Best Vanguard Funds To Invest In

Posted on by Ryan

Which Index (and Other) Funds Should I Invest In?

Index mutual funds are a sound long-term investment

If you’ve read any of my material you know I’m a huge proponent of index mutual funds. The specific reasons on why I believe investing in index mutual funds is a sound investment strategy is a topic for other articles. This article is less about the “why” of index mutual fund investing and is more about the “what,” or what specific index mutual funds should you consider investing in. Finding the best vanguards funds for retirement will vary depending on your current age, retirement age and goals.

Vanguard is the flagship index mutual fund company

Below I recommend several Vanguard index (and other) mutual funds for you to consider. But why Vanguard? The Vanguard Group, better known as “Vanguard,” is a U.S.-based investment management company. Like other investment brokerage firms it sells many financial products and services, but what I’m going to focus on here is some of their index mutual fund offerings. But again, why Vanguard? Aren’t there other investment companies that offer index mutual funds as well? The answer is yes, but Vanguard is a solid option because of the following:

Founded in 1975, it is a stable, well-run firm.
It has a wide offering of index mutual funds to choose from.
- Target Date, Emerging Markets, Growth Stock, Large Gap, S&P 500 Index, ect.
The expense ratios to invest in Vanguard index funds are very, VERY low – some of the very best in the industry.
You can conveniently manage your investments using Vanguard’s well-organized website (https://www.vanguard.com).

Specific Index Mutual Funds to Consider

Whether you have $10,000 or $10,000,000, following are specific mutual funds for you to consider investing in. Now lets look at some of the best Vanguard funds out there.

Vanguard Prime Money Market Account (VMMXX)

The Vanguard Prime Money Market Account is invested in conservative, short-term, high-quality securities. It’s an excellent place to save money that you want to be safe and yet still earn a competitive interest rate.[1] Unlike a CD, a money market account is liquid; you can write checks against it and you can also connect it to your bank account to wire money to and from it.

Click Prime Money Market Account for an overview.

Vanguard 500 Index Fund (VFINX)

The Vanguard 500 Index Fund is the granddaddy of them all, the very first index fund for individual investors. This fund is invested in companies comprising the S&P 500, one of the most followed stock market indices in the world. Investing in this fund gives you broad exposure to 500 large, U.S.-based multinationals that are selected to be representative of the U.S. economy as a whole. Consider this fund a workhorse, a common holding of most anyone who invests in index mutual funds.

Click Vanguard 500 Index Fund for an overview.

Vanguard Small Cap Growth Index Fund (VISGX)

The Vanguard Small Cap Growth Index Fund is designed to track the S&P Small-Cap 600 Index. So while the 500 Index Fund invests in larger, more established companies, this index fund gives you investment exposure to that next strata of companies – those that are smaller, leaner, and up and coming. This fund can also provide good balance to the 500 Index Fund because smaller companies tend to perform differently than larger companies during various economic cycles, and being diversified in such a way can make your overall investment portfolio more durable.

Click Vanguard Small Cap Growth Index Fund for an overview.

Vanguard Total International Stock Index Fund (VGTSX)

The global economy doesn’t just revolve around the U.S., and Total International Stock Index Fund gives you the opportunity diversify geographically by enabling you to invest in large, non-U.S. companies based around the world. For example, this fund has holdings in Nestle SA, Toyota Corp., Vodafone Group plc, and literally thousands of other non-U.S. companies.

Click Vanguard Total International Stock Index Fund for an overview.

Vanguard REIT Index Fund (VGISX)

A “REIT” is a real estate investment trust, a corporation that qualifies for favorable tax status as long as it follows certain rules, one of which is that its assets must be concentrated in real estate. Thus REITs hold properties such as apartments, shopping malls, hotels, office parks, etc. Thus the REIT Index Fund gives individual investors a cost-effective way to invest in a widely diversified portfolio of professionally managed commercial real estate.

Click Vanguard REIT Index Fund for an overview.

Vanguard Energy Fund (VGENX)

Energy is a vital element of the global economy. The Vanguard Energy Fund invests the bulk of its assets in companies engaged in the production and transmission of core energies such as oil, natural gas and coal. It also has some investments in companies engaged in energy research and conservation. An investment in energy can add a nice element of diversification to your portfolio because energy-related investments have the potential to go up even as the broader economy struggles. However, while energy investments can do well, they can also be quite volatile, so they’re not for the faint of heart. Finally, it’s also important to note that the Energy Fund is NOT actually an index fund, but since it can provide a good element of investment diversification and because its management expenses are very low I included it on the list.

Click Vanguard Energy Fund for an overview.

Vanguard Precious Metals and Mining Fund (VGPMX)

While I am not personally a fan of precious metals, for the sake of completeness I did want to point out this relatively safe and inexpensive way to invest in them (but see my definition of “safe” in the footnote below).[2] Note that this fund does not invest directly in precious metals themselves, but in companies involved in the exploration and extraction of them. Vanguard bills this as an investment that would be “complementary to an already diversified portfolio with a long-term time horizon.”

Click Vanguard Precious Metals and Mining Fund for an overview.

Short-Term Bond Index Fund (VBISX)

The Short-Term Bond Index Fund holds a diversified mix of investment-grade debt with maturities from 1-5 years. This fund is passively managed to follow a common bond index by using a passively managed sampling approach. The Short-Term Bond Index Fund is an outstanding alternative to traditional 3 month to 5 year bank CDs because it can easily be sold without penalty and because it’s invested in hundreds of underlying debt securities as opposed to just 1 CD at 1 interest rate at 1 bank!

Click Short-Term Bond Index Fund for an overview.

Total Bond Market Index Fund (VBMFX)

The Total Bond Market Index Fund is, in my view, not quite what the name implies. Rather than include a sample of ALL bonds, this fund’s holdings are concentrated in debt securities that range between 5-10 years. As with the Short-Term Bond Index Fund, this fund employs a passively managed sampling approach, and it’s invested in a wide rage of government, corporate, and international dollar-denominated assets in an effort to track a commonly followed bond index (related to, but different than the bond index the Short-Term Bond Index Fund is designed to track).

Click Total Bond Market Index Fund for an overview.

Other Vanguard Mutual Funds

If you don’t find the list above to be comprehensive enough or if you simply want to see the full range of the best Vanguard funds, then check out: https://investor.vanguard.com/mutual-funds/list?sort=name&sortorder=asc#/mutual-funds/asset-class/month-end-returns

Which of the above index mutual funds should I invest in?

My purpose in providing the list above is not to tell exactly which index mutual funds to invest in and what percentage you should hold of each, because I do not believe there is some “magic formula” that works for ALL people in ALL situations. Instead, my goal is to provide you with solid investment choices that you can use as a baseline as you determine what your own investment strategy should be. Said another way, if all that you ever do is invest in a balanced mix of the above mutual funds according to an allocation you feel comfortable with (meaning X% in this fund, Y% in that fund, etc.) in the context of your particular goals, circumstances, preferences, risk tolerance, and personality then you’re doing what’s right for you. It really doesn’t have to be any more complicated than that. So make your investment choices, let your money start working for you, and then get on with the rest of your life!

What if my company’s retirement plan doesn’t offer Vanguard mutual funds?

Vanguard funds may not even be offered as choices in your company’s retirement plan (e.g., your 401k plan), and even if some are then it’s probably not going to be all of the ones you would be interested in. So then what do you do? Fortunately the management expenses in mutual funds offered by retirement plans usually much lower than the rates you could get on your own, so just pick investments that come as close as possible to what you’re looking for. For example, you may really like the idea of putting some of your money in the Vanguard Small Cap Growth Index Fund, but if it’s not an investment choice then it’s likely your retirement plan offers another fund that would enable you to invest in smaller companies.

Should you invest in anything else BUT Vanguard’s index mutual funds?

Thinking beyond your company’s retirement plan, of course there are other investment options aside from Vanguard’s index mutual funds. You could choose to invest from among hundreds of actively managed mutual funds, ETFs, raw land, rental real estate, individual stocks, gold, covered calls, etc. So the question isn’t CAN you invest in things other than Vanguard’s index mutual funds, but SHOULD you do so? The short answer is that if you’ve got an opportunity to invest in something that you know is comfortably below market value (meaning you’re almost sure you’ll make a profit) then it’s worth considering. Examples might include discounted company stock or stock options, land purchased at a discount from a friend or relative, or something along those lines.[3] However, if you’ve got no such obvious “can’t miss” investment opportunities then, again, if all you did was build a portfolio with a sensible mix of Vanguard’s index mutual funds then that alone would be a good, solid, long-term investment strategy.[4]

[1] Note that while this money market account is not FDIC insured, it is still considered to be quite safe.

[2] Note that “safe” in this context does not mean this investment is without risk. What I do mean is that owning a publicly traded and marketable security is vastly more secure than having some gold coins stuffed under your mattress (or even in your safe deposit box!).

[3] Note that I am NOT talking here about gimmicky, “click here or call this number and I’ll tell you the secrets of getting rich using my ‘secret’ method” schemes. No, I am talking about straightforward, real investment opportunities that you can understand up front before committing any money.

[4] This article does NOT constitute investment advice. See the site’s legal disclaimer here.

Leasing Vs Buying A Car Pros And Cons

Posted on by Ryan

When it comes to their money, some people do inexplicable things. I came across an appalling figure the other day. The average length of a car loan today is 70 months – nearly six years! Now couple that stat with the fact that, on average, people only keep their cars three to five years. If you do that, it doesn’t take a calculator to figure out you’re digging yourself into a hole. You can read about tips to save money on your car. Now lets look at leasing vs buying a car pros and cons.

Upside Down With Car Payment

Being ‘upside down’ is the term used to describe when you owe more on something than it’s actually worth. When you’re talking about cars, it can happen surprising easily.

As a rule, new cars immediately lose value as soon as they’re driven off the lot. It takes several months or even a year of payments to owe less than the resale value of the car. For that period of time, you’re upside down. The longer your loan term, the longer it takes to get to the break-even point.

So it seems that what more and more new car buyers are doing is not entirely paying for a car before they turn around and sell it. Then they buy another car and roll the old loan balance into the new loan. After a few cycles of this, you’re driving a Chevy with a Mercedes-size loan.

The Numbers

To put numbers to the point, let’s say you want to buy this nice new Toyota Camry with a loan of $25,000. If you finance for five years at 5.09% (what my bank offers), you’ll be paying $3,369 in interest over the life of the loan. If your loan term is three years, total interest is $2,789. Financing for the longer term nearly doubles the interest you pay.

If you decide to trade in that car after four years, you still owe over $5,520 on the loan. No problem – just roll that into the loan for your new car.

Do this a couple of times and you’ll quickly be driving a car worth half what you owe on it.

Lease Instead

Since evidently a great many people are doing just that, it seems they should be leasing instead of buying. At least at the end of a lease you don’t owe any money (assuming you fulfill the terms of the lease). Not only that but you’ll be able to afford more car than you would by buying outright.

Like I said, people do unbelievable things when it comes to money.

Saving Money For Travel Tips

Posted on by Ryan

Many families take a vacation as a reward for working hard and making it through the preceding months. Vacations create unique memories that everyone will share for years to come. Coming up with the money for a trip is not always easy. There are five budgeting tips that any family can use when saving money for travel.

1. Create A Savings Account

Creating a separate savings account for vacation money will help in a number of ways. It allows families to see the actual amount of money saved without having to deduct current expenses. A separate account also makes it harder to access the savings. This reduces the chances that it will be used for an impulse purchase. A dedicated savings account is useful because it is safe and separate from the main accounts used every day. Fees or other charges on a checking account will not affect the vacation savings.

2. Temporarily Eliminate Extras

A vacation is a time to relax and to have fun. One way to save money for a trip is to reduce the extra services in a home temporarily. Sacrificing a little entertainment or fun while saving will make the vacation much more enjoyable. Some extra services that could be cancelled include premium cable channels, housekeeping and expensive cell phone perks that do not affect service. These services can be reactivated after the vacation. The money from the cancelled services can be put directly into the savings account each week or month.

3. Lower Credit Card Payments

One way to help save money is to try to lower credit card payments before the vacation. Lowering interest rates will reduce monthly spending on bills. Credit card companies will sometimes lower rates for good customers who call and negotiate. This is not always possible for people with credit problems. A reputable credit repair service can often fix credit history problems quickly. This can make it possible to negotiate with a credit card company for lower rates.

4. Reduce Vacation Costs

An alternate way to help save money for a vacation is to lower the cost of the trip. This will make each dollar saved more valuable. Reducing the cost of a vacation can take some work. It is helpful to check regularly if there are new deals or discounts available. Finding less expensive hotel rooms or airfare will make it easier to save and will give the family more spending money once the vacation starts.

5. Create And Follow A Budget

The most effective way to save money for a vacation is to create a budget and then follow it as closely as possible. The budget should account for food, gas and other spending. Unnecessary expenses like eating out should be removed from the budget. All members of the family should resist spending money that is not listed in the budget. A good budget will predict exactly how much can be saved each week. It also shows expenses that could be reduced.

Hulu Or Netflix: Which One Is More Worth Your Dollars?

Posted on by Ryan

Most consumers used to just sign up for cable without thinking about the alternatives, but the era of cable bundles may be coming to an end soon. Many people are finding that they would rather watch television online using their mobile devices as well as their gaming consoles and computers for a flat-rate that is much lower than cable. Read more on ways to save money this summer.

So Hulu or Netflix? Well, netflix currently has about ten times as many subscribers as Hulu, but their service has also been around much longer. Netflix has pledged to spend five billion dollars on acquiring new content throughout the next five years. They will be focusing on acquiring all of the most popular movies and television shows.

Hulu is owned by ABC, NBC and FOX. They currently offer customers the current season of shows from these networks for streaming. In addition to their large selection of television offerings, Hulu is currently experimenting with the addition of movie titles.

Hulu & Netflix – Accessibility and Content

Hulu or Netflix can both be streamed on many different devices, including smartphones, tablets, gaming consoles and Blu-Ray players. They both allow customers to stream content over mobile broadband 4G and 3G networks.

Netflix is currently stocked with about 100,000 streaming options and their movie collection is constantly growing. They offer a variety of television shows, however most of the shows they offer have been cancelled. Their options for current television series usually don’t include the current season.

Hulu offers many current television shows and most current episodes are available the day after they air on television. Most people who watch Glee and other current television shows opt to subscribe to Hulu. The have shows from many networks, including ABC, BBC America, FOX, The CW and USA. The movie selection at Hulu is sparse, but their selection of television shows is excellent.

Hulu and Netflix Users Watching Habits

Pricing for Hulu and Netflix

Netflix streaming costs just $7.99 per month for unlimited streaming of any of the content on their site on any supported device.

Hulu offers customers many shows for free at Hulu.com, but these shows are interrupted by substantial advertisements. Customers can choose to subscribe to Hulu Plus, which costs $7.99 per month and allows customers the ability to download mobile apps and access Hulu content through gaming consoles. The amount of ads is substantially reduced for Hulu Plus customers, but a few ads still appear during streaming.

The Bottom Line On Hulu or Netflix

Many people who get rid of cable spend $15.98 per month to subscribe to both Netflix and Hulu. This gives you the best of both worlds, with a variety of movies and television shows available for streaming at any time. Netflix is generally the best option for customers who want to keep their cable bundle while giving themselves the option of instant streaming and more movie choices.

First Time Home Buyer Guide

Posted on by Ryan

5 Things to do Before Moving into Your First Family Home

When a couple moves into their first family home, they want to make sure everything goes as smoothly as possible. As such, here are five things every potential homeowner should do before moving into their first family home. This first time home buyer guide should not only be used for your first home, but any additional homes you may purchase down the road.

1. Secure A Great Mortgage

Every applicant has a certain style of mortgage that is right for them. For instance, veterans can take advantage of A VA hybrid loan, or can research a VA hybrid review to see if this type of loan is right for them. Many first time home buyers take advantage of mortgages that cater to their budgets and needs. Still others look for a larger mortgage that can be paid off in less than 30 years. Every person has a different type of mortgage that works best for their needs, and they should know the varieties available before they settle on one.

2. Have The Home Inspected And Evaluated

A professional inspection and evaluation may cost potential homeowners a little bit of money, but it’s worth every penny for the peace of mind in the end. An inspection can detect areas of concern that can affect the value of a home, including rotting wood, unauthorized additions, and even a sinking foundation. An evaluation of the home lets potential homeowners know what their new home is actually worth so they can better bargain price at closing.

3. Know The Neighborhood

Along with knowing the safety and value of a home, a couple wishing to buy their first family home should learn about the neighborhood as well. Knowing crime rates, actual neighbors, proximity to schools and parks, and other things that can affect children is something every person should know about any home they are interested in.

4. Choose A Home A Family Can Continue Growing In

Many couples choose a home with only a few bedrooms, only anticipating the immediate future. If homeowners choose a home they can see themselves living in for 15 years or more, they are more likely to go with a home they can have several children in for the entirety of their childhoods.

5. Stay Within Budget

As a general rule, new homeowners should stay within their income level when buying a home. If a home exceeds more than twice a family’s annual income, they should seriously consider the affordability of their new home. In choosing a real budget right away, new family homeowners can keep themselves from drowning in debt from a house they cannot really afford.