If I Were in My 20s, I'd Buy This Unstoppable Vanguard ETF and Hold It Forever
Investors can reap big rewards over the long term by betting on growth in their younger years.
Overview
The Morningstar U.S. Large Cap Growth index exclusively measures the performance of 146 of the most valuable growth companies listed on American stock exchanges. As their name implies, growth stocks typically deliver high capital gains, separating them from value stocks, which usually produce lower returns but provide dividend income.
The Vanguard Morningstar Growth ETF (NYSEMKT: VUG) is an exchange-traded fund (ETF) that mimics the Morningstar U.S. Large Cap Growth index by holding the same stocks. Because of its growth-oriented portfolio, which features a high degree of exposure to the technology sector, it has outperformed the benchmark S&P 500 (SNPINDEX: ^GSPC) index on average every year since its launch in 2004.
Details
Focusing heavily on growth can lead to more volatility, but that might be a worthwhile trade-off for young investors in their 20s, because it can make a significant difference to their financial position when they eventually reach retirement. If I were that age today, here's why I'd buy the Vanguard Morningstar Growth ETF and hold it forever.
Source
Originally published at www.fool.com.