Vanguard Growth Index Fund VIGAX
Vanguard Mutual funds
Long before ETFs came along, mutual funds offered the easiest way todiversify. In many ways and for some investors, mutual funds may still be abetter option than ETFs. Consider these 8 low-cost mutual funds from Vanguardand if you are close to retirement you might want to read about vanguardtarget retirement funds.
1. Vanguard Total Stock Market Index Fund (VTSAX)
This is the largest stock index fund you could buy. It is one of the firstindex funds that captured the entire U.S. stock market. If you buy this fund,you’ll be about as diversified as you can get among stocks, which drives yourrisk of catastrophe down. It has tracked with the S&P 500 almost identicallysince 2016.This is a cost-effective fund for investors who don’t want to complicate theirstock portfolio, but still want the safety of diversification. (It’s stillsmart to add bonds and international securities to your portfolio).
Best Vanguard Index Funds
1. Vanguard Total Stock Market Index Fund (VTSAX) 2. Vanguard 500 Index Fund Admiral Shares (VFIAX) 3. Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) 4. Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) 5. Vanguard Real Estate Index Fund Admiral Shares (VGSLX) 6. Vanguard Growth Index Fund Admiral Shares (VIGAX) 7. Vanguard Balanced Index Fund Admiral Shares (VBIAX) 8. Vanguard Dividend Growth Fund (VDIGX) 9. Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) 10. Vanguard Target Retirement Funds
The Pros of Vanguard Index Funds
Lower risk and more diversification:With each index fund, there are a collection of hundreds (or thousands) ofstocks, bonds, or sometimes both pending the fund.And if a single stock or bond in the “index” is not performing well at themoment, there’s a good chance that another within the fund is doing well whichminimizes and balances potential losses.Low-cost fees for index funds:This was always an important one to me, was keeping the fees low. SinceVanguard was the leader in very low fund fees, many other brokerage companieshave recently lowered their fees to compete.But all index funds within Vanguard have professional portfolio managers.However, because index funds are easier to manage there are less expertise andtime needed to hand-select stocks or bonds for each fund.More tax advantages:Everyone loves tax advantages, am I right?While you might be using index funds for your retirement accounts that alreadyhave tax advantages, you still can get some more potentially.Index funds are not changing the stock or bond holdings often, compared tomany actively managed funds.And because of that, typically this leads to fewer taxable capital gainsdistributions and that could reduce your tax bill.
The Cons of Vanguard Index Funds
Tons of index fund choices:While more options is never a bad thing per se, Vanguard has a plethora ofindex fund choices to choose from that can make it difficult to know what topick.This will require you to do a bit more research and know your goals forinvesting. Just one reason why I made this list of best Vanguard index funds!You could also go with the three-fund portfolio as well, which can simplifyyour investment strategy as well.Funds have minimum investment requirements:Any of the index funds from Vanguard have two classes you can choose from:Investor Shares and Admiral Shares.For investor shares, you are looking at funds that require a minimuminvestment between $1,000 and $3,000. However, Vanguard does not offer as manyin the investor shares category anymore and the ones they do are typically aminimum of $3,000.And the Admiral Shares typically are $3,000 for most index funds. But you canalso find funds at the $50,000 actively managed funds and up to $100,000 forcertain specific index funds.
4. Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
For a well-balanced and diversified portfolio, you do want to consider somestocks from international companies. However, you also must be careful asthere is more risk in international markets.This Vanguard international fund will help you gain equity exposure to thedeveloped and emerging international economies. So now you are getting a blendof stock markets from all over the world, except the United States.Like the Total Stock Market index fund, this one pays out quarterly dividends,but the expense ratio is a bit higher at 0.11%. The minimum investment is$3,000. Read more about VTIAX here.
10. Vanguard Target Retirement Funds
And the last of the best Vanguard index funds are their target retirementfunds. The reason there is not one specifically listed here, is they have afund for major years that you might potentially hit retirement age.If you do not want to deal with choosing a few index fund types, rebalancing,or figuring out the percentages to invest in — a target retirement fund is agreat option.Based on the retirement fund year you choose, the management will handle thediversification you need, will auto rebalance so you are on track and willalter percentages over time as you get closer to your retirement.For example, based on my birth year if I chose a target retirement date fund Iwould select Vanguard Target Retirement 2055 Fund (VFFVX).This has a 0.15% expense ratio and just a $1,000 minimum to get started. Youcan learn more here and pick a retirement fund based on your birth year.Note:Managing your own portfolio but looking to get recommendations, find any fees,and see if you are on track? UseBlooom’s free portfolio analyzer, which can provide tailored notes on your 401k, traditional IRA, Roth IRA,and more.Use Blooom for free!
Vanguard Russell 1000 Growth Index Fund ETF Shares (VONG)
Source: Shutterstock52-week range: $131.88 – $240.69Expense ratio %: 0.08%Dividend yield: 0.70%The Vanguard Russell 1000 Growth Index Fund ETF provides exposure to a widerange of growth stocks among large-capitalization (cap) U.S. companies. VONG,which has 437 holdings, tracks the Russell 1000 Growth Index.The top ten stocks make up close to half of net assets which are about $8.5billion. Apple, Microsoft, and Amazon (NASDAQ:AMZN) head the list ofbusinesses. In terms of industry weightings, the fund allocates funds toTechnology (46.30%), Consumer Discretionary (20.40%), Healthcare (13.20%),Financial Services (9.80%), and Producer Durables (5.40%). In recent years,growth names have definitely been charging the bull market and investors havenot been shy to buy the top names.YTD, this Vanguard ETF is up about 24%. Its trailing P/E and P/B ratios standat 40.2 and 11.9. These are rich metrics, even for large-cap growthbusinesses. If you’re interested in adding these stocks to your holdings, youmay want to add the fund to your shopping list. Potential investors may buyinto upcoming declines especially around $200.
How do you buy Vanguard Index fund shares?
Besides investing through your 401(k) provider, there are two ways to purchaseindex fund shares: directly from Vanguard or by opening a brokerage account.You’ll need to choose the type of account you’d like to open, such as atraditional or Roth IRA, or a taxable account.Finally, decide which index fund shares you’d like to purchase depending onhow much you have to invest, and whether to make monthly additional sharepurchases in the fund.
Vanguard Total Stock Market Index Fund (VTSAX)
Three-quarters of the U.S. stock market not enough? This fund covers theentire U.S. equity market, including small-, mid- and large-cap growth andvalue stocks.Minimum investment: $3,000. Expense ratio: 0.04%.
Vanguard Growth Index Fund (VIGAX)
This fund has a buy-and-hold approach for stocks in large U.S. companies insectors that have larger growth potential, such as technology, consumerservices and financial services.Minimum investment: $3,000. Expense ratio: 0.05%.
Vanguard Total International Stock Index Fund (VTIAX)
Total U.S. market not enough? This fund takes on the world, tracking stockindexes in both developed and emerging markets across the globe.Minimum investment: $3,000. Expense ratio: 0.11%.