Best ETFs to Invest in 2024: Top 7 Choices for Every Investor
Investing in ETFs can be a great way to diversify your portfolio without a lot of hassle.
You’re probably looking for smart picks that balance risk and reward for the year ahead.
It’s all about finding those funds that align well with your financial goals and risk tolerance.
What are the best ETFs to invest in for 2024? With so many options available, navigating the ETF landscape can seem overwhelming.
This article will help you cut through the noise and identify seven top ETFs tailored to different investment strategies and goals.
Whether you’re a seasoned investor or just starting out, there’s something here for everyone.
1) Invesco QQQ Trust
The Invesco QQQ Trust is a popular ETF among tech-savvy investors.
It tracks the Nasdaq-100 index, which includes 100 of the largest non-financial companies listed on the Nasdaq stock market.
This makes it a go-to choice if you want exposure to big tech names.
One of the main reasons to consider the Invesco QQQ Trust is its impressive performance.
Over the years, it has consistently outperformed many other ETFs.
This is largely due to its tech-heavy portfolio, which includes giants like Apple, Microsoft, and Amazon.
Another advantage is its liquidity.
The QQQ is one of the most widely traded ETFs, ensuring that you can easily buy and sell it without worrying about large spreads.
This makes it a convenient option.
The expense ratio of the Invesco QQQ Trust is also reasonable.
While it’s not the cheapest ETF out there, its strong performance often justifies the cost.
Investors appreciate that they get a lot of value for their money.
However, keep in mind that the QQQ is heavily weighted towards the technology sector.
If tech stocks experience a downturn, the value of your investment could also drop significantly.
That said, if you believe in the long-term growth of tech, the QQQ can be a smart choice.
If you’re interested in diversifying your portfolio with a focus on technology, you might want to check out more about the Invesco QQQ Trust.
2) Vanguard Total Stock Market ETF
The Vanguard Total Stock Market ETF (VTI) is a great choice if you want to cover the entire U.S. stock market with a single fund.
This ETF aims to track the CRSP US Total Market Index.
It includes large-, mid-, small-, and micro-cap stocks, making it very comprehensive.
With VTI, you get exposure to about 100% of the investable U.S. stock market.
It’s suitable for those who want a broad and diversified portfolio.
The expense ratio of VTI is just 0.03%.
This means you’ll pay very low fees compared to many other investment options, letting you keep more of your returns.
Given its wide range of stocks, this ETF can offer stability and widespread growth potential.
You don’t have to pick and choose stocks yourself.
To learn more about this ETF, you can check out the Vanguard Total Stock Market ETF.
This can help you understand its current performance and price.
Investing in VTI allows you to simplify your investment strategy.
Instead of managing multiple individual stocks, you manage one fund that covers them all.
This is especially useful if you’re new to investing or prefer a hands-off approach.
You can sleep easy knowing your money is spread across the market.
VTI offers you a balanced and diversified way to invest in the U.S. who becoming more widespread.
For more details on VTI’s performance, visit Vanguard Mutual Fund Profile.
3) SPDR S&P 500 ETF Trust
You’ve probably heard of the SPDR S&P 500 ETF Trust, also known as SPY.
It was launched in January 1993 by State Street Global Advisors.
This ETF mirrors the performance of the S&P 500 Index.
Many investors love SPY as it’s one of the most popular ETFs out there.
It’s great because it offers exposure to 500 of the largest U.S. companies.
It’s really appealing for both new and experienced investors.
SPY is known for its high liquidity.
This means you can buy and sell shares easily.
It’s helpful when you need quick access to your money.
Another cool thing about SPY is its large asset base.
With net assets of $481 billion, it’s one of the biggest ETFs around.
Such a large asset base ensures stability and reliability.
If you’re thinking about expenses, SPY has an expense ratio of 0.09%.
While some ETFs might have lower fees, this rate is still quite competitive for what SPY offers.
For more details about SPY, you can check Forbes’ article.
Make sure to explore SPY if you want a solid, dependable ETF in your portfolio.
4) iShares MSCI Emerging Markets ETF
This ETF is designed to track the performance of the MSCI Emerging Markets Index.
It includes large and mid-sized companies from emerging markets like China, India, and Brazil.
The iShares MSCI Emerging Markets ETF holds a diverse set of companies.
This helps you spread your investment risk across different regions and industries.
One major perk of this ETF is its wide exposure to various markets.
You get access to economic growth in multiple countries.
The fund’s expense ratio is relatively low.
This means more of your money stays invested rather than going towards fees.
For a long-term investor, this ETF can be a solid choice.
It gives you the potential for high returns as emerging markets grow.
Big tech companies like Tencent and Alibaba are often part of this fund.
These firms have a large influence on the market and can boost your returns.
You can learn more about this ETF from BlackRock, the company that manages it.
They provide detailed information about the fund’s holdings and performance.
If you’re looking to add international diversity to your portfolio, this ETF is worth considering.
It exposes you to some of the fastest-growing economies in the world.
Keep in mind that investing in emerging markets can be riskier.
Political and economic instability can affect these investments more than those in developed markets.
So, make sure this fits your risk tolerance before diving in.
5) Schwab U.S. Dividend Equity ETF
The Schwab U.S. Dividend Equity ETF (SCHD) is a great option if you are looking to invest in dividend-paying stocks.
It focuses on 100 of the top dividend stocks in the U.S. market.
One of the best things about SCHD is its transparent approach.
The ETF tracks the Dow Jones U.S. Dividend 100 Index, so you know what you’re investing in.
SCHD has a solid reputation for being risk-conscious.
This means it aims to reduce risks while still offering good returns.
Its strategy involves selecting companies that have a strong track record of dividend payments.
This can be a smart choice if you want steady income from your investments.
Another plus is that SCHD often has lower fees compared to other dividend ETFs.
Lower fees mean you get to keep more of your earnings.
You can easily buy SCHD through most brokerage accounts.
If you’re already a Charles Schwab customer, it’s even simpler.
Investing in SCHD provides exposure to a diverse range of industries.
This helps to spread out risk and can lead to more stable returns.
For more details on buying this ETF, visit how to invest in SCHD ETF.
Learn more about why this ETF is highly rated at one of the best dividend funds.
For the official page, check out the Schwab U.S. Dividend Equity ETF on Schwab’s site.
6) ARK Innovation ETF
ARK Innovation ETF (NYSEMKT: ARKK) has caught a lot of attention recently.
Cathie Wood, the founder of ARK Invest, is known for picking stocks with high growth potential.
In 2024, this ETF saw a significant rise of 67%, which is impressive considering past performance.
The fund actively selects its holdings, so it isn’t a passive investment.
This means the team behind ARK Innovation is always looking for the next big thing.
They focus on industries like technology, biotech, and fintech.
Investing in ARK Innovation ETF involves some management fees.
Specifically, they charge 0.75% of the assets.
So if you invest $10,000, you’ll pay $75 in fees.
This is important to consider when looking at potential returns.
Analysts seem optimistic about the future of ARK Innovation ETF.
They predict that many of the stocks in its 34-stock portfolio will see gains.
Some estimates suggest these stocks might average an increase of nearly 30% over the next year.
It’s worth noting that ARK Innovation ETF can be quite volatile.
While it has the potential for high rewards, it also comes with higher risks.
This ETF might be suitable for you if you’re comfortable with some ups and downs and are looking for long-term growth.
Explore more about ARK Innovation ETF here.
7) Vanguard FTSE Developed Markets ETF
The Vanguard FTSE Developed Markets ETF (VEA) is a solid choice if you’re looking to invest in markets outside the U.S. It focuses on stocks from developed markets, covering Europe, Asia, and Canada.
This gives you exposure to a diverse set of international companies.
With a market-cap-weighted portfolio, VEA holds nearly all the stocks in the developed international market.
As of January 31, 2024, it had net assets totaling $178.3 billion.
This wide reach provides a broad investment base and helps spread risk across many different economies.
One of the best features of VEA is its low annual fee of 0.05%.
This makes it a cost-effective option for long-term investors who don’t want to see their returns eaten up by high fees.
The fund’s large size, at $31 billion, and diverse holdings can make it a more stable choice for international exposure.
Plus, it helps you stay diversified and can act as a hedge against U.S. market volatility.
VEA’s portfolio comprises 4,034 stocks, including big names in the international market.
It’s a great option if you’re aiming for steady growth without taking on too much risk.
Remember, investing in international funds can offer more opportunities, but also comes with its own set of challenges.
The Vanguard FTSE Developed Markets ETF is designed to minimize those risks while providing a robust investment in developed markets around the globe.
For more detailed performance metrics and comparisons, you can check out the information provided by U.S. News or Morningstar.
Why ETFs Are a Smart Investment
Investing in ETFs offers a range of benefits, including the ability to diversify your portfolio and save on costs.
Understanding these aspects can help you make more informed investment decisions.
Diversification Benefits
ETFs, or exchange-traded funds, allow you to invest in a broad range of assets with just one purchase.
This can include stocks, bonds, or commodities.
By investing in a single ETF, you’re exposed to multiple assets, reducing the risk compared to investing in individual stocks.
Think about it like this: if one stock in an ETF performs poorly, the strong performance of other stocks in the ETF can balance it out.
This spread of investments helps lower the risk for you as an investor.
It’s like not putting all your eggs in one basket.
Diversifying helps cushion your portfolio against market volatility.
Many ETFs track popular indexes like the S&P 500, meaning you’re essentially investing in the performance of the entire index.
This can provide a balanced and stable return.
Low Costs Explained
One of the biggest advantages of ETFs is their low cost.
ETFs generally have lower expense ratios compared to mutual funds.
This is because they are passively managed and track an index rather than being actively managed by a fund manager.
Low costs mean more of your money stays invested, potentially growing over time.
For instance, ETFs often come with lower transaction fees since they trade like stocks on an exchange.
Expense ratios for some ETFs can be as low as 0.03%, which is significantly cheaper than the average mutual fund.
These savings might seem small but can add up over time, enhancing your overall returns.
Additionally, many ETFs are tax-efficient, which can help you save money on taxes.
This efficiency comes from the “in-kind” creation and redemption process, avoiding many capital gains distributions.
This way, you can keep more of your earnings in your pocket.
How to Evaluate ETFs
Evaluating ETFs can be a bit tricky, but it’s manageable if you focus on a few key factors.
Where expense ratios affect your returns, historical performance gives insights into potential gains, and fund management quality ensures your investments are in good hands.
Understanding Expense Ratios
Expense ratios are a big deal when picking ETFs.
This number tells you how much of your investment goes to fees, which can eat into your profits.
For example, an expense ratio of 0.10% means you pay $1 for every $1,000 invested.
Lower expense ratios generally mean better returns, especially if you plan to invest for a long time.
Always compare the expense ratios of similar ETFs.
Sometimes, slightly higher fees are worth it if the ETF offers unique benefits or higher returns.
Analyzing Historical Performance
Looking at historical performance helps you spot ETFs that have done well in different market conditions.
Check how the ETF has performed over 1-year, 5-year, and 10-year periods.
Pay attention to metrics like average annual return and volatility.
Remember that past performance doesn’t guarantee future results, but it can show you how the ETF has managed to grow.
Look for consistent returns with minimal high-risk fluctuations.
Charts and performance tables can also help you visualize these trends.
Assessing Fund Management
The people managing your ETF are crucial to its success.
Good fund managers make strategic decisions that maximize gains and minimize losses.
Research the fund managers’ histories and their track records.
Experience in the financial markets can be a good indicator of future performance.
Look at how long the current management team has been in place.
Stability can often mean well-thought-out strategies and smoother performance.
But don’t be afraid to dig into their investment strategies and see if they align with your financial goals.
Check the Vanguard Growth ETF for an example of a fund led by experienced management.
Frequently Asked Questions
Here are responses to some common questions about the best ETFs to consider for 2024.
These responses include recommendations for both new and experienced investors, as well as insights into specific strategies and top-performing funds.
What are the top ETFs to buy for long-term growth in 2024?
For long-term growth, consider Invesco QQQ Trust and SPDR S&P 500 ETF Trust.
These ETFs invest in large-cap stocks, offering solid growth potential with lower risk.
For a new investor, which ETFs are best to start with this year?
If you’re new to investing, Vanguard Total Stock Market ETF and Schwab U.S. Dividend Equity ETF are good choices.
They offer broad diversification and are relatively low-cost, making them beginner-friendly.
Which ETFs are experts recommending for maximum income in 2024?
For those seeking maximum income, the Schwab U.S. Dividend Equity ETF is a strong recommendation.
It focuses on high-dividend stocks, providing a steady income stream.
Are there any ETF picks that stand out for young investors right now?
Young investors might find the iShares MSCI Emerging Markets ETF appealing.
This ETF targets emerging markets, offering high growth potential, though it comes with higher risk.
What ETFs have had the strongest performance over the past decade?
Looking at long-term performance, the Invesco QQQ Trust stands out.
It has shown strong returns by focusing on tech-heavy stocks from the NASDAQ-100.
What investment strategies are ETF managers focusing on for 2024?
ETF managers in 2024 are placing a strong emphasis on diversification and sector-specific strategies.
Funds like the Vanguard Total Stock Market ETF and Invesco QQQ Trust show a mix of both, targeting overall market stability and growth through tech and other high-performing sectors.