The U.S. stock market has been on a terrific ride since late 2022. The indexes have roared back, driven by a resilient economy and anticipation of an artificial intelligence (AI) revolution. You may remember that things felt bleak 18 months ago, but the stock market has repeatedly proven its durability.
So did you enjoy Wall Street’s rally, or did you miss out on the bull market recovery? Either way, no worries. It’s always a great time to invest. These three exchange-traded funds (ETFs) can help you build wealth for decades.
1. SPDR S&P 500 ETF
Supporting your portfolio with a solid and simple foundation is always a great idea. Perhaps following the broader stock market is the easiest way to do this. Consider the SPDR S&P 500 ETF (NYSEMKT: SPY) for the job. It tracks the S&P 500 index, a group of 500 fantastic U.S. companies, and arguably the world’s most famous stock index. People often refer to the S&P 500 when discussing how the stock market is doing.
The logic behind this is simple. The S&P 500 has proven resilient for generations, overcoming all obstacles America has faced to reach new highs. Even investing greats like Warren Buffett carry some S&P 500 exposure in their portfolios. Buffett’s Berkshire Hathaway owns this very ETF, one of just two ETF holdings in its famous stock portfolio.
Historically, the S&P 500 averages annual returns near 10%, making it a very effective wealth-building tool that every long-term investor should keep some of in their portfolios.
2. Schwab US Dividend Equity ETF
Investing is about fitting your portfolio to your own needs and goals. Many people invest for dividends and the cash they provide investors. Dividends are a way for companies to share their profits with shareholders. The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is one of the most popular dividend ETFs. It tracks the Dow Jones U.S. Dividend 100 index, a collection of 100 prominent dividend-paying U.S. corporations.
The fund’s dividend yield is currently 3.3%, which isn’t quite as much as you can get from U.S. treasury bonds, but it’s more than many individual stocks. Plus, you still get some price upside because these aren’t necessarily low- or no-growth companies you’re buying. They’re dividend-paying blue-chip stocks.
Schwab’s U.S. Dividend Equity ETF is also managed actively, which protects investors from good stocks going bad. It removed 3M from the fund before announcing it was cutting its dividend. The price for management’s guidance is very reasonable. The fund’s expense ratio is only 0.06%, which is well on the low end that funds charge.
3. ARK Innovation ETF
Investors hungry for more risk and potential reward may be interested in Cathie Wood’s ARK Innovation ETF (NYSEMKT: ARKK). The fund is focused on high growth and innovation, tracking the latest trends, such as cryptocurrency, electric vehicles, streaming, and artificial intelligence. The fund became famous after a significant investment in Tesla paid off, launching the fund upward in 2020 and 2021.
However, the fund has struggled due to higher interest rates stifling growth at companies like the ones ARK invests in. Investors’ risk appetite isn’t what it was a few years ago. The fund is very actively managed and charges a more expensive 0.75%. The fund’s ups and downs have made it a polarizing topic on Wall Street.
But if anything, ARK’s successful Tesla bet shows that a fund’s fortunes can change with one big win, just as for an individual portfolio. Investors comfortable taking the risks of investing in an innovation-focused fund like this should consider ARK.
Should you invest $1,000 in SPDR S&P 500 ETF Trust right now?
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Tesla. The Motley Fool recommends 3M. The Motley Fool has a disclosure policy.
Missed Out on the Bull Market Recovery? 3 ETFs to Help You Build Wealth for Decades was originally published by The Motley Fool
