Vanguard 10-Year Study: Top Low-Cost ETFs & Mutual Funds for Long-Term Wealth Building

Investing for long-term wealth requires a disciplined strategy, careful selection of investment vehicles, and a focus on minimizing costs. Vanguard, one of the world’s most respected investment firms, has consistently emphasized low-cost ETFs and mutual funds as the cornerstone of successful wealth-building strategies.

A recent 10-year Vanguard study highlights the impact of low fees, diversification, and disciplined investing on long-term portfolio performance. This guide explores the top Vanguard ETFs and mutual funds for 2025 and provides insights for building sustainable wealth over decades.

Why Low-Cost Investing Matters

Fees can significantly erode long-term investment returns. Even a seemingly small difference in annual expense ratios can compound into tens of thousands of dollars over 10 years or more.

Example: Investing $10,000 for 10 years at an 8% annual return:

·         ETF with 0.05% fees → ~$21,800

·         Mutual fund with 0.75% fees → ~$20,300

This demonstrates why Vanguard’s low-cost approach is favored by long-term investors seeking to maximize net returns.

Top Vanguard ETFs for 2025

ETFs are ideal for hands-on investors who want flexibility, diversification, and tax efficiency. Based on the 10-year Vanguard study, the following ETFs are standout performers:

1. Vanguard Total Stock Market ETF (VTI)

·         Tracks the entire U.S. stock market, covering large, mid, and small-cap companies.

·         Provides broad diversification in one fund.

·         Expense ratio: 0.03%

2. Vanguard S&P 500 ETF (VOO)

·         Tracks the 500 largest U.S. companies.

·         Historically strong long-term returns with moderate risk.

·         Expense ratio: 0.03%

3. Vanguard Dividend Appreciation ETF (VIG)

·         Focuses on companies with a history of increasing dividends.

·         Suitable for investors seeking income and growth.

·         Expense ratio: 0.06%

4. Vanguard Total International Stock ETF (VXUS)

·         Provides exposure to developed and emerging markets outside the U.S.

·         Adds diversification and growth potential from global economies.

·         Expense ratio: 0.08%

5. Vanguard Growth ETF (VUG)

·         Invests in high-growth U.S. companies with potential for capital appreciation.

·         Best for investors with higher risk tolerance.

·         Expense ratio: 0.04%

Top Vanguard Mutual Funds for Long-Term Growth

Mutual funds offer professional management and diversification, ideal for hands-off investors:

1. Vanguard 500 Index Fund (VFIAX)

·         Mirrors the S&P 500 index.

·         Low-cost and historically strong long-term growth.

·         Expense ratio: 0.04%

2. Vanguard Total Stock Market Index Fund (VTSAX)

·         Broad coverage of U.S. equities.

·         Ideal for building a diversified core portfolio.

·         Expense ratio: 0.04%

3. Vanguard Wellington Fund (VWELX)

·         Balanced allocation: ~60–70% stocks, 30–40% bonds.

·         Suitable for moderate-risk investors seeking growth and income.

·         Expense ratio: 0.25%

4. Vanguard Target Retirement Funds

·         Automatically adjust asset allocation according to retirement year.

·         Convenient for long-term investors saving for retirement.

·         Expense ratios: 0.12%–0.15%

5. Vanguard Health Care Fund (VGHCX)

·         Focuses on the healthcare sector, including pharmaceuticals and biotech.

·         Offers growth potential with higher risk.

·         Expense ratio: 0.34%

Key Takeaways from the 10-Year Vanguard Study

1.      Low Fees Boost Long-Term Returns: Funds with lower expense ratios consistently outperform higher-cost alternatives over a decade.

2.      Diversification Reduces Risk: Broad-market ETFs and mutual funds provide stable growth while mitigating volatility.

3.      Consistent Investing Matters: Regular contributions, reinvesting dividends, and maintaining discipline are crucial for wealth building.

4.      Passive Investing Works: Index-tracking ETFs and mutual funds outperform many actively managed funds over 10 years due to cost efficiency.

Building a Long-Term Portfolio in 2025

Here’s a sample portfolio based on the study’s findings:

Conservative Portfolio

·         40% Vanguard Total Bond Market ETF (BND)

·         30% Vanguard Dividend Appreciation ETF (VIG)

·         30% Vanguard Total International Stock ETF (VXUS)

Balanced Portfolio

·         50% Vanguard Total Stock Market ETF (VTI)

·         30% Vanguard Total Bond Market ETF (BND)

·         20% Vanguard Total International Stock ETF (VXUS)

Aggressive Growth Portfolio

·         60% Vanguard Growth ETF (VUG)

·         20% Vanguard Total International Stock ETF (VXUS)

·         20% Vanguard Small-Cap ETF (VB)

Tip: Adjust allocations annually to reflect changing goals, risk tolerance, and market conditions.

Strategies for Maximizing Long-Term Wealth

1.      Dollar-Cost Averaging (DCA): Invest a fixed amount regularly, reducing the impact of market volatility.

2.      Reinvest Dividends: Accelerates compounding and long-term growth.

3.      Minimize Costs: Prioritize low-fee ETFs and mutual funds to retain more returns.

4.      Stay Disciplined: Avoid emotional decisions based on short-term market fluctuations.

5.      Diversify Globally: Include both U.S. and international stocks to capture global growth.

Conclusion

The Vanguard 10-year study underscores the power of low-cost, diversified ETFs and mutual funds in building long-term wealth. Whether you are conservative, balanced, or aggressive, Vanguard offers a variety of options suited to every investor profile in 2025.

By focusing on low fees, broad diversification, consistent investing, and reinvesting dividends, investors can maximize returns while minimizing risk. Vanguard’s ETFs and mutual funds provide an accessible and reliable path to sustainable wealth building, making them ideal choices for long-term investors seeking growth and financial security.