Why the Vanguard Total Stock Market ETF is ideal for hands-off investors

As a parent, one thing I often try to emphasize to my kids is the importance of hard work. Study a little bit for a test, and you might walk away with a 95. Study harder, and you could score 100 instead.

I’m also no stranger to hard work. There’s a reason I spend 40 or more hours a week at my desk as a freelance writer when I could probably get away with working less. I’m a big fan of the payoff.

But when it comes to investing, I happen to think it’s OK to be a little lazy.

A portfolio that also includes mid- and large-cap stocks provides balance. (Michael Nagle/Bloomberg via Getty Images)

While some investors spend hours each week poring over their portfolios and choosing stocks to meet their long-term and retirement savings goals, others may prefer a more hands-off approach. And I think it’s totally fine to find a lazy person’s ETF, or exchange-traded fund, that you can put money into regularly and call it a day.

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There’s one ETF in particular that I’m a fan of for this approach. And if your goal is to grow your money without having to put in a lot of effort, you may want to add it to your portfolio.

How the Vanguard Total Stock Market ETF lends to “lazy” investing

The Vanguard Total Stock Market ETF is ideal for lazy investing because it offers broad market exposure in a single fund. As the name implies, when you buy shares of the Vanguard Total Stock Market ETF, you’re effectively investing in thousands of U.S. companies across a range of industries and market caps.

The latter point is important. Exposure to large-, mid- and small-cap stocks is crucial because each category plays a different role in a diversified portfolio.

Large-cap companies are typically well-established businesses with a proven model. Some may be poised for steady growth, while others may have a long history of paying and increasing dividends. These companies can offer the benefit of consistency and may hold up better during periods of market volatility.

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Mid-cap stocks, meanwhile, are usually companies that are still growing but have reasonably established businesses. They can offer a nice balance between stability and growth potential.

Finally, small-cap stocks tend to be less established companies. That can be a mixed bag. Small-cap stocks can carry more risk, but they also offer a lot of growth potential.

A portfolio of only small-cap stocks can be risky. But a portfolio that also includes mid- and large-cap stocks provides balance.

With the Vanguard Total Stock Market ETF, you don’t have to rack your brain trying to come up with the ideal allocation…