If I Were Starting a Portfolio From Scratch Today, These 3 ETFs Would Be My Foundation

The stock market often seems like a non-stop carnival of bright lights, risks, opportunities, and noise. The everyday headlines of financial media might make people feel extreme mood swings. It's as if the only possibilities are "right now is a uniquely terrible time in the economy and the stock market is doomed to crash," or "right now is your best and only chance to get in on the ground floor of the next big thing, and if you don't invest, you'll regret it forever."

Most of this noise and emotion is ultimately bad for people. If you're a long-term investor, investing shouldn't feel like a carnival. It should feel quieter, simpler, and dare I say: boring. Your investment choices shouldn't be fueled by fear of missing out or fear of looming disaster. Your view of the future shouldn't be too greedy or doom-and-gloom. Instead, try to use a mindset of quiet optimism and humble investing.

That means: diversify. Don't put too many eggs in one basket. Don't assume that today's hot stock or must-buy sector is going to beat the rest of the market forever. If I had to start over investing right now, I would choose low-cost index funds that allow me to own the entire stock market -- in the U.S. and around the world. And I would want to buy bonds in a low-cost way that makes sense for my overall goals and risk tolerance.

Let's look at three exchange-traded funds (ETFs) that I already own and use as the foundation of my investing. They might not work for everyone, and they might not beat the best returns from the most famous investors. But that's OK -- I'm trying to stay low-profile, diversified, and boring.

1. Vanguard Morningstar Total Stock Market ETF (VTI): Own the entire U.S. stock market

I don't know what's going to happen next in the stock market. No one does. It's fine to choose stocks that you believe in and to have some high-conviction investments. It's true that making a few concentrated investments in a few individual stocks that might go up 1,000% can be a good way to build wealth.

But I buy the Vanguard Morningstar Total Stock Market ETF (NYSEMKT: VTI) because I don't know which individual stocks or types of stocks will do best in the long term. I don't know whether large caps or small caps, tech stocks, energy stocks, or consumer staples will outperform the rest.

VTI doesn't force me to choose. Instead, investing in VTI lets me own all these stocks. The VTI portfolio of 3,519 stocks represents the entire publicly traded U.S. stock market, not just the biggest 500 companies like the S&P 500 index.

VTI doesn't always match or beat the S&P 500, and that's OK with me. I want to own all the U.S. small caps and mid caps, too, just in case those smaller companies outcompete the big names in the next 10 to 20 years.

2. Vanguard Total International Stock ETF (VXUS): Own the rest of the world

Along with my uncertainty about picking stocks in the U.S., I don't know for sure that America will always be the best place to be a shareholder. In the past 15 years, the S&P 500 has broadly outperformed the rest of the world. American tech companies have powered much of this growth.

But what if that changes? Vanguard's latest financial markets outlook projects that global ex-U.S. equities (unhedged) (international stocks) will outperform U.S. stocks in the next 30 years, by about 1.3% to 3.3% per year.

The Vanguard Total International Stock ETF (NASDAQ: VXUS) lets me own those international companies. VXUS holds 8,901 stocks from dozens of countries all over the world, beyond the U.S. market. If the U.S. dollar weakens, the U.S. economy slows, or the U.S. tech-heavy stock market crashes, VXUS might be a better investment.

It's also possible that Vanguard's research forecast turns out to be wrong, and the U.S. stock market will keep outgaining the rest of the world for decades to come. If so, I'm fine with that -- because I already own the U.S. stock market with VTI. But I still want to diversify with international stocks and avoid putting too many eggs in one basket called "America."

3. Vanguard Total Bond Market ETF (BND): Own all high-quality U.S. bonds

Bond yields have recently reached multidecade highs, which has made some investors wonder if now is a good time to buy bonds. As a long-term investor, I want to buy bonds every month. Not as the biggest piece of my portfolio, but as a smaller percentage. Bonds can help diversify risk in case of a stock market crash. They can help your overall portfolio stay steady or avoid losing as much value as it would if you weren't diversified beyond stocks.

The Vanguard Total Bond Market ETF (NASDAQ: BND) is a simple, low-cost choice. This bond ETF lets me own 11,434 high-quality U.S. bonds. It includes Treasury bonds and investment-grade corporate bonds.

Bond prices go down when interest rates go up. So there's no guarantee that BND will always make money. But that's OK, too. I'm in this for the long haul and I want the possible diversification (and possible future gains) that go with buying bonds as well as stocks.

Ben Gran has positions in Vanguard Morningstar Total Stock Market ETF, Vanguard Total Bond Market ETF, and Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.