Why I think beginners would love these Vanguard ETFs

Starting your investing journey can be scary. There are thousands of stocks, endless opinions, and no shortage of market noise. 

That is why I often think exchange-traded funds (ETFs) make a lot of sense for beginners. They remove a lot of the guesswork and let you focus on time in the market rather than trying to outsmart it.

If I was helping someone take their first steps into investing, these are three Vanguard ETFs I think many beginners would genuinely like owning.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

One of the biggest mistakes new investors make is keeping their portfolio too Australia-focused. Our market is dominated by banks and miners, which are notoriously cyclical.

That is where the VGS ETF really shines. It provides exposure to over 1,000 large and mid-sized stocks across developed markets, but excluding Australia. This includes heavyweights from the US, Europe, and Japan, and gives investors access to sectors like technology and healthcare that are underrepresented locally.

For beginners, I like the Vanguard MSCI Index International Shares ETF because it is simple, diversified, and designed to be held for the long term. You are not betting on a single theme or trend. You are backing global economic growth across a wide range of industries and countries.

Vanguard MSCI International Small Companies Index ETF (ASX: VISM)

The Vanguard MSCI International Small Companies Index ETF complements the VGS ETF nicely by focusing on international small-cap stocks. These businesses tend to be earlier in their growth journeys and can offer higher long-term growth potential, albeit with more volatility along the way.

What makes the VISM ETF appealing for beginners is that it provides access to thousands of smaller companies across developed markets in a single investment. Trying to replicate this exposure through individual stocks would be extremely difficult and risky.

While small caps can move around more in the short term, holding them within a diversified ETF structure can help smooth some of that volatility. For investors with a long time horizon, this kind of exposure can be a powerful addition to a portfolio.

Vanguard Diversified High Growth Index ETF (ASX: VDHG)

For beginners who want maximum simplicity, the Vanguard Diversified High Growth Index ETF is particularly interesting. It is effectively a portfolio in a single ETF.

The VDHG ETF invests across multiple Vanguard ETFs and asset classes, targeting around 90% growth assets and 10% income assets. This includes Australian shares, international shares, international small companies, emerging markets, and a modest allocation to fixed interest.

The benefit here is that diversification and asset allocation are handled automatically. There is no need to rebalance, adjust weightings, or worry about mixing different ETFs together. You simply invest and stay invested.

Because it is growth-focused, this ETF is best suited to beginners with a long time horizon and a higher tolerance for ups and downs.

Why these work so well for beginners

All three of these Vanguard ETFs share a few important traits. They are low cost, broadly diversified, transparent, and designed to be held for many years. They also reduce the risk of making big mistakes early on, like overtrading or chasing short-term performance.

For beginners, that combination can be incredibly valuable. Investing does not need to be complicated to be effective. In many cases, starting with high-quality ETFs like these and sticking with them can be one of the smartest moves an investor ever makes.

The post Why I think beginners would love these Vanguard ETFs appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. 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.