Not Sure Which Stocks to Buy? This Vanguard ETF Makes It Simple. |

In my younger years, I used to spend a lot of time trying to pick individual winners in the stock market. At best, my track record really wasn’t better than anyone else’s. At worst, the bursting of the tech bubble did more damage to my portfolio than I care to remember.

That’s a big reason why I’ve mostly switched over to exchange-traded funds (ETFs) from stocks. Now I prefer buying broad themes. Owning the Vanguard Total Stock Market ETF (VTI +0.53%), for example, allows me to participate in overall U.S. economic growth. I can simply buy this fund and let the long-term power of compounding do its thing. It’s easier. It’s cheaper. And it’s arguably more successful.

Why the Vanguard Total Stock Market ETF beats stock picking

The Vanguard Total Stock Market ETF covers the entire investable U.S. stock market, about 3,500 stocks in total. I prefer this one over the Vanguard S&P 500 ETFbecause I want to own more than just large caps.

As we’ve seen this year, small caps can have periods where they significantly outperform the S&P 500. The Vanguard Russell 2000 ETFis beating VOO by an 11% to 20% margin year to date. With small-cap earnings beginning to grow faster than those of the S&P 500, there’s a real opportunity for small caps to lead for more than just a few months. I want that opportunity in my portfolio.

And it does all of this with a 0.03% annual expense ratio. With so many investors and professional money managers failing to beat the broader market over time, simply buying the market and avoiding the headache is the wiser path.

Where stock picking can fail

There’s nothing inherently wrong with researching companies to find an edge for your portfolio. But social media and financial news programs can create a lot of noise that isn’t always built on the best information.

Many investors are tempted to simply chase whatever’s been doing well lately. Or they’ll buy a stock based on what they heard from a friend or whatever is being talked about on a Redditmessage board.

That’s not a quality process. It may work from time to time, but the odds of lagging over time are pretty strong.

That’s why I’ve largely removed individual stock picking from my investment strategy. Buying themes and broad indexes lets me participate in the growth story without risking picking a stock that struggles to keep up.

If you feel like you just own a collection of stocks instead of a well-constructed portfolio, the Vanguard Total Stock Market ETF is a great way to start building it the right way.

David Dierking has positions in Vanguard Total Stock Market ETF. The Motley Fool has positions in and recommends Reddit and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.