How I’d make investing easy with Vanguard ETFs

Investing does not need to involve constantly researching individual companies or trying to pick the next big winner.

For investors who want to keep things simple, I think Vanguard exchange-traded funds (ETFs) can do much of the work.

Here are a few ways I would use them.

Start with the Australian share market

The Vanguard Australian Shares Index ETF (ASX: VAS) is one of the simplest ways to invest across the Australian share market.

Rather than choosing which bank, miner, healthcare company, or retailer might perform best, the fund spreads investors’ money across a group of 300 Australian businesses.

I think that can be attractive for someone who wants exposure to ASX shares without spending hours researching individual companies.

There is also an income component. Many Australian shares pay dividends, and the VAS ETF passes the income it receives from its holdings through to investors.

The biggest advantage for me, though, is simplicity.

An investor can make one purchase and immediately own a broad collection of established Australian businesses. From there, they can keep adding money over time and allow the underlying companies to do the work.

Add the rest of the world

Australia is only a small part of the global share market, so I would also consider investing internationally.

The Vanguard MSCI Index International Shares ETF (ASX: VGS) provides exposure to companies across major developed markets outside Australia.

That opens the door to global businesses in technology, healthcare, consumer products, financial services, industrials, and many other industries that are less represented on the ASX.

I think this is an easy way to broaden an investment portfolio without researching companies across dozens of countries.

The VGS ETF also means an investor does not need to predict which overseas market will perform best next.

Instead, they can own a broad collection of global businesses and give them years to grow.

Want to make it even easier?

Some investors may prefer to go one step further and use a single diversified ETF.

The Vanguard Diversified High Growth Index ETF (ASX: VDHG) combines Australian and international shares with smaller allocations to defensive assets.

Vanguard takes care of spreading the money across several markets and rebalancing the portfolio over time.

I think that can remove several decisions that often make investing feel more complicated than it needs to be.

There is no need to decide exactly how much money should go into Australian shares, US companies, emerging markets, or bonds each time an investment is made.

For someone who wants to regularly invest and then get on with life, that simplicity could be valuable.

Consistency can do a lot of the work

Whichever approach an investor chooses, I think the biggest advantage comes from making investing easy enough to stick with.

Markets will fall from time to time, headlines will change, and there will always be a new investment that appears more exciting.

A broad Vanguard ETF allows investors to focus instead on regularly putting money to work and thinking in years rather than weeks.

Over a long enough period, I think that consistency can become far more important than finding the perfect investment at exactly the right moment.

Foolish takeaway

I think Vanguard ETFs can make building wealth remarkably straightforward.

An investor could use the VAS ETF for Australian shares, the VGS ETF for global exposure, or the VDHG ETF if they would rather have much of the diversification handled within a single investment.

The important part is finding an approach that is easy to understand and easy to continue.

For many investors, buying a broad ETF regularly and giving it plenty of time could be all the investing strategy they need.

The post How I’d make investing easy with Vanguard ETFs appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.