Introduction: A Journey to Simplified Investing

When I initially ventured into the realm of investing, the plethora of options felt both limitless and daunting. Stocks, bonds, commodities, mutual funds… where should I start? It wasn’t until I discovered exchange-traded funds (ETFs) that everything began to make sense. For a novice like me, ETFs, particularly those that concentrate on the US market (US Market ETFs), provided the ideal blend of diversification, simplicity, and cost-efficiency.

Fast forward to today, and ETFs are now the cornerstone of my portfolio. If you’re a new investor looking to build your wealth in 2025, I’m here to share the top 5 US Market ETFs that have earned a spot in my portfolio and explain why they might be a great fit for you too.

If you’re new to investing and unsure about where to start, allow me to walk you through the five ETFs in my portfolio and explain why they could serve as the ideal starting points for your investment journey. But before we dive in, let me be clear: investing always carries risks, and it’s crucial to do your own research or consult a financial advisor.

What Are ETFs?

ETFs, or exchange-traded funds, are baskets of securities that trade on stock exchanges, just like individual stocks.

The Case for US Market ETFs

• Stability and growth of the US economy: The US stock market has delivered an average annual return of about 10% over the past century (Source: S&P Dow Jones Indices).
• Diversification within the world’s largest market: Includes exposure to companies like Apple, Microsoft, and Amazon.
• Low-cost options: Many US Market ETFs have expense ratios as low as 0.03%, saving you money over time.

Criteria I Considered for Selecting My 5 US Market ETFs for 2025

1. Performance History: Consistent returns over the past 5-10 years.
2. Expense Ratio: Low-cost funds for higher net gains.
3. Market Coverage: Broad or targeted exposure to specific segments of the US market.
4. Liquidity: High trading volumes for ease of buying and selling.

5 US Market ETFs in My Portfolio for 2025

Let’s dive into the specific ETFs I’ve chosen and why they made the cut.

1. Vanguard Total Stock Market ETF (VTI)

   •     Ticker: VTI

Overview

• Tracks the CRSP US Total Market Index.
• Covers large-, mid-, small-, and micro-cap stocks.

Why I Love VTI

• Broad diversification: Exposure to the entire US equity market.
• Low cost: Expense ratio of 0.03%.
• Performance: Delivered an average annual return of ~12.5% over the last decade (Source: Vanguard).

Ideal For

• Investors seeking a one-stop-shop for US market exposure.
• Best For: Maximising market diversification in one fund.

2. SPDR S&P 500 ETF Trust (SPY)

   •     Ticker: SPY

Overview

•     Tracks the S&P 500 Index, representing the 500 largest US companies.

Why I Love SPY

• Stability: Focus on blue-chip stocks.
• Expense Ratio: 0.09%
• Historical performance: Average annual return of ~10% over 20 years.
• Average Annual Return (10 years): ~12% (source: Morningstar)
• Holdings: Apple, Microsoft, Amazon, and more.
• Liquidity: Among the most heavily traded ETFs globally.

Ideal For

   •     New investors looking for exposure to well-established companies.

3. iShares Russell 2000 ETF (IWM)

   •     Ticker: IWM

Overview

   •     Tracks the Russell 2000 Index, Covers small-cap companies with high growth potential.

Why I Love IWM

• Growth potential: Small-cap stocks often outpace large-caps in bull markets.
• Diversification within smaller companies: Access to industries under-represented in large-cap indexes.
• Expense Ratio: 0.19%
• Average Annual Return (10 years): ~9% (source: Morningstar)
• Holdings: Top-performing small-cap firms in diverse sectors.

Ideal For

• Investors with a moderate risk appetite seeking high growth.
• Investors looking to diversify into smaller, growth-oriented companies.

4. Invesco QQQ ETF (QQQ)

   •     Ticker: QQQ

Overview

   •     Tracks the Nasdaq-100 Index, heavily weighted toward technology.

Why I Love QQQ

• Tech exposure: Includes companies like Apple, Microsoft, and Nvidia.
• High returns: Outperformed the S&P 500 by ~5% annually over the last 10 years.
• Future-ready: Focus on sectors like AI, cloud computing, and biotech.
• Expense Ratio: 0.20%
• Average Annual Return (10 years): ~14% (source: Investopedia)
• Holdings: Nvidia, Tesla, Meta Platforms, and others.

Ideal For

•     Investors who are bullish on innovation and technology.

5. Schwab U.S. Dividend Equity ETF (SCHD)

   •     Ticker: SCHD

Overview

   •     Focuses on high-dividend-yielding stocks with strong fundamentals.

Why I Love SCHD

• Steady income: A 30-day SEC yield of 3.6% (as of 2025).
• Dividend Yield: ~3.6% (source: Charles Schwab)
• Defensive play: Performs well during market downturns.
• Low expense ratio: Just 0.06%.

Ideal For

•     Income-focused investors seeking stability.

How to Build a Portfolio with US Market ETFs

Diversify Across Sectors

•     Combine ETFs that focus on large-cap, small-cap, tech, and dividends.

Keep Costs Low

•     Favour ETFs with expense ratios under 0.10%.

Monitor Performance

   •     Regularly rebalance your portfolio to align with your goals.

How These ETFs Fit Together in My Portfolio

Balancing Growth and Stability

•     SPY and VTI provide core stability through large-cap exposure.

•     QQQ adds tech-driven growth potential.

Diversifying Across Market Segments

•     IWM captures small-cap growth opportunities.

•     SCHD ensures steady income through dividends.

Risk Management

•     Diversification: Reduces portfolio volatility.

•     Expense Ratios: Low costs ensure more of your money stays invested.

How to Start Investing in ETFs

Step 1: Open a Brokerage Account

•     Consider platforms like Vanguard, Fidelity, or Robinhood.

Step 2: Decide on Your Budget

•     Start with a lump sum or set up monthly contributions.

Step 3: Choose ETFs That Align With Your Goals

•     Long-term growth: SPY, VTI

•     Income: SCHD

•     High growth: QQQ, IWM

Step 4: Monitor Your Investments

•     Use tools like Morningstar or Yahoo Finance to track performance.

Some Interesting Statistics US Market ETFs

ETF Market Growth: In 2024, investors poured over $1.1 trillion into the U.S. ETF market, pushing total assets to a record $10 trillion [6]. This growth highlights the increasing popularity and trust in ETFs among investors.

1. Top-Performing ETFs: The Vanguard S&P 500 ETF (VOO) saw the highest net inflows in 2024, attracting over $116 billion [6]. Other top performers included the iShares Core S&P 500 ETF (IVV) and the Vanguard Total Stock Market ETF (VTI) [6].
2. Emerging Trends: Active ETFs have gained significant traction, with 121 mutual funds converting to active ETFs in 2024 [7]. This shift reflects a growing interest in actively managed strategies within the ETF space.
3. Sector-Specific ETFs: The Financial Select Sector SPDR Fund (XLF) and the iShares Russell 2000 ETF (IWM) are among the ETFs to watch in 2025, offering exposure to financial stocks and small-cap companies, respectively [8].
4. Technology and Growth ETFs: Funds like the Invesco QQQ Trust (QQQ) and the Roundhill Magnificent Seven ETF (MAGS) have shown strong performance, driven by the growth of leading tech companies [6].
5. Market Outlook: Analysts predict continued growth for ETFs in 2025, with a focus on sectors like technology, financials, and alternative investments [7].

FAQs About Investing in US Market ETFs

1. Are ETFs Safe for New Investors?

ETFs are generally considered a low-risk way to enter the market due to their diversification.

2. How Much Should I Invest?

Start with what you’re comfortable losing, as all investments carry risk. Start small, perhaps 20-30% of your portfolio for beginners.

3. What Are the Tax Implications?

ETFs are tax-efficient but may still incur capital gains taxes. Consult a tax professional.

4. Can I Use ETFs for Passive Income?

Dividend-focused ETFs like SCHD are ideal for generating passive income.

Conclusion

Investing in US Market ETFs has significantly transformed my portfolio in 2025. These five ETFs—SPY, QQQ, IWM, VTI, and SCHD—offer a mix of stability, growth, and income, making them ideal for new investors. Remember, the best investment strategy is one that aligns with your goals and risk tolerance. Start small, stay consistent, and watch your wealth grow over time.

Are you ready to take the first step into the world of ETFs? Let’s start this journey together!

References

1. Vanguard
2. S&P Dow Jones Indices
3. Morningstar
4. Schwab
5. ETF.com
6. These ETF strategies were big winners last year. What to expect in 2025.
7. What’s Next For ETF’s In 2025 | The WealthAdvisor
8. 10 Best ETFs for Investors to Watch in 2025 – ETF.com

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Please consult a financial advisor before making investment decisions.