2 Vanguard ETFs That Will Help You Retire Early

Did you know that Americans typically retire before age 65? But what’s surprising is that they can afford it not because their finances are in such good shape.

The average retirement age is 62, and the main reason retirees stop working early is because they have to. Health problems, disabilities and factors beyond their control are the top reasons Americans retire early, according to a recent survey from the Employee Benefit Research Institute.

Ideally, people should retire early because they can afford to, not because they are forced by factors beyond their control, which can lead to more stressful retirement years. One way to improve your financial situation and retire early as your finances allow is to invest your savings. And there are two exchange-traded funds (ETFs) that can help you with this: Vanguard S&P 500 ETF (NYSEMKT: VOO) And Vanguard Total Stock Market ETF (NYSEMKT: VTI).

1. Vanguard S&P 500 ETF

A fund that reflects S&P 500 Index (SNPINDEX: ^GSPC) can be a great investment as it will give you access to the best stocks on the market including Apple And Microsoft. And the Vanguard S&P 500 ETF has a low expense ratio of 0.03%, which ensures fees don’t eat up much of your profits. With an average market capitalization of over $260 billion, you’re not taking on much risk with volatile investments in this type of ETF, so it may be ideal for long-term investors who just want a fund to put their money into. on a regular basis.

Overall profitability level VOO data on YCharts

Over the past decade, the fund has achieved total returns, including dividends, of about 250%. It averages a compound annual growth rate (CAGR) of 13.4%, which is higher than the S&P 500. long term annual average around 10%. Over the long term, this may decline, especially with many growth stocks now trading at elevated levels. However, with some excellent diversification and the fund’s capabilities to help you achieve significant long-term returns, it can be a solid investment that can help you retire early.

2. ETF Vanguard Total Stock Market Index Fund

A more diverse fund is the Vanguard Total Stock Market Index. It holds over 3,600 stocks and also has a low expense ratio of 0.03%. By giving investors exposure to large-, mid- and small-cap stocks, the risk for individual stocks is even lower than with a fund that mirrors the S&P 500.

So, if you’re concerned that the S&P 500 might be too expensive, this ETF might be a better option for you. You’ll still get exposure to the top stocks, but they won’t make up as much of the fund’s overall weight.

Greater diversification means you can sacrifice stronger returns (in bull years) in exchange for added security. But that doesn’t mean the Total Stock Market ETF isn’t a great fund to own. Over the past decade, its total return of 234% is not far behind the Vanguard S&P 500 fund’s 12.8% average annual growth rate.

Overall VTI return level data on YCharts

Investing in a fund can provide you with an even simpler strategy over the long term, knowing that this passively managed ETF gives you exposure to more than just the big names. And because the fund is a little more diverse, it may be less vulnerable if there’s a sell-off in technology or highly valued companies. growth stocks.

Any of these ETFs can be a great investment over the long term, as they can help you grow your savings significantly over time. You might want to invest in both of them.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Vanguard S&P 500 ETF and Vanguard Total Stock Market ETF. The Motley Fool recommends the following options: long January 2026 $395 Microsoft calls and short January 2026 $405 Microsoft calls. The Motley Fool has disclosure policy.