If you have just opened a SoFi account and are staring at the investment screen wondering what to buy, you are not alone. With thousands of stocks and ETFs available, having too many choices can make getting started harder than it needs to be.
For beginners, the goal should not be to build a portfolio packed with dozens of funds. A simpler approach is to choose a few low-cost, diversified ETFs and contribute consistently over time.
Here are four ETFs worth considering if you are building a portfolio from scratch: VTI, VOO, SCHD, and VXUS.
What Should Beginners Invest in on SoFi?
Before getting into the individual funds, remember that there is no single portfolio that works for everyone. Your age, financial goals, risk tolerance, investment timeline, and other circumstances all matter.
That said, these four ETFs provide exposure to different parts of the stock market and can form the foundation of a relatively simple portfolio.
1. VTI: Vanguard Total Stock Market ETF
For many beginners, VTI can serve as the foundation of a portfolio.
The Vanguard Total Stock Market ETF is designed to provide exposure to virtually the entire U.S. stock market. That includes large-, mid-, and small-cap companies, giving investors exposure to thousands of businesses in a single fund.
You get major companies such as Apple, Microsoft, Nvidia, Amazon, and Alphabet alongside thousands of smaller companies that could become tomorrow’s market leaders.
One of VTI’s biggest advantages is its low expense ratio of 0.03%. Keeping investment costs low is important because fees can compound over decades just like your investment returns.
If you only wanted to choose one ETF from this list, VTI would be a reasonable candidate because of its broad diversification and exposure to the overall U.S. market.
VOO: Vanguard S&P 500 ETF
VOO takes a somewhat different approach. Rather than covering the entire U.S. market, it tracks the S&P 500, which represents approximately 500 of the largest publicly traded U.S. companies.
That means significant exposure to companies such as Apple, Microsoft, Nvidia, Amazon, Meta, Berkshire Hathaway, and JPMorgan Chase.
VOO also has a 0.03% expense ratio, making it an inexpensive way to invest in large U.S. companies.
One important distinction between VOO and VTI is concentration. VOO places more emphasis on large companies, particularly the biggest technology and growth businesses. When those companies perform exceptionally well, VOO can benefit significantly. When mega-cap stocks experience a major sell-off, however, VOO can feel the impact more strongly.
For a younger investor with decades until retirement, that additional concentration may be acceptable, particularly if they are comfortable with market volatility.
SCHD: Schwab U.S. Dividend Equity ETF
SCHD serves a different purpose from VTI and VOO.
While those funds primarily emphasize broad market exposure and growth, SCHD focuses on high-quality U.S. companies that pay dividends.
The fund holds roughly 100 companies that meet certain quality and dividend-related criteria. The result is a portfolio focused on established businesses with histories of paying and growing dividends.
SCHD’s expense ratio is 0.06%, which remains relatively low compared with many actively managed investment funds.
Dividends can provide another source of return besides changes in the share price. Companies in a dividend-focused ETF distribute cash to shareholders, generally on a quarterly basis.
However, investors should not assume that dividends are guaranteed. Companies can reduce or eliminate their dividends, and dividend-focused funds can still lose substantial value during market downturns.
For investors who want more emphasis on income, SCHD can complement a broader market ETF.
VXUS: Vanguard Total International Stock ETF
The first three ETFs focus on U.S. companies. VXUS adds international diversification.
The Vanguard Total International Stock ETF provides exposure to thousands of companies outside the United States, including businesses in Europe, Japan, the United Kingdom, China, India, Brazil, Australia, and other markets.
Its expense ratio is 0.05%.
International stocks have lagged U.S. stocks during much of the past decade, which can make international investing seem unnecessary. But investing based solely on the most recent period of performance can be dangerous.
Different markets lead at different times. International stocks have experienced periods when they outperformed the U.S. market, so owning some international exposure can reduce dependence on the performance of one country’s stock market.
For someone who wants a predominantly U.S.-focused portfolio, a relatively small allocation to VXUS can provide an additional layer of diversification.
How Beginners Invest With Small Amounts on SoFi
One advantage for beginners investing through SoFi is fractional investing.
You don’t necessarily need enough money to purchase an entire share of an ETF. If an ETF has a share price of several hundred dollars, that doesn’t mean you need several hundred dollars to start investing in it.
Instead, you can purchase a fraction of a share, allowing you to invest smaller amounts regularly.
For example, someone investing $100 could divide it among several ETFs rather than waiting until they have enough money to purchase whole shares.
The important thing is that you are investing according to your chosen allocation rather than letting the share price determine what you buy.
A Simple Allocation for Beginners
Once you decide what to buy, the next question is how much to put into each ETF.
One approach is to increase the allocation to dividend-focused investments as you get older. For example, a simplified strategy could look like this:
| Age | SCHD | VTI | VOO | VXUS |
|---|---|---|---|---|
| 30 | 30% | 40% | 20% | 10% |
| 40 | 40% | 30% | 20% | 10% |
| 50 | 50% | 20% | 20% | 10% |
This isn’t a universal formula, and there is no requirement to follow it exactly. Younger investors may prefer a greater emphasis on growth, while investors approaching retirement may want to place more emphasis on income and stability.
Also, VTI and VOO overlap significantly. Owning both doesn’t provide as much additional diversification as owning completely different asset classes because both funds contain many of the same large U.S. companies.
The exact percentages matter less than having a sensible plan and consistently contributing to it.
Mistakes Beginners Invest Around Should Avoid
Knowing what beginners invest in is only part of the equation. Knowing what to avoid can be just as important.
Chasing Last Year’s Best Performer
An ETF that gained 40% last year isn’t necessarily going to repeat that performance.
Past performance can be useful for understanding a fund’s history, but it shouldn’t be the primary reason you buy it. Instead, focus on factors such as diversification, costs, investment strategy, and your own time horizon.
Owning Too Many ETFs
More ETFs don’t automatically mean more diversification.
If you own several funds that all contain the same major companies, you may simply be creating unnecessary overlap.
A handful of carefully selected funds can be easier to understand, monitor, and rebalance than a portfolio containing dozens of similar ETFs.
Buying Stocks Because They’re Trending
Individual stocks can be tempting, particularly when a company has recently surged.
But buying a stock simply because everyone is talking about it can expose beginners to unnecessary risk. A company that has already risen dramatically can still fall just as quickly.
Broad-market ETFs allow you to spread your investment across hundreds or thousands of companies instead of relying on one business to succeed.
Ignoring Expense Ratios
Investment fees may look insignificant when you’re starting with a small amount of money. Over several decades, however, they can become much more meaningful.
A fund charging 0.03% is very different from one charging 0.50% or more, especially as your portfolio grows.
When comparable funds provide similar exposure, choosing a lower-cost option can help keep more of your investment working for you.
The Most Important Step Is Getting Started
There is no perfect ETF portfolio that guarantees success. Markets rise and fall, and even excellent investments can experience long periods of disappointing performance.
For beginners, the bigger challenge is often not finding the perfect ETF. It is developing the discipline to invest consistently, avoid emotional decisions, keep costs under control, and stay invested through market volatility.
VTI can provide broad U.S. market exposure, VOO focuses on large U.S. companies, SCHD emphasizes dividend-paying businesses, and VXUS adds international diversification. Together, they can give beginners a straightforward starting point to build from.
Just remember that investing involves risk, and you can lose money. Consider your own financial situation and do your research before making investment decisions.
