Last updated: July 2026
This article is for informational purposes only and is not investment advice. See our full Disclaimer for details.
Not every ETF on this site is designed to be held for decades. Some — sector funds, leveraged funds, high-yield options-income funds — are built for a specific job, and holding them “forever” without ever reassessing that job isn’t the same as long-term investing; it’s just not paying attention. This article is about the other category: funds structurally suited to sit at the core of a portfolio for years or decades with minimal need for second-guessing.
Why “Long Term” Actually Matters
Since 1957, the S&P 500 has delivered an average annualized return (with dividends reinvested) of roughly 10.3%-10.5% — a genuinely powerful compounding engine over multi-decade periods. But that average obscures how volatile any individual year actually is. Consider a sample of actual calendar-year S&P 500 returns:
| Year | S&P 500 Return |
|---|---|
| 2008 | -37.0% |
| 2009 | +26.5% |
| 2018 | -4.4% |
| 2019 | +31.5% |
| 2022 | -18.1% |
| 2023 | +26.3% |
Historical S&P 500 returns; past performance does not guarantee future results.
The lesson isn’t “the market always goes up eventually” — it’s that the long-run average is only accessible to investors who actually stay invested through years like 2008 and 2022, rather than jumping in and out. A hypothetical $10,000 invested at the long-run average rate of roughly 10.3% would grow to around $189,000 over 30 years — but only for an investor who held through the -37% years along the way, not one who panic-sold during them and missed the recovery.
What Makes a Fund Suited for Decades of Holding
A few structural characteristics separate a genuine long-term core holding from a fund better suited to a shorter-term or more tactical role:
Low, durable cost. An expense ratio that stays competitive over time matters enormously when compounded across decades, as covered in more depth in our Best Low-Cost Index ETFs guide.
Broad diversification. A fund spread across hundreds or thousands of companies is far less exposed to any single company’s, or even any single sector’s, long-term decline than a concentrated fund.
Low turnover and tax efficiency. Funds that don’t trade frequently internally generate fewer unexpected taxable events over a long holding period — a meaningful factor if the fund sits in a taxable brokerage account, covered further in our Best ETFs for a Taxable Brokerage Account guide.
A durable underlying thesis. A fund tracking “the total U.S. stock market” doesn’t need a specific trend or narrative to keep making sense in ten or twenty years. A fund built around a narrow theme, a specific technology cycle, or an options strategy calibrated to current market volatility is inherently a shorter-horizon, more situational holding.
Structural resilience. A fund’s index methodology, issuer stability, and asset base should be robust enough that you’re not relying on a small, newly launched fund surviving and staying liquid for the next 30 years.
The Core Long-Term Holdings
Broad U.S. index funds (VTI, VOO). These remain the most commonly cited long-term core holdings across nearly all mainstream financial guidance, for exactly the reasons above: rock-bottom cost, extremely broad diversification, and a straightforward thesis — own the U.S. economy’s largest companies (VOO) or nearly the entire U.S. market (VTI) — that doesn’t depend on any specific sector or trend continuing. We compare the two directly in our VOO vs VTI guide.
International diversification (VXUS). For investors who want their long-term holdings to reflect the global economy rather than a U.S.-only bet, VXUS provides that diversification with the same low-cost, broad, low-turnover characteristics that make VTI a durable core holding. Our VTI vs VXUS guide covers the ongoing debate about how much international exposure makes sense.
Core bond exposure (BND). As a portfolio’s stabilizing counterweight to equities, particularly as an investor’s time horizon shortens, a broad, low-cost bond fund like BND serves a genuine long-term structural role — not to maximize returns, but to reduce overall portfolio volatility over time, as covered in our Best Bond ETFs guide.
Traditional dividend growth funds (SCHD, VIG, DGRO). These funds’ quality and dividend-growth screening methodologies are specifically designed around long-term compounding — SCHD’s historical dividend growth track record, covered in our Best Dividend ETFs guide, is a multi-decade story by design, not a short-term income play.
Funds That Deserve More Frequent Reassessment
This isn’t a claim that these funds are “bad” — several are covered favorably elsewhere on this site for the specific jobs they’re built to do. It’s a claim that treating them as permanent, forget-about-it holdings misunderstands what they’re for.
Sector ETFs (XLK, XLE, XLF, and others). As covered in our Best Sector ETFs guide, sector leadership rotates over time based on economic conditions. A sector fund that made sense as a satellite tilt five years ago may no longer reflect your current view or the current market environment — these are generally better suited to periodic reassessment than a “buy and forget for 30 years” approach.
High-yield options-income funds (JEPI, JEPQ, QYLD, SPYI). These funds are built to solve a specific problem — generating high current income, often with capped upside — covered in our Best ETFs for Monthly Dividend Income guide. That’s a legitimate, ongoing role for an investor who needs current income, but it’s a different kind of “long-term” holding than a core growth fund like VTI: you’re holding it because the income-generation job remains relevant to your situation, not simply because you bought it years ago.
Leveraged and inverse funds. These are structurally unsuited to long-term holding at all, due to daily rebalancing effects that can cause their returns to diverge meaningfully from a simple multiple of the underlying index over extended periods — a theme covered in our broader guide to volatile ETFs and the importance of research before investing.
Crypto and gold ETFs. As covered in our Crypto ETFs Explained and Gold ETFs Explained guides, these serve a diversification or satellite role for investors who specifically want that exposure — not because they lack long-term merit, but because most mainstream guidance frames them as a smaller, deliberate allocation rather than a core holding to build a portfolio around.
Narrow thematic or single-country funds. Funds built around a specific investment theme or a single country’s market carry concentration risk that a genuinely diversified core holding doesn’t — worth monitoring and reassessing rather than assuming the theme’s relevance is permanent.
“Boring” Is a Feature, Not a Bug
This is worth saying directly: the funds best suited for multi-decade holding are, almost by definition, unexciting. VTI doesn’t generate headlines. BND doesn’t trend on social media. That’s not a coincidence — a genuinely durable long-term holding doesn’t need a compelling current narrative to keep making sense, which is exactly why it can be held through years like 2008 or 2022 without needing to be re-evaluated based on whatever is dominating financial news at the time.
Long-Term Doesn’t Mean “Never Look at It Again”
Holding a fund for decades doesn’t mean total neglect. A reasonable long-term approach still generally involves:
- Periodic rebalancing — checking that your allocation across funds hasn’t drifted meaningfully from your target due to different growth rates between holdings, and adjusting if it has.
- Occasional cost review — confirming your core holdings haven’t been meaningfully undercut by a lower-cost alternative, as covered in our Best Low-Cost Index ETFs guide, without necessarily switching every time a fractional basis-point-cheaper option appears.
- Reassessing life-stage allocation — gradually shifting the stock-to-bond balance as your time horizon changes, a concept covered in our Why Young Investors Can Afford More Risk guide.
- Confirming account placement still makes sense — as your balances and tax situation change, the asset-location logic in our Roth IRA and taxable account guides may point toward adjustments.
This is periodic maintenance, not active trading — a meaningfully different behavior pattern than reacting to short-term headlines or chasing whichever fund performed best last quarter.
A Sample Long-Term Core Portfolio (For Illustration Only)
The following is a hypothetical example illustrating how the funds discussed above might combine into a long-term core portfolio — not a personalized recommendation:
| Fund | Role | Illustrative allocation |
|---|---|---|
| VTI | U.S. core equity | 50% |
| VXUS | International equity | 20% |
| BND | Bonds/stability | 20% |
| SCHD | Dividend growth | 10% |
An investor with a longer time horizon and higher risk tolerance might reduce or eliminate the bond allocation; someone with a shorter time horizon might increase it substantially. There’s no single correct version of this table — it depends entirely on your own goals, timeline, and risk tolerance.
Frequently Asked Questions
Is it ever appropriate to sell a “long-term” holding? Yes — long-term doesn’t mean permanent regardless of circumstances. Reasonable reasons to sell or reduce a long-term holding include a genuine, durable change in your goals or timeline, a cheaper alternative fund tracking the identical index becoming clearly superior, or rebalancing an allocation that’s drifted significantly from your target. It generally doesn’t include reacting to a single bad quarter or chasing a recently better-performing fund.
How many ETFs do I need for a genuine long-term portfolio? There’s no fixed number. Some investors use a single broad fund like VTI as their entire long-term equity holding; others combine several (U.S., international, bonds, and perhaps a dividend or growth tilt) for more granular control over their allocation. More funds isn’t automatically better — overlapping, redundant holdings (like combining VOO and VTI, covered in our VOO vs VTI guide) add complexity without meaningfully more diversification.
Should I ever add a sector or thematic ETF to a long-term portfolio? Some investors do, as a smaller satellite allocation layered on top of a diversified core — this isn’t inherently incompatible with long-term investing, but it’s a different kind of holding than a core fund like VTI, and generally warrants more frequent reassessment as sector and thematic conditions change.
What’s the biggest mistake people make with “long-term” ETF holdings? Based on common investor behavior patterns, one of the most frequently cited mistakes is abandoning a genuinely long-term strategy during a downturn — selling a core holding like VTI after a sharp decline, which locks in the loss and forfeits the recovery that a long-run average return depends on.
Do I need to pick the “perfect” fund to hold long term? Not really. As covered throughout this site — VOO vs. VTI, SCHD vs. VYM, and other close comparisons — the difference between two reasonable, low-cost options in the same category is typically far smaller than the difference between investing consistently over decades versus not investing at all, or between staying invested through downturns versus panic-selling. Consistency matters more than optimizing every fund choice to perfection.
This article reflects publicly available historical market data as of the “last updated” date above and is provided for general informational and educational purposes only — it is not a recommendation to buy or sell any security. Past performance does not guarantee future results. Always do your own research and consult a licensed financial advisor before making investment decisions. Read our full Disclaimer and Privacy Policy for more information.