Getting started in the share market can feel a little overwhelming. There are thousands of companies to choose from, and figuring out which ones to buy isn't always easy.
But I think there's a much simpler way for beginners to start investing – exchange-traded funds (ETFs).
The Vanguard MSCI Index International Shares ETF (ASX: VGS) is one option I rate highly, and I believe it could be an excellent choice for investors looking to build wealth over time.
Here are three reasons why.
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You don't have to pick the winners
One of the biggest challenges for new investors is deciding which companies deserve their money.
After all, identifying a successful business today doesn't necessarily mean it will be a successful investment over the next decade.
That's something I like about the VGS ETF. Instead of having to choose individual shares, investors gain exposure to approximately 1,300 companies through a single investment.
The fund holds some of the world's most successful businesses, including NVIDIA, Microsoft, and Apple.
But it also owns hundreds of other companies across industries such as healthcare, financial services, manufacturing, and consumer goods.
I think this makes the VGS ETF a great introduction to share market investing. You can benefit from the success of individual businesses without having to predict which one will deliver the best returns.
And if some companies struggle while others prosper, your investment isn't dependent on the fortunes of just a handful of shares.
It opens up a world of opportunities
Another reason I like the VGS ETF is that it gives Australian investors access to businesses they might otherwise overlook.
The ASX is home to some excellent companies, but our market is heavily influenced by banks and mining businesses.
There's an enormous world of investment opportunities beyond Australia. The VGS ETF provides exposure to developed markets across approximately 23 countries, including the United States, Japan, the United Kingdom, France, and Switzerland.
This means investors can participate in the growth of industries that have a much smaller presence on the ASX.
Technology is an obvious example, but there are also global healthcare leaders, industrial businesses, and consumer companies with enormous international operations.
I believe this is valuable for beginners because it introduces them to a much broader range of businesses and economies.
Admittedly, the United States accounts for the majority of the fund's investments, so its performance remains heavily influenced by American shares.
Nevertheless, I think the international exposure is one of its greatest strengths.
It's easy to keep investing
My final reason is the simplicity of the VGS ETF. Once you've purchased units, there's very little you need to do to maintain your investment.
The fund follows an index, meaning Vanguard handles the process of adjusting its holdings as the index changes.
And because the investment is passively managed, the fees are relatively low. The VGS ETF charges an annual management fee of just 0.18%. I calculate this to be approximately $1.80 a year on a $1,000 investment.
I think that makes it an attractive option for investors planning to hold their shares for many years. There's also the opportunity to build your investment gradually by purchasing additional units when you have money available.
Of course, the ETF will still experience market downturns, and currency movements can influence returns.
But for investors with a long-term outlook, I believe its simplicity makes it much easier to develop and stick with good investing habits.
Foolish takeaway
I think the VGS ETF is an excellent option for beginners, and one I'd be happy to own myself.
It provides exposure to hundreds of successful global businesses, offers opportunities for long-term growth, and makes investing relatively straightforward.
For someone starting their investing journey, I believe buying a fund like VGS and regularly adding to it could be a great way to build wealth over the coming decades.
