Financial Wealth Required for Moderate Prosperity in 2025, as Perceived by the Typical U.S. Resident
Investing in Exchange-Traded Funds (ETFs): A Smart Choice for Building Wealth
In the ever-evolving world of finance, exchange-traded funds (ETFs) have emerged as a popular choice for investors seeking a low-maintenance option to build wealth in the stock market. These bundles of stocks grouped together into a single investment offer a simple and effective way to diversify your portfolio.
Recent research by Charles Schwab has shed light on the beliefs of U.S. adults regarding financial comfort. The survey, which polled over 2,000 individuals aged between 21 and 75, revealed that the average net worth needed to be considered financially comfortable varies across generations. Baby boomers, for instance, have the highest expectations, with an average net worth of $839,000 in 2025.
One ETF that has garnered attention due to its explosive returns since its launch in 2004 is the Vanguard Information Technology ETF (VGT 1.77%). This ETF, which has a focus solely on tech stocks, has earned an average rate of return of 16.73% per year over the last decade. However, it's essential to note that with its emphasis on high-growth sectors, the VGT carries a higher risk compared to other ETFs on the list.
In contrast, the Charles Schwab U.S. Large-Cap Growth ETF (SCHG 0.57%) offers a somewhat safer growth fund. This ETF, which contains large-cap stocks, has a more conservative approach, focusing on stocks that have the most growth potential. Over the past decade, the SCHG has delivered an average rate of return of 16.73%, indicating its potential as a solid investment choice.
Another safe option for risk-averse investors is an S&P 500 tracking fund like the iShares Core S&P 500 ETF (IVV 0.50%). This ETF aims to replicate the performance of the S&P 500 and contains stocks from 500 of the largest U.S.-based companies. The extensive diversification within this ETF helps limit risk, making it ideal for those who prefer a more stable investment.
With just one share of an ETF, you can own hundreds or even thousands of stocks at once, offering a level of diversification that would be difficult to achieve through individual stock purchases. This feature makes ETFs an attractive choice for both seasoned investors and those new to the world of investing.
As the survey conducted by Charles Schwab indicates, achieving financial comfort remains a challenge for many Americans. Among the participants, 27% said they don't think they'll ever get there. However, with the right investment choices, such as ETFs, and a long-term strategy, it's possible to build wealth and secure a financially comfortable future.
By investing in ETFs like the Charles Schwab U.S. Large-Cap Growth ETF (SCHG 0.57%) or the Vanguard Information Technology ETF (VGT 1.77%), or even an S&P 500 tracking fund like the iShares Core S&P 500 ETF (IVV 0.50%), you can take a significant step towards reaching your financial goals. With patience and a well-diversified portfolio, you can weather market fluctuations and work towards a secure financial future.
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