Looking to get started on your investing journey in 2025? Exchange-traded funds (ETFs) are a great place to start, as they offer diversified exposure to a wide group of the market’s best stocks in one simple, convenient instrument.
Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
Here are three of the best ETFs to consider as you set out on your path as an investor – the Schwab U.S. Large-Cap Growth ETF (SCHG), the Schwab U.S. Dividend Equity ETF (SCHD), and the Invesco QQQ Trust (QQQ). All three offer diversified exposure to great stocks, varying levels of strong returns over the years, and, importantly, low fees.
Schwab U.S. Large-Cap Growth ETF (SCHG)
If you’re looking for an ETF to start out with, the Schwab U.S. Large-Cap Growth ETF is a good place to begin. This growth-oriented ETF from Charles Schwab was launched in 2009 and now has $37.7 billion in assets under management (AUM).
It offers investors exposure to a basket of 227 companies that make up the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.
As you can see, SCHG has positions in many of the market’s most dominant stocks, including the magnificent seven plus other powerhouses like Broadcom (AVGO) and Eli Lilly (LLY). These are many of the most dynamic and innovative companies in the U.S., not to mention the world, with exposure to compelling long-term themes like artificial intelligence, quantum computing, autonomous vehicles, and more, making them good propositions for long-term investors.
SCHG’s top holdings are also rated highly by TipRanks’ Smart Score system. The Smart Score is a quantitative stock scoring system created by TipRanks. It gives stocks a score from one to 10, based on eight key market factors. The score is data-driven and does not involve any human intervention. Seven of SCHG’s top 10 holdings have Outperform-equivalent Smart Scores of 8 or above.
SCHG itself features an Outperform-equivalent ETF Smart Score of 8 out of 10.
Another reason SCHG is a top choice for new investors is that it has generated strong returns over a long period of time.
As of the end of 2024, SCHG has delivered an annualized three-year return of 11.4%, an annualized five-year return of 19.8%, and an annualized 10-year return of 16.7%. These returns beat those of the broader market over each time frame as the Vanguard S&P 500 ETF (VOO), a good stand-in for the broader market and an ETF that has produced strong returns itself, delivered an annualized three-year return of 8.9%, an annualized five-year return of 14.5%, and an annualized 10-year return of 13.1% as of the same date.
Additionally, SCHG is delivering this market-beating performance for a very low price. Its expense ratio of 0.06%, means that an investor in the fund will pay just $6 in fees on a $10,000 investment annually.
Is SCHG Stock a Buy, According to Analysts?
Turning to Wall Street, SCHG earns a Strong Buy consensus rating based on 195 Buys, 31 Holds, and one Sell rating assigned in the past three months. The average SCHG stock price target of $31.92 implies 13.4% upside potential from current levels.
Overall, I’m bullish on SCHG and consider it a great building block for new investors (and all investors for that matter) based on its strong portfolio of highly-rated stocks, its history of outperforming the market to generate compelling returns, and its ultra-low expense ratio.
Schwab U.S. Dividend Equity ETF (SCHD)
Like SCHG, the Schwab U.S. Dividend Equity ETF is another offering from blue-chip asset manager Charles Schwab (SCHW). SCHD debuted in 2011 and has grown to $65.8 billion in AUM.
While SCHG focuses on growth stocks, SCHD is instead focused on dividend stocks.
The fund owns a portfolio of 101 dividend stocks, and its top 10 holdings make up a reasonable 41.1% of assets. You can check out an overview of SCHD’s top 10 holdings below.
While SCHG caters towards the more growth-oriented part of the market, SCHD hones in on tried-and-true dividend stocks like healthcare giants Pfizer (PFE) and AbbVie (ABBV), soft drink giants Coca-Cola (KO) and Pepsi (PEP) and even BlackRock (BLK), the world’s largest asset manager.
These companies have been paying and, in many cases, growing their dividends for many years. Because they hail from more defensive parts of the market like healthcare, consumer staples, and financials, these holdings, and by extension SCHD itself, should hold up better than the market as a whole during a market pullback as these sectors typically feature lower valuations and more defensive business models.
SHCD features an attractive dividend yield of 3.6%, which is nearly triple the S&P 500’s (SPX) yield of 1.3%. Newer investors can reinvest these above-average dividends to create a snowball effect and slowly but surely build up their positions in SCHD over time.
It’s worth noting that SCHD has slightly underperformed the market over time, but its results have still been quite positive, and it may outperform the broader market if there is a rotation from growth stocks to more defensive names like those that SCHD specializes in. As of December 31, SCHD has posted an annualized three-year return of 4.2%, an annualized five-year return of 11.1%, and an annualized 10-year return of 11.0%. For comparison, the aforementioned VOO has generated better returns over the comparable periods.
Like SCHG, SCHD sports a favorable expense ratio of just 0.06%, meaning an investor will pay just $6 in fees annually on a $10,000 investment in the fund.
Is SCHD Stock a Buy, According to Analysts?
Turning to Wall Street, SCHG earns a Moderate Buy consensus rating based on 55 Buys, 41 Holds, and five Sell ratings assigned in the past three months. The average SCHD stock price target of $31.31 implies 14.6% upside potential from current levels.
I’m bullish on SCHD as another great choice for new investors based on its diversified portfolio of blue-chip dividend stocks, its attractive above-average dividend yield, and its favorable expense ratio.
Invesco QQQ Trust (QQQ)
Last but not least, the Invesco QQQ Trust (QQQ) is another powerhouse ETF for beginners to consider.
With $321 billion in AUM, QQQ is one of the largest and most popular ETFs in the world, and with good reason. It invests in the Nasdaq 100 (NDX), an index of the 100 largest non-financial stocks listed on the Nasdaq exchange.
The Nasdaq has long been associated with top tech and growth stocks, so the ETF and its holdings skew heavily in this direction. QQQ owns 102 stocks, and its top 10 holdings account for 52.2% of assets. You’ll find an overview of QQQ’s top 10 holdings below.
As you can see, QQQ’s top holdings look fairly similar to the growth-oriented SCHG’s, with Costco (COST) replacing Eli Lilly (LLY). These holdings give investors significant exposure to secular trends like artificial intelligence, quantum computing, robotics, autonomous driving, and more. Seven of these top 10 holdings feature Outperform-equivalent Smart Scores, with QQQ itself earning an Outperform-equivalent ETF Smart Score of 8 out of 10.
QQQ’s long-term track record of outperforming the market is what truly sets it apart as a can’t-miss investment opportunity. The powerhouse ETF has outperformed the market over each of the past three-, five- and 10-year time frames, racking up the best returns in this group of three strong ETFs in the process.
As of the end of 2024, QQQ had generated an annualized three-year return of 9.5%, an excellent annualized five-year return of 20.0%, and an impressive annualized 10-year return of 18.3%. For comparison, QQQ has outperformed VOO over these three periods.
With an expense ratio of 0.20%, QQQ is the most expensive of the ETFs in this group but still reasonably priced and well below the average expense ratio for all ETFs. An investor in the fund will pay just $20 in fees on a $10,000 investment annually.
Is QQQ Stock a Buy, According to Analysts?
Turning to Wall Street, QQQ earns a Moderate Buy consensus rating based on 91 Buys, 11 Holds, and zero Sell ratings assigned in the past three months. The average QQQ stock price target of $584.51 implies 13.4% upside potential from current levels.
I’m bullish on QQQ based on its stellar long-term performance, its portfolio of top tech and growth stocks, and its reasonable expense ratio.
Three Great Building Blocks for Investors
If you’re looking to get started investing in 2025, ETFs are a great way to get the ball rolling, as they give you instant exposure to a wide array of the market’s top stocks. I’m bullish on all three of these ETFs as excellent building blocks for investors to use and start building their portfolios around.
All three feature diversified portfolios of blue-chip stocks and reasonable expense ratios. I’m bullish on SCHG and QQQ based on their portfolios of top tech and growth stocks, exposure to exciting long-term themes, and their long histories of outperforming the broader market. Meanwhile, I’m bullish on SCHD as a strong complement to these names based on its more defensive portfolio and attractive dividend yield.
