Which are the Best Vanguard Funds for You in 2021

Vanguard is a very reputable name in the world of investing and its funds are very popular among buy-and-hold or long term investors. The reason behind Vanguard’s popularity is their incredible selection of high-quality, low-cost mutual funds and ETFs. These awesome qualities really make Vanguard funds a very good choice for those who are willing to invest in the long term. However, just because Vanguard offers a great selection of funds for long term investment, you shouldn’t go ahead and blindly invest in one of those. First, you need to determine whether you are a long term investor or not. Sometimes, different financial planners can define “long term” differently. But as a general rule of thumb, if you can invest and wait for a minimum of 10 years before you need to start withdrawing from your investment accounts, you will qualify as a long term investor. This definition holds true for bond securities as well. Now, on to the best funds offered by Vanguard for this purpose.

Here are the Best Vanguard funds for you:

Vanguard Total Stock Market Index Fund Admiral Shares MUTF (VTSAX)

Kicking off the list of the best Vanguard funds is the Vanguard’ Total Stock Market Index (VTSAX). There are two reasons why it’s the world’s largest open ended fund: it is a diversified stock market index fund, and its expenses are extremely low. The portfolio provides exposure to the entire U.S. stock market, including small, mid, and large cap stocks. This portfolio mix includes over 3,500 securities. The expenses are only 0.04% or $4 for every $10,000 invested, and the minimum initial investment is $3,000 for Admiral Shares. This is also available as Vanguard Total Stock Market ETF (VTI), with a 0.03% expense ratio.

Vanguard Wellesley Income Fund Investor Shares MUTF (VWINX)

Next on the list of the best Vanguard funds, is the Vanguard Wellesley Income (VWINX). It holds a conservative (low risk) allocation of roughly 40% stocks and 60% bonds. VWINX is great for long-term investors who have a comparatively low tolerance for risk or retired investors trying to find a mixture of income and growth. For an actively managed fund, the VWINX has a very low expense rate of 0.23%. This fund also requires a $3,000 minimum initial investment. 

Vanguard 500 Index Fund Admiral Shares MUTF (VFIAX)

Next on the list of the best Vanguard funds is the Vanguard 500 Index (VFIAX). This popular index fund operates by tracking the S&P 500 index. What that essentially means is that the fund holds just over 500 of America’s largest stocks. This allows the VFIAX shareholders to gain exposure to some of America’s largest stocks such as Apple (AAPL), Facebook (FB), Amazon (AMZN), and Alphabet (GOOG, GOOGL), the parent company of Google. VFIAX may be a smart choice for investors who want to create a portfolio that has other stock funds, like small-, and mid-cap funds. The expense ratio for VFIAX is 0.04%, and the minimum initial investment is $3,000. It is also available as Vanguard S&P 500 ETF (VOO), with a 0.03% expense ratio.

Vanguard Total Bond Market Index Fund Admiral Shares MUTF (VBTLX)

Next on the list of the best Vanguard funds, is the Vanguard Total Bond Market Index (VBTLX). Although long-term investing is usually related to stocks, all smart investors need to have at least some of their investments tied up in bonds. VBTLX offers well-diversified low-cost investments like most good index funds. The VBTLX portfolio consists of almost 9,000 U.S. government and corporate bonds. The expense ratio for VBTLX is 0.05%, and the minimum initial investment is $3,000. This is also available as an ETF and it carries an expense ratio of 0.035%.

Vanguard STAR Fund Investor Shares MUTF (VGSTX)

Next on the list of the best Vanguard funds is Vanguard STAR (VGSTX). You may have noticed that a lot of funds have minimums of $3,000 to start out investing. However, VGSTX has a lower minimum of $1,000. It is also what’s referred to as a fund of funds, which suggests it invests in other mutual funds, which has some advantages over single fund options. The STAR fund consists of a diversified mixture of 11 Vanguard funds, making it a solid standalone option for beginner investors or those looking for a one fund solution for investing. While the 0.31% expense ratio appears to be high but it still happens to be 62% lower when compared to funds that have similar holdings. 

Vanguard Total International Stock Market Index Fund Admiral Shares MUTF (VTIAX)

Next on the list of the best Vanguard funds, is the Vanguard Total International Stock Market Index (VTIAX). To build an entire portfolio of long-term investments, most investors will include international stock funds, and VTIAX is one of the best Vanguard offerings in this field. The index that VTIAX tracks has more than 6,000 non-American stocks and features stocks from developed markets like Germany and Japan, as well as developing markets such as China, India and Brazil. After coughing up an expense ratio of 0.11%, shareholders can gain exposure to the whole stock exchange outside the U.S. The minimum initial investment with this fund is also $3,000.  Investors can also pick up the index at one-share costs, like Vanguard Total International Stock ETF (VXUS), with a lower expense ratio of 0.08%.

Vanguard Growth Index Fund Admiral Shares MUTF (VIGAX)

Next on the list of the best Vanguard funds, is the VIGAX. This fund is suitable for investors who are open towards taking a little more risk in order to enjoy the high returns of S&P 500 type broad market indices. This index fund consists of large-cap growth stocks that have been outperforming the S&P 500 for over 10 years. Expenses for VIGAX are 0.05%, and the minimum initial investment is $3,000. It is also available as Vanguard Growth ETF (VUG) with a 0.04% expense ratio.

Vanguard Balanced Index Fund Admiral Shares MUTF (VBIAX)

Next on the list of the best Vanguard funds, is the Vanguard Balanced Index (VBIAX). Vanguard features a small but outstanding selection of balanced funds—mutual funds or ETFs that invest in a combination of stocks and bonds. VBIAX features a moderate (medium risk) allocation of about 60% stocks and 40% bonds. The stock portion invests within a total stock market index, and therefore the bond portion invests within a total bond index. The expenses are 0.07%, and the minimum initial investment is $3,000.

Vanguard Mid-Cap Index Fund Admiral Shares MUTF (VIMAX)

Next on the list of the best Vanguard funds, is the Vanguard Mid-Cap Index (VIMAX). Small- and mid-cap stocks have historically outperformed large-cap stocks, but mid-cap stocks are often the wiser choice of the three. When compared to large cap stocks, mid cap stocks are riskier, but they are safer than small cap stocks. Therefore, investors often consider mid-caps the sweet spot of investing due to their sweeter risk to reward ratio. VIMAX has a low expense ratio of 0.05%, and the minimum initial investment is $3,000. The same blend is also available as an ETF, as Vanguard Mid-Cap ETF (VO), with a 0.04% expense ratio.

Vanguard Target Retirement Funds

Rounding off our list of the best Vanguard funds are the Vanguard Target Retirement Funds. These funds, as their name suggests operate with an investment strategy that caters to the target retirement year. There are quite a few Target Retirement Funds on offer from Vanguard and you can choose one that fulfils your requirements the best. For example, Vanguard Target Retirement 2040 (VFORX) has an asset allocation of roughly 85% stocks and 15% bonds, which is acceptable for an investor planning to retire some time around the year 2040. 

So those were the best Vanguard funds available for investment. If you were looking to invest some hard earned money in a Vanguard fund, this post will hopefully help you make that choice. 

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