If you’re busy and want to invest your money in the long term, you will love the best vanguard funds. They are cheaper. They are high quality funds, well diversified, and professionally managed. Thus, vanguard funds are a favorite for long-term investments and for retirement.
Vanguard mutual funds, like any mutual funds, are money invested by investors. They are pooled together in a single investment portfolio. The mutual fund is then managed by a professional manager who then use the money to buy a bunch of stocks, bonds or other assets.
With Vanguard index funds, they are passively managed. That is, they are managed by a computer with its only job is to track an index, such as the S&P 500.
Nonetheless, both mutual funds and index funds are cost-efficient and a huge time saver for a busy investor. And because of that, the best vanguard funds are superior investment vehicles for long term-investment.
In this article, we will discuss the 8 best vanguard funds that offer a high-quality, cost and time-efficient way to invest in the stock market.
Understanding the Advantages of the Best Vanguard Funds
Before jumping into the best vanguard funds, it’s important to go over the main reasons for investing in mutual or index funds rather than individual stocks, bonds, or other securities.
Diversification. You have probably heard of the popular saying “don’t put all your eggs in one basket.” Well, if so, it applies well to mutual and index funds. Diversification is when you have a mix of investment to help control the total risk of your investment portfolio.
Unless you have a lot of money, buying individual stocks yourself can be costly. But with a mutual or index fund, you’re able to buy dozens of stocks and invest in different types of stocks in a variety of industries, thus diversifying your portfolio.
Because you invest in multiple stocks across various industries, you are spreading your risk. If one stock plummets, the others can balance it out. Most Vanguard funds, if not all, are diversified.
Low minimum investment. Another benefit of Vanguard funds is that they require a reasonable investment minimum. Some Vanguard mutual funds require a minimum of $3000 to invest. They also offer a monthly investment plan, so you can start with as little as $20 per month.
Cost efficiency. The charges that you pay to buy or sell a fund can be significant. However Vanguard funds are known to cost way less than the average mutual fund.
Professional management. Even if you have a lot and you are an expert in investing, investing your money in a Vanguard mutual fund is a huge time saver. That means once you buy your fund and contribute to it monthly (however you chose), you can just forget about it.
A Vanguard professional manager takes care of it for you. Plus, vanguard fund managers are experienced, well educated. So you don’t have to worry about an inexperienced manager running your money.
These are the reasons why investing in the best vanguard funds is better than investing in individual stocks and/or bonds.
However, one of the drawbacks with vanguard funds, as with all mutual or index funds, is that you don’t have control over your investment portfolio. Leaving your money to someone who decides when and what to invest in can be difficult for you if you’re someone who likes to be in control.
So, if you like to be in control and things yourself, you may want to develop your own investment portfolio and not relying on these Vanguard funds.
Are you a long-term investor?
Think about yourself and your goals before choosing these best Vanguard funds.
What are your investment goals? Do you plan on holding these funds in the long term?
A long term investor is someone who puts money into an investment product for a long period of time.
If you plan on investing money to achieve some goals in 2 years, such as buying a car or going on a vacation, you should not use these Vanguard Funds.
That is because stocks and bonds can rise and fall significantly over a short period of time. That makes it possible to lose some or all of your money. Moreover, if you need cash in a hurry, a Vanguard fund is definitely not the right investment for you.
So you’re better off using short-term investments for these kind of goals.
But if you want to build wealth for the long term or your goal is to retire in 20 or 40 years, these Vanguard funds are for you.
Likewise, what is your appetite for risk?
A long-term investor should be aware of the risks involved in investing in the stock market. They should know their own risk tolerance. Some investors are more cautious than others. Some can take risks and are able to sleep well at night.
These vanguard funds carry different level of risks. Some are more conservative than the others.
Therefore, before you start buying Vanguard funds, figure out whether you are a long term investor. In other words, don’t keep money in funds unless you plan on holding them for at least 5 years.
The 8 Best Vanguard Funds to Buy Now for Long-Term Investments
Now that you have a pretty good idea of why a Vanguard fund is a good long-term investment, and you are aware of your risk tolerance, below is 8 of the top and best Vanguard funds to buy now for the long term. If you have questions beyond Vanguard funds, it may make sense to work with a financial planner or financial advisor near you.
- Minimum initial investment:$3000
The biggest and perhaps one of the best Vanguard funds is the Vanguard Total Stock Market. The fund was created in 1992. It gives long term investors a broad exposure to the entire US equity market, including large, mid, and small cap growth stocks. Some of the largest stocks include Apple, Facebook, Johnson And Johnson, Alphabet, Berkshire Hathaway, etc…
This Vanguard fund has all of the attributes mentioned above, i.e., diversification and low costs. Note this fund invests exclusively in stock. So it’s the most aggressive Vanguard fund around.You need a minimum of $3000 to invest in this fund. The expenses are 0.04%, which is extremely low. Note this is also available as an ETF, with an expense ratio of 0.03%.
- Minimum initial investment:$3,000
- Expenses: 0.04%
If you want to have your money invested only in American assets, this Vanguard fund is the right one for you. The Vanguard 500 Index, as the name suggests tracks the S&P 500 index.
This index funds gives you exposure to 500 of the largest U.S. companies, spreading across different industries, making it one of the best Vanguard funds to have. Some of the largest companies you might already know include Microsoft, Apple, Visa, JP Morgan Chase, Facebook, etc. It has a minimum investment of $3,000 with an expense ratio of 0.04&, making it one of the best Vanguard funds to have.
- Minimum initial investment:
If you’re aware of risks involved in investing in stocks and you have a low tolerance for risk, the Vanguard wellington Income is for you. This fund allocates about one third to stocks and two thirds to bonds, making it very conservative.
Another good thing about this Vanguard fund is that it invests in stocks that have a strong track record of providing dividend income to its investors. So, if you are one of those long term investors who has a low appetite for risks and who likes to receive a steady dividend payment without a lot of volatility in the share price, you should consider this fund.
- Minimum initial investment: $1,000
- Expenses: 0.31%
The great thing about this Vanguard fund is that the minimum investment is relatively low ($1000), making it a good choice among new investors. Plus, it’s well balanced.
It is invested 60% in stocks and 40% in bonds. For those investors looking for a broad diversification in both domestic and international stocks and bonds, this fund should not be overlooked.
- Minimum initial investment:$3000
Vanguard Dividend Growth, as the name suggests, focuses on companies that pay dividends and have the ability to grow their dividends over time.
If you’re an investor with a long term focus and likes to receive a steady dividend income, you may want to consider this fund. The minimum investment is $3000 with an expense ratio of 0.22%.
- Minimum initial investment: $3,000
- Expenses: 0.34%
As the name suggests, Vanguard Health Care only invests in the Health Care Section. That’s the only downside. Apart from that, it gives investors a great exposure to various domestic and international companies within the health care sector, such as pharmaceutical firms, research firms, and medical supply and equipment companies.
If you’re considering this Vanguard fund, you should also have another and more diversified fund to reduce your risk.
- Minimum initial investment: $3000
- Expenses: 0.43%
If you’re looking to build a complete investment portfolio and want to have more exposure to foreign stocks, the Vanguard International Growth is the one of the best Vanguard Funds to accomplish that goal. The fund focuses on non-U.S. stocks in developed and emerging markets with a high growth potential.
However, one thing to consider is the high volatility of this fund. Because it also invests in developed countries, the share price can rise and fall significantly. So you should consider this fund if you want more exposure to foreign stocks. But you also want to have another fund as well to balance it out. The minimum initial investment is $3,000 with an expense ratio of 0.43%.
- Minimum initial investment: $3000
- Expenses: 0.05%
Bond funds may be appropriate and advantageous for long term investors who want a bond fund that invests US and Corporate bonds. If that’s your goal then the Vanguard Total Bond Market Index is the right one for you.
Just as any Vanguard funds, it’s cost efficient, safe and high quality. It has a minimum initial investment of $3,000 and an expense ration of 0.05%. Also note that this fund is also available as an ETF.
The Bottom Line
If you’re looking to invest in mutual or index funds, those are the best Vanguard funds to buy now and hold for the long term. They are high quality, low-cost, and are safe.
Speak with the Right Financial Advisor
- If you have questions beyond knowing which of the best Vanguard funds to invest, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).