for investment selection.
The 3 questions you ask and answer before ordering a takeout can help you choose an investment.
1. What do I want?
When you think of investing, the answer is quite simple. There are 3 main asset classes and each has a different purpose.
Suppose you are looking for long-term growth, and you know that ease means you can experience more ups and downs in the value of your investment. If so, you probably want to invest in stocks.
2. What should I get?
Maybe you decide you want pizza. But what kind of pizza? You face similar decisions when choosing stocks.
Personal stock lets you own a portion of a company. There are thousands of options to choose from. You can choose stocks based on your own criteria, which allows you to focus on specific companies or sectors.
A stock mutual fund gives you access to hundreds (or even thousands) of stocks in a single fund. You can choose an actively or passively managed mutual fund and you can invest in or part of the total US or international stock market.
A stock ETF (exchange-traded fund) gives you access to hundreds (or even thousands) of stocks in a single fund. Similar to mutual funds, you can invest in an ETF that represents or is a part of the total US or international stock market. You can invest in ETFs for the cost of a single share, which is usually much less than the minimum investment in a mutual fund. ETFs are priced throughout the day, giving you the flexibility to trade intraday.
If you have only a few hundred dollars to invest and like the idea of building a diversified portfolio with just a few funds, then stock ETFs can be a great way to start.
Why choose a Vanguard ETF?
- Vanguard is the only place where you can buy and sell each Vanguard ETF® commission-free, no matter how you do business.
- 81% of Vanguard ETFs lose their peer-group average income over the last 10 years. *
- The average Vanguard ETF spending ratio is 75% lower than the industry average. **
- Investors have handed over .6 1.6 trillion of their hard-earned money to the Vanguard ETF.
* For a period of 10 years ending December1, 2020, 51 of the 51 Vanguard stock ETFs and 10 of the 12 Vanguard Bond ETFs have surpassed their Liper Peer-Group average for a total of 51 of the 63 Vanguard ETFs. Results will vary for other periods. Only ETFs with a minimum 10-year history were included in the comparison. Source: Lipper, a Thomson Reuters company. The competitive performance data displayed represents past performance, which is not a guarantee of future results. See ETF performance.
** Vanguard average ETF cost ratio: 0.06%. Industry average ETF cost ratio: 0.24%. All average resource-based. The industry excludes the average vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.
*** As of January 31, 2021.
3. How do I get what I want?
Pick up or delivery? Choose your own ETF or choose one from a shortlist?
Ready to choose a Vanguard ETF?
The individual ETFs you choose should complement your target asset allocation. You can select an ETF from our complete list of dozens of funds categorized by market capitalization. Or you can select one or more of our building block ETFs, which represent different sectors of the total market. You can also choose an ESG fund, which gives you a way to invest in ETFs that take into account environmental, social and governance issues.
After weighing all your options, you decide to invest in a building block ETF – Vanguard Total Stock Market ETF. And for dinner? A thin crust pepperoni pizza, has been delivered.
For more information about vanguard funds, visit vanguard.com to get a prospectus or, if available, a summary prospectus. The prospectus contains investment objectives, risks, charges, expenses and other important information about a fund; Read and consider carefully before investing.
You must buy and sell Vanguard ETF shares through Vanguard Brokerage Services (we offer them commission-free) or through other brokers (which may charge a commission). See Vanguard Brokerage Service Commission and Fee Schedule for complete information. Vanguard ETF shares are not redeemable in any way other than the merger of millions of dollars worth directly with the issuing fund. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or accept the current market price, which may be more or less than the net asset value.
All investments are at risk, including the potential loss of money you invest. Diversity does not guarantee gain or protect from loss. Investments in stocks and bonds issued by non-US companies are subject to country / regional risk and currency risk.
There is no guarantee that any specific asset allocation or combination of funds will meet your investment objectives or give you a certain income level.
ESG funds are subject to ESG investment risk, which means that stocks or bonds displayed by the index sponsor for the ESG criteria will generally have less impact on the market or selected special stocks or bonds, in total, other funds verified for the ESG criteria.
“If you can order a takeout, you can choose your next investment.”,