401(k) investors who are building long-term stock portfolios should focus on growth to maximize value in retirement. There’s plenty of time to ride out temporary market cycles before you start taking 401(k) withdrawals, and the S&P 500 has never delivered a negative return over a 15-year span. Long-term retirement accounts should therefore focus on growth rather than controlling volatility, and ETFs can be a great tool to get diversified investments in high-growth industries.
Most 401(k)s don’t let you pick your own investments. But if you see one of these five ETFs on your investment menu, then you should strong consider it. And if you’re one of the lucky few who has access to a self-directed 401(k), then take a closer look at all five to see which fits your needs.
The Vanguard Growth ETF (NYSEMKT: VUG) tracks an index of large-cap and mid-cap U.S. growth stocks based on six different characteristics, including earnings expansion, sales growth, and analyst forecasts. As a result, the portfolio is more concentrated in tech and consumer cyclical stocks in its 260 holdings. This ETF should produce results similar to the S&P 500, but with larger swings between highs and lows along with more long-term growth potential.