Long-Term Investment: Top Performing ETFs You Should Know in 2025
Investing in the long term is a proven strategy for building wealth. Exchange-traded funds (ETFs) have become a go-to choice for investors seeking simplicity, diversification, and cost-efficiency. With so many ETFs available, choosing the right one can be daunting. This guide will explore top-performing and long-term investment ETFs tailored for long-term investment, their unique features, and why they make sense for your portfolio.
Why Choose ETFs for Long-Term Investment?
1. Diversification: ETFs hold a basket of assets, reducing the risk of exposure to any single security.
2. Cost Efficiency: They typically have lower expense ratios than mutual funds, saving investors money over time.
3. Liquidity: ETFs can be traded throughout the day like stocks, providing flexibility and ease of access.
4. Tax Efficiency: Their unique structure minimizes capital gains taxes compared to mutual funds.
5. Variety: ETFs cater to various investment goals, tracking indices, sectors, commodities, or even innovative themes.
Top ETFs for Long-Term Investors
Below are some of the best-performing ETFs ideal for long-term investment. These funds have consistently delivered solid returns and align with various financial goals.
1. Vanguard Total Stock Market ETF (VTI)
Overview: VTI offers exposure to the entire U.S. stock market, covering large-mid, small, and micro-cap stocks. It’s an excellent choice for investors seeking broad market exposure.
Expense Ratio: 0.03%
Why It’s Great for Long-Term Investing:
Diversification across thousands of U.S. companies.
Low-cost structure maximizes long-term returns.
Historically strong performance in alignment with the U.S. market.
2. SPDR S&P 500 ETF Trust (SPY)
Overview: As one of the oldest and most popular ETFs, SPY tracks the S&P 500 index, representing the 500 largest companies in the U.S.
Expense Ratio: 0.09%.
Why It’s Great for Long-Term Investing:
Focuses on established, high-performing companies.
Proven track record of steady growth over decades.
High liquidity ensures ease of buying and selling.
3. iShares MSCI Emerging Markets ETF (EEM)
Overview: EEM provides exposure to emerging markets like China, India, and Brazil, offering growth potential from developing economies.
Expense Ratio: 0.68%
Why It’s Great for Long-Term Investing:
Access to high-growth economies.
Diversification beyond developed markets.
A hedge against U.S. market downturns.
4. Invesco QQQ ETF (QQQ)
Overview: Q tracks the Nasdaq-100 Index, focusing on technology and innovation-driven companies like Apple, Microsoft, and Tesla.
Expense Ratio: 0.20%
Why It’s Great for Long-Term Investing:
Exposure to high-growth sectors such as technology and biotechnology.
Strong historical performance driven by market leaders.
Perfect for investors with a high-risk tolerance and a long-time horizon.
5. Schwab U.S. Dividend Equity ETF (SCHD)
Overview: SCHD focuses on high-quality U.S. companies with strong dividend growth histories, making it ideal for income-seeking investors.
Expense Ratio: 0.06%
Why It’s Great for Long-Term Investing:
Consistent dividend payouts provide passive income.
Focus on financially stable companies.
Lower risk compared to growth-oriented ETFs.
6. iShares Core MSCI World ETF (URTH)
Overview: URTH provides exposure to developed markets worldwide, offering global diversification in a single fund.
Expense Ratio: 0.24%
Why It’s Great for Long-Term Investing:
Reduces geographic risk by diversifying across major economies.
Ideal for investors looking to tap into international growth.
Balanced exposure to sectors and industries worldwide.
7. Vanguard FTSE All-World ex-US ETF (EVU)
Overview: VEU focuses on non-U.S. stocks, including emerging and developed markets.
Expense Ratio: 0.07%
Why It’s Great for Long-Term Investing:
Complements U.S.-focused ETFs to create a well-rounded portfolio.
Access to global markets, including high-growth areas.
Cost-effective diversification beyond domestic equities.
8. ARK Innovation ETF (ARKK)
Overview: ARKK invests in disruptive innovation, including areas like AI, robotics, and genomics.
Expense Ratio: 0.75%
Why It’s Great for Long-Term Investing:
High growth potential from cutting-edge industries.
Appeals to investors with a high-risk tolerance.
Opportunities to capitalize on future trends and technologies.
How to Choose the Right ETF for Your Portfolio?
Selecting the best ETF for long-term investment depends on your financial goals, risk tolerance, and investment strategy. Here are some tips to help you decide:
1. Define Your Goals:
Are you looking for growth, income, or diversification?
Determine whether you prefer domestic or international exposure.
2. Assess Risk Tolerance:
High-growth ETFs like QQQ or ARKK come with higher risks, while dividend-focused funds like SCHD offer stability.
3. Review Expense Ratios:
Lower expense ratios can significantly impact long-term returns.
4. Check Historical Performance:
Past performance isn’t a guarantee of future results but provides insight into consistency.
5. Understand the ETF’s Focus:
Ensure the ETF aligns with your investment strategy, whether it’s sector-specific, geographically diverse, or income-focused.
Benefits of Long-Term Investing in ETFs
1. Compounding Returns:
Holding investments for the long term allows returns to compound, multiplying your wealth over time.
2. Reduced Impact of Market Volatility:
Long-term investors are less affected by short-term market fluctuations, providing a smoother investment journey.
3. Tax Efficiency:
ETFs tax-efficient structure minimizes tax liabilities, enhancing overall returns.
4. Cost Savings:
Low expense ratios mean more of your money stays invested, maximizing growth potential.
ETFs are a versatile and powerful tool for long-term investors. They offer diversification, cost efficiency, and access to various markets and sectors. Whether you’re a conservative investor seeking stability or a risk-tolerant investor eyeing high growth, there’s an ETF tailored to your needs.
The ETFs highlighted in this guide—from broad market funds like VTI and SPY to niche options like ARKK and SCHD—are excellent choices for building a robust portfolio. By aligning your ETF selections with your financial goals and risk appetite, you can create a well-rounded strategy for achieving long-term success.
Start exploring the world of ETFs today and take the first step toward securing your financial future.