Why the Vanguard Growth ETF is Your Smartest Investment with $500

Why the Vanguard Growth ETF

This exchange-traded fund offers a better balance of risk and reward than a more popular alternative. If you're reading this, you probably already know growth stocks are the most accessible way for the average person to build wealth over time.

Fortunately, there's a simple solution: Buy a basket of growth stocks that someone else updates as needed. The Vanguard Growth ETF (NYSEMKT: VUG) is your best bet among these baskets right now.

Low Cost Advantage

The Vanguard Growth ETF boasts a handful of competitive advantages. Chief among these advantages is its low cost to you. Its annualized expense ratio currently stands at a mere 0.04%, meaning the costs associated with managing and maintaining the fund only shave about 0.04% off the average yearly performance of the stocks held within the fund.

But does the Invesco fund's superior performance over the past 20 years make this added expense worth it?

This is in slight contrast to the better-balanced Vanguard Growth ETF. It's built to reflect the performance of the CRSP (Center for Research in Security Prices) US Large Cap Growth Index, which also holds sizable stakes in the aforementioned Microsoft, Nvidia, and Apple.

Long-Term Investment Potential

Don't let neglect of several seemingly small things sneak up on you and end up crimping your long-term results. The Vanguard Growth ETF offers healthy growth potential at a reasonable level of risk. It also requires no ongoing effort from you since the CRSP -- and, therefore, Vanguard -- swaps out any of the index's or fund's stocks as needed.

With a third party making scheduled rebalances of the index, the risk of trying to time the market is negated. This often bolsters a fund or index's overall returns by virtue of locking in partial gains on exceedingly bullish stocks or scooping up stocks while they're temporarily down.