If you are investing in the stock market for the long run, then there’s no better performing way to do it than by investing in Vanguard funds. These funds help to keep your portfolio nicely diversified and keep your costs low.
Over the long-term, low-cost mutual funds and ETFs have always outperformed any other investment strategy. There is almost no other safer way to invest your money and almost guarantee a return.
If you are a seasoned investor or even someone that’s just getting started, here are the top 5 best Vanguard funds that you should consider investing in.
- What are vanguard funds
- 1. Vanguard Target Retirement Funds
- 2. Vanguard Total Stock Market Index Fund (VTSAX)
- 3. Vanguard Growth Index (VIGAX)
- 4. Vanguard Total International Stock Market Index (VTIAX)
- 5. Vanguard Total Bond Market Index (VBTLX)
- How to buy into a Vanguard Fund
- How to track your Vanguard Funds
What are vanguard funds
Vanguard funds allow investors to invest in different portfolios that expose them to various kinds of Investments. Instead of picking and choosing individual companies to invest in, Vanguard funds expose you to hundreds to thousands of different companies.
Vanguard funds were initially introduced in 1976. These funds have been there for a very long time, providing investors a well-rounded and easy way to invest at a very low cost.
This is a much safer way to invest as it spreads out your investments and minimizes your risk. The underlying funds can hold U.S. Stocks, government bonds, or even International stocks. This just depends on which Vanguard fund you decide to invest in.
Vanguard funds are also much cheaper than the industry average when it comes to investing. They average about 84% less than the industry average. By keeping your costs low, you end up maximizing your returns.
1. Vanguard Target Retirement Funds
Let’s kick off the list with probably the easiest one to invest in, and one that is best fit for beginners. Target date funds automatically adjust asset allocations automatically as you age.
You simply pick a Target-date fund depending on when you plan on retiring. For example, if you are currently at the age of 30, then your target-date fund would be something like the Vanguard Target Retirement 2050 Fund (VFIFX). This is assuming you are planning on retiring around the age of 60.
All you have to do is simply pick it once and it does the rest for you. There is little you need to do except to pick your level of risk. Remember:
- High risk, high reward
- Low risk, low reward
As you get more comfortable inexperienced in the stock market, then you can always shift your Investments away from Target date funds. This is only when you are ready for more control and have a better understanding of investing.
2. Vanguard Total Stock Market Index Fund (VTSAX)
Another excellent option would be investing in the Vanguard Total Stock Market Index Fund (VTSAX). VTSAX tracks the entire U.S. Equity Market.
By investing in this fund, you have a very broad portfolio of U.S. based stocks and leaves you very well Diversified. Just remember, this is entirely stocks. Your portfolio should be invested in more than just one Index Fund.
This fund also has one of the lowest expense ratios out there, minimizing your expenses. At the time of writing this, it had an expense ratio of 0.04% with a yield of 2.12%.
3. Vanguard Growth Index (VIGAX)
The Vanguard Growth Index (VIGAX) is excellent for investors that are willing to take up a little more risk for a higher potential return. This Index Fund is perfect for those that are willing to take up more risk and aren’t close to retirement meant quite yet.
The fund holds large-cap growth stocks that have historically outperformed the S&P 500 for 10 years or more. It also has a very reasonable expense ratio of about 0.05%.
4. Vanguard Total International Stock Market Index (VTIAX)
To have a well-rounded and diversified portfolio, International stock funds are a great way to do that. You should not have your entire portfolio centered around just the United States. It’s important you invest in companies in other countries.
The Vanguard Total International Stock Market Index (VTIAX) includes well over 6,000 companies in both Developed and Emerging Markets. These are countries such as Europe, Japan, China, and even Brazil.
VTIAX has an expense ratio of 0.11%, making it very cheap as well.
5. Vanguard Total Bond Market Index (VBTLX)
The Vanguard Total Bond Market Index (VBTLX) should definitely be a part of any Investor’s portfolio. Not only does it help with diversifying your portfolio, but for those nearing retirement are hopefully invested in this fund.
Investing is typically associated with just investing in stocks. Although stocks are a great way to invest your money, investing in a much less volatile and safer bond market should be a big point for any investor.
VBTLX consists of more than one 9,000 government and corporate bonds. This is a well-rounded Index Fund with much less volatility, less risk, and of course less returns. VBTLX’s expense ratio is also about 0.05%.
How to buy into a Vanguard Fund
Once you have figured out which funds to invest into, it’s now time to go ahead and buy into your Vanguard funds.
The simplest and easiest way is to use an app called Robinhood to get started. It has been my go-to investment app for the last five years and counting. Not only is trading free, but it’s super easy and intuitive to use.
Oh and did I mention, by using this link, you will automatically get a free stock worth up to $200 just for signing up! Check it out and start Investing in Vanguard funds.
How to track your Vanguard Funds
Doing research and picking your Vanguard Funds is one thing, but how do you keep track of it all? Simple. By using Personal Capital, you can analyze your Investments and retirement funds all in one place.
It can also help you reduce your investment fees by tracking those. Statistically, most investors have no idea how much they are paying and fees. A fee of 1-2% is actually pretty exorbitant and adds up to tens of thousands of dollars over the years.
By using Personal Capital, you have all your accounts in one place, and you can use the built-in retirement planner to figure out your next financial moves and Investments. Completely free to use, I highly recommend you check it out.
Let me know in the comments below if you invest in Vanguard funds and your personal experience investing in them! Hope this was helpful 🙂
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