8 Best Vanguard Funds Worth Buying Right Now In 2023


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5 months ago

8 Best Vanguard Funds Worth Buying Right Now In 2023


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5 months ago

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Considering investing in a Vanguard fund? It can feel a little complicated, especially if you’re new to investing. But don’t stress – there are plenty of low-cost Vanguard funds available to any investor.  

Vanguard funds are highly recommended by professionals. They’re dependable, affordable, and can be a great way to diversify your portfolio if you know what you’re doing.

Best Vanguard Funds

  1. Total Stock Market ETF (VTI)
  2. Total Stock Market Index Fund (VTSAX)
  3. Target Retirement 2050 Fund (VFIFX)
  4. Social Index Fund (VFTAX)
  5. Total International Stock Index Fund (VTIAX)
  6. Growth Index Fund (VIGAX)
  7. Total Bond Market (BND)
  8. Strategic Equity Fund (VSEQX)

Ready to learn more? Here’s a basic overview of Vanguard funds: what you need to know before you invest, and the 8 best Vanguard funds worth buying right now.

What is Vanguard?

Founded in 1975, Vanguard is an investment management company with a unique approach to investing. Today, they manage more than $5.1 trillion in investments. They offer around 425 super low-cost traditional funds and ETFs.

Vanguard funds are distinguished mainly by their low fees. Most investment management companies are owned by outside stockholders, but Vanguard is owned entirely by their own shareholders (that’s you, if you own a Vanguard fund). Because of that, they’re able to keep their fees super low.

Even though it’s a little more complicated than using a robo-advisor, Vanguard funds are highly recommended for young and beginning investors. They make investment more accessible, whatever your current budget looks like.

What’s the difference between an Index Fund (ETF) and a Mutual Fund?

If you’ve read about Vanguard before, you’ve probably come across a lot of information about their index funds, which can be ideal for new investors.

But mutual funds are great for new investors too, right? So, what’s the difference between the two?

An exchange-traded fund (ETF) is a lot like a mutual fund: it’s an index fund that contains multiple – sometimes thousands – of bonds in one. So, when you buy an index funding, you get built-in diversification in your portfolio, and the peace of mind that you won’t lose all your stock if a certain company sinks.

The key difference that sets an ETF apart from a mutual fund is that you can’t set up automatic investments and withdrawals. You’ll have to monitor and make contributions to your ETF manually – but the fees are much cheaper.

To sum it up, if you don’t mind making contributions yourself every month and want lower fees, an ETF is right for you. You’ll see a few of Vanguard’s best available ETFs on the list below.

Best Vanguard Funds

Need a little more help buying the right Vanguard funds for you?

Vanguard keeps a shortlist of “select” funds chosen by their Portfolio Review Department. Some of those select funds are on this list – they’re generally among the most popular Vanguard funds, because they’re chosen for their diversity, cost, and establishment. However, keep in mind that Vanguard does place some of their more expensive funds on the select list, too.

If you’re looking for the best combination of cost and reward potential, you don’t need to pay the big bucks. Here are 8 of the best low-cost Vanguard funds you can buy right now:

1. Total Stock Market ETF (VTI)

Total Stock Market is the original ETF established by Vanguard back in 1975. The goal was a more accessible, low-cost fund that anyone could invest in.

Vanguard’s flagship ETF fund is still widely regarded as one of the best they offer. This index fund is a bundle of large, mid, and small company bonds, and tracks the CRSP U.S. Total Market Index.

Not only is this Vanguard’s oldest fund, it’s also their most popular. 9 times out of 10, when someone tells you they’ve invested in a Vanguard fund, this is the one they’re referring to. It’s well-established, reliable, and has an incredibly low expense ratio. Whether you’re a beginning investor or already have an expansive portfolio, this is an index fund worth buying right now.

  • Market summary
  • Fee: 0.03%
  • 5-year average return: 11.8%
  • Minimum investment: 1 share

2. Total Stock Market Index Fund (VTSAX)

The Vanguard Total Stock Market Index Fund is one of the best choices for a beginner, especially if you’re interested in building a three-fund portfolio (one fund focused on domestic stocks, one on international stocks, and one on bonds).

This index fund tracks the entire U.S. equity market. With it, you’ll get a diversified bundle of stocks in U.S. companies including Microsoft, Apple, and Amazon. It’s a perfect starting point for someone who wants to build up their portfolio. The super low expense ratio makes this a safe investment for long-term holding.

3. Target Retirement 2050 Fund (VFIFX)

Investing in your retirement? This Vanguard mutual fund makes it easy.

VFIX is a lifecycle fund, which means it minimizes the risk as you get closer to retirement age. At the start, the fund is mostly invested in stocks, and shifts its asset allocation toward bonds over time. That way, you have the opportunity for growth while you’re young, and more security by the time you reach retirement.

The year 2050 in the title is meant to be a target retirement year – you don’t actually have to be planning on retiring in 30 years, but the fund is set up to maximize your earnings within that time.

This Vanguard fund doesn’t come with the lowest fee. Still, it’s low-cost compared to other investment companies. I’ve included it on this list because it’s a solid long-term investment and a reliable way to invest in your future.

4. Social Index Fund (VFTAX)

If you want to invest in the best socially and ecologically responsible companies in 2023, this Vanguard fund is a unique opportunity.

This index fund bundles stock from companies that are making changes that have a positive impact. For example, companies that have been switching to renewable energy, changing hiring policies to include more diversity, or investing in equal pay are considered socially responsible.

Some of the companies that are meeting those guidelines include Apple, Google, and Tesla. Not bad companies to invest in!

With VFTAX, you can feel good about the companies you’re investing in. Beyond that, those socially responsible policies are always good for business – this index fund consistently outperforms some of the most popular Vanguard funds.

5. Total International Stock Index Fund (VTIAX)

If you’re a beginning investor who’s interested in international stocks, this index fund is a great one to add to your three-fund portfolio.

The Vanguard Total International Stock Index Fund tracks the FTSE Global All Cap ex. U.S. index. In other words, it measures the performance of companies around the world, excluding the U.S. Some of those companies include Nestle, Alibaba Group Holding, and Tencent Holdings.

This fund does come with a slightly higher expense ratio than some of the other most popular Vanguard funds, but it also has a fairly high yield, and outperforms a ton of other international index funds.

6. Growth Index Fund (VIGAX)

This growth fund is a little riskier than some of the other Vanguard funds on this list, but the high returns can be worth it.

When you buy VIGAX, Vanguard selects a high-growth companies for you. The goal is that those companies will grow rapidly for an awesome return over time. With that rapid growth, you also have the risk of stocks failing, which is why this is considered one of the riskier Vanguard funds.

That said, the companies Vanguard picks are always projected for stable, long-term growth, not just fast growth and collapse in a few years. This is a fund you’ll want to buy and hold for a long time to get the most out of it.

This is also another extremely low-fee option, so it’s well worth it to invest.

7. Total Bond Market (BND)

If you want a well-balanced portfolio, you have to invest in some bonds, as well as stocks. All the experts recommend spending at least a small percentage of your total investments on bonds while you’re young, and a larger percentage as you get closer to retirement.

Bonds might not be as exciting, because both the risk and the potential return are lower – but they’re necessary for stable, sustainable growth.

The Vanguard Total Market Bond is a perfect example of a bond you can invest in right now, to set your portfolio up for long-term success. BND tracks the Bloomberg Barclays U.S. Aggregate Bond Index.

Bonds tend to do better than stocks when the market is at a low point, so you’ll want to hold on to this bond for the long term.

8. Strategic Equity Fund (VSEQX)

Similar to the Growth Index Fund, this Vanguard fund is a little riskier, but comes with the possibility of a higher return.

Vanguard Strategic Equity Fund is composed of stock in smaller, fast-growing companies. They’re mostly selected by a computer, not a team of professionals. That might sound less reliable, but plenty of investors will tell you that automation is actually an advantage, because it eliminates the risk of human error.

The fee for this one is also fairly high, compared to some other Vanguard funds. If you want a little more risk and potential for rapid growth in your profile, it could be worthwhile to invest in VSEQX – just keep it to less than 10% of your total investment amount.

Why fees matter

Now that you have an overview of the 8 best Vanguard funds you can by right now, let’s talk about what makes them so great.

At the beginning of this article, I mentioned that Vanguard is able to keep their fees super low compared to other investment management companies. As you noticed, the fees for all these funds vary – but they’re still a lot lower than average.

So, why does that matter?

The higher the fee, the less you’ll get on your eventual return. Consider, for example, a 2% fee on a $100,000 investment. If you earned a 6% return for 25 years on that investment, with no fee, you would end up with $430,000. But add in that 2% fee, and you’re down to just $260,000! See the difference?

That’s why Vanguard funds are so exceptional. With lower fees, you have a higher chance of a successful return.

Choosing the right Vanguard fund for you

Not sure which Vanguard fund is right for you?

There are plenty of Vanguard funds worth buying right now in 2023, but it’s important to do your research and make sure you’re making the best choice for your portfolio. It all comes down to your preferences and plans for the future.

Take some time to consider whether you’re looking for something with higher risk and a good return, or something low-risk that will steadily grow your wealth over the years. (Ideally, you should have both in your portfolio!)

Remember, for a well-balanced portfolio, experts recommend plenty of diversity, a mix of domestic and international stocks, and some bonds for long-term growth and success.

If you want to learn more about Vanguard funds, you can use their watch list tool to track as many as 6 funds at a time. You’ll be able to see the price-per-share and changes of the fund over time. That way, you can track and monitor a fund’s performance before you decide to buy.

Start building your portfolio in 2023

If you’re ready to make the switch from a robo-advisor to a real investment management company, I highly recommend Vanguard.

Vanguard funds are accessible, low-cost, and easy to track and monitor. Whether you’re saving for retirement or hoping to grow your wealth in the next few years, the right Vanguard funds for you are out there.

It’s easier than you might think to start building your portfolio in 2023! Investing in a Vanguard fund today is a smart investment in your future.

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