7 Top Vanguard ETFs To Buy For Retirement Investing

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Vanguard facilitates retirement saving for millions of U.S. households. The asset manager’s collection of low-cost funds can tackle any retirement goal, from capital appreciation to income. Vanguard exchange-traded funds are particularly interesting because they have no minimum investment. Savers can buy one share or 20, depending on their budget and timeline.

Read on for a closer look at seven Vanguard ETFs for retirement savers. The list includes options suitable for kicking off a retirement savings effort as well as funds that can carry the ball over the goal line.

Why Invest In Vanguard ETFs

Investors like Vanguard ETFs because they have low fees, understandable strategies and a wide range of choices. Low fees are especially important for retirement investors because their portfolios stay active for so long. Over 40 or 50 years, the difference between an expense ratio of 0.03% and 0.05% can add up to tens of thousands of dollars.

Another interesting aspect of Vanguard as a company is its ownership structure. Vanguard is owned by its funds. Those who invest in Vanguard funds, then, indirectly become owners. That structure ensures the company is aligned to the needs and goals of Vanguard fund shareholders.

Top Vanguard ETFs Picks Criteria

This collection of Vanguard ETFs is constructed on the premise that retirement investors’ needs change over time. Young investors in their 20s and 30s, for example, can accept higher risk and volatility in the pursuit of capital appreciation. These savers won’t access their retirement capital for decades, which means current volatility isn’t much of an issue. They’re likely to come out ahead by holding through market downturns and waiting for the recoveries that inevitably follow.

Retirement investors in the middle of their careers should start building some defense into their strategy. A greater emphasis on income-producing assets can help run interference against market volatility going forward.

As the investor’s career winds down, capital preservation becomes the priority. Aggressive equities are less suitable in this phase. Increased exposure to low-volatility stocks and bonds can provide a good balance of upside and stability.

The Vanguard ETFs noted here cover those tactics. There are options for strong growth, moderate growth, income and diversification. As well, they’re all passively managed index funds with expense ratios of 0.07% or less.

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7 Best Vanguard ETFs To Buy For Retirement Investing

The table below highlights seven Vanguard ETFs recommended for different types of retirement investors.

1. Vanguard Growth ETF VUG

VUG Overview

Share price: $346.09
Expense ratio: 0.04%
Total assets: $222.4 billion
Inception date: 2004
Average annual return since inception: 11.2%
Best for: Investors with longer investment timelines and moderate risk tolerance

Vanguard Growth ETF invests in about 200 large-cap U.S. growth stocks like MicrosoftMSFT
, AppleAAPL
, Nvidia and AmazonAMZN
.

Why VUG Is A Top Choice

VUG makes this list of top ETFs because it provides convenient access to the largest growth stocks in the U.S. These have solid appreciation potential plus the size and scale to manage through economic downturns. The portfolio may show some volatility in the near-term, which is why it’s best suited for young or risk-tolerant retirement investors.

2. Vanguard Extended Market ETF VXF

VXF Overview

Share price: $170.36
Expense ratio: 0.06%
Total assets: $100.4 billion
Inception date: 2001
Average annual return since inception: 9.6%
Best for: Investors with longer investment timelines and moderate risk tolerance

VXF invests in about 3,500 small- and mid-cap equities, including Palantir TechnologiesPLTR
, Super Micro ComputerSMCI
and Coinbase (COIN). The portfolio represents most of the stock market excluding those stocks that are in the S&P 500.

Why VXF Is A Top Choice

VXF provides exposure to up-and-coming companies that have steeper growth potential than mega stocks like Microsoft. One challenge with investing in small- and mid-caps is that they individually can be unpredictable and reactive. VXF addresses that issue through diversification. Because there are thousands of individual stocks in the portfolio, VXF investors can enjoy the exposure to these interesting smaller companies without being dependent on any one of them.

3. Vanguard Dividend Appreciation ETF VIG

VIG Overview

Share price: $177.85
Expense ratio: 0.06%
Total assets: $91.4 billion
Inception date: 2006
Average annual return since inception: 9.7%
Best for: Intermediate investment timelines and retirement income seekers

VIG holds 150 stocks that regularly raise their dividends, such as BroadcomAVGO
(AVGO), JPMorgan (JPM), UnitedHealth GroupUNH
and VisaV
. The fund’s current 30-day SEC yield is 1.7%.

Why VIG Is A Top Choice

A stream of ever-increasing dividend income from VIG can help offset the inflationary pressures that tighten every retiree’s budget. Savers who like that idea might consider investing in VIG early. This fund won’t grow as quickly as VUG, but reinvesting dividends for decades is an easy way to build a nice income machine to tap in retirement.

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4. Vanguard S&P 500 ETF VOO

VOO Overview

Share price: $468.87
Expense ratio: 0.03%
Total assets: $1.1 trillion
Inception date: 2010
Average annual return since inception: 14.4%
Best for: Intermediate investment timelines

VOO owns all stocks in the S&P 500, including Microsoft, Apple, Nvidia and Amazon. There is overlap with the VUG portfolio, but VOO is more diversified.

Why VOO Is A Top Choice

Between 1960 and 2023, the S&P 500 produced an inflation-adjusted compound annual growth rate of 6.3% including dividends. VOO provides easy, low-cost access to that performance.

The fund is suitable as a core holding for retirement investors who can handle the normal fluctuations of the stock market.

5. Vanguard Mega Cap Value ETF MGV

MGV Overview

Share price: $116.46
Expense ratio: 0.07%
Total assets: $7.1 billion
Inception date: 2007
Average annual return since inception: 8.4%
Best for: Lower-risk capital appreciation

MGV invests in very large public companies that appear to be undervalued. Top holdings include Berkshire HathawayBRK.B
(BRK.B), Home Depot (HD) and Procter & GamblePG
. Note that Berkshire Hathaway provides indirect exposure to its own value-oriented stock portfolio. For more information, see this article on top Warren Buffett stocks.

Why MGV Is A Top Choice

Mega cap value stocks balance appreciation potential with lower volatility. They tend to have predictable business models that deliver slow-and-steady growth over time. Many are committed to returning value to shareholders through dividends and share buybacks.

Those qualities make the MGV portfolio a good pick for retirement savers with lower risk tolerance and shorter timelines.

6. Vanguard FTSE All-World Ex-US ETF VEU

VEU Overview

Share price: $58.12
Expense ratio: 0.07%
Total assets: $54.4 billion
Inception date: 2007
Average annual return since inception: 3.8%
Best for: Diversification

VEU invests in more than 2,000 large-cap stocks from 46 developed and emerging markets outside the U.S.

Why VEU Is A Top Choice

International exposure provides access to fast-growing markets around the world. It also reduces dependence on the U.S. financial markets, which cycle up and down.

One analysis from Fidelity concludes that 30% international exposure in a long-term stock portfolio may contribute to lower overall volatility. This is because international stocks move on different cycles—they can rise when U.S. stocks are falling and vice versa.

International stocks are generally riskier than domestic stocks, so this fund is better suited for younger investors with longer timelines.

7. Vanguard Total Bond Market ETF BND

BND Overview

Share price: $71.04
Expense ratio: 0.03%
Total assets: $314.4 billion
Inception date: 2007
Average annual return since inception: 2.9%
Best for: Diversification

The BND portfolio is a diversified basket of investment-grade, U.S. bonds. The fund does not hold inflation-protected or tax-exempt bonds.

Why BND Is A Top Choice

Fixed income funds play nicely alongside equity funds in a retirement portfolio. Stocks provide growth potential while bonds deliver stability and income.

That’s why most retirement portfolios should have some bond exposure. Younger retirement investors don’t need as much stability or income, so they can hold BND in a smaller proportion—say, 10%. As retirement nears, investors can shift to higher bond allocations for lower overall volatility.

Bottom Line

The playbook for retirement investing involves early offense that shifts into strong defense. Vanguard has the straightforward, low-cost ETFs to quarterback both strategies, plus the transition in between.

FAQs

What are ETFs?

ETFs (exchange-traded funds) are pooled investment portfolios that trade on a stock exchange. You can buy and sell ETFs throughout the trading day, like a stock.

How are Vanguard ETFs different from mutual funds?

Vanguard ETFs trade and reprice throughout the day, like stocks do. Mutual funds, on the other hand, aggregate all orders and settle them once daily.

Why are Vanguard ETFs popular?

Investors like Vanguard ETFs because they have low expense ratios and they satisfy a wide range of practical investing themes, including large-cap value, dividend appreciation, diversified international equities and more.

How do you invest in Vanguard ETFs?

To invest in Vanguard ETFs, open a Vanguard account or place a trade order in your current IRA, Roth IRA or brokerage account. Investing with an IRA or Roth IRA has the advantage of deferring taxes on capital gains and income.

Can you hold Vanguard ETFs in a retirement account?

You can buy and hold Vanguard ETFs within many traditional IRAs and Roth IRAs, including retirement accounts operated by Vanguard. Some Vanguard 401(k)s also have access to Vanguard ETFs, as would 401(k)s with brokerage windows.

Are Vanguard ETFs suitable for long-term investors?

While each Vanguard fund has its own risk profile, all Vanguard index funds have low expense ratios. Choosing low-cost funds over higher-cost ones can add tens of thousands of dollars to the long-term investor’s account balance over time.