Wealth Elf’s Top ETF’s this Year

When it comes to building a strong financial future, diversifying your investments is key. For beginners, a great place to start is with low-cost index funds or ETFs, which offer broad market exposure and reduce risk through diversification.

If you have a higher risk tolerance and longer time window, exploring individual stocks in growing industries like technology or AI can offer exciting growth potential. Yup, we love AI this year - no surprise on that one.

Without further ado, here’s our favorite investments of 2025 so far including low-cost index funds for broad market exposure and select tech and AI stocks for growth. From tariffs to inflation, plus the promise of cools to home loan rates - it’s been a bumpy ride so far!

VUG. The Vanguard Growth ETF (VUG) has continued to shine as a top-tier investment in 2025, building on a strong performance record over the past several years. With exposure to leading large-cap growth stocks like Apple, Microsoft, Nvidia, and Amazon, VUG has benefited from the ongoing strength of the tech sector and innovation-driven companies.

Thus far this year, the fund has delivered impressive returns amid a resilient U.S. economy and robust corporate earnings, reinforcing its reputation as a reliable vehicle for long-term capital appreciation.

Its low expense ratio, diversification, and consistent historical outperformance against broader benchmarks like the S&P 500 have made VUG a favorite among growth-oriented investors.

VYM. The Vanguard High Dividend Yield ETF (VYM) has proven to be a solid investment in 2025 and in previous years, especially for income-focused investors seeking stability and consistent returns. In a year where high-growth sectors have experienced volatility, VYM has offered a more defensive position by focusing on high-quality, dividend-paying companies across various industries, including consumer staples, healthcare, and financials.

Its performance in 2025 has outpaced major indices like the Nasdaq and S&P 500 during downturns, showcasing its resilience. With a low expense ratio and a strong track record of dividend payouts, VYM continues to provide an attractive blend of income generation and long-term capital appreciation, making it a reliable core holding for conservative or retirement-focused portfolios.

Palantir has been an outstanding investment in 2025, with its stock surging over 70% year-to-date and nearly 400% over the past 12 months, far outpacing major indices (insane!). This explosive growth is fueled by strong revenue gains up nearly 40% year-over-year driven by booming demand for its AI Platform across commercial and government sectors.

Many compare Palantir and Nvidia which have been exceptional investments, but they excel in different areas of the AI landscape. The differentiator between Palantir and Nvidia is Nvidia remains the backbone of AI hardware, powering data centers and AI model training with its industry-leading GPUs. And while its stock has continued to rise, its gains have slowed slightly compared to the explosive rallies of previous years.

Palantir, on the other hand, has outperformed Nvidia in percentage gains this year, driven by soaring demand for its AI software platform, particularly in government and commercial sectors. That said, many raise concerns over Palantir’s heavy involvement in government contracts which can become problematic long term when success requires a smooth, consistent relationship.

The S&P 500. In 2025, the S&P 500 remains a strong investment due to its broad exposure to the largest and most resilient U.S. companies, benefiting from tailwinds like artificial intelligence, easing inflation, and a potential soft landing for the economy. Compared to recent years particularly 2022, when the index fell around 19% amid high inflation and aggressive rate hikes the market has rebounded sharply.

In 2023, it returned approximately 24%, and in 2024, it continued to climb as interest rates stabilized and tech-driven growth accelerated. You will always hear investors promote the S&P 500 because it’s a safe bet long term. That’s why the S&P 500 is also in our guide of The Best Long Term Investments to Put on Autopilot.

Did any of these investment picks pique your interest? Did you also lean on International ETF’s to stack your deck against uncertainty? Let us know on Instagram at @Wealth_Elf.