These are some of the best Vanguard funds to buy and hold, in no particular order. After reviewing the funds, learn more about the pros and cons, long-term investing, and choosing the right funds for your needs.
| FUND | EXPENSE RATIO | MINIMUM INVESTMENT |
|---|---|---|
| VTSAX | 0.04% | $3,000 |
| VWINX | 0.23% | $3,000 |
| VFIAX | 0.04% | $3,000 |
| VBTLX | 0.05% | $3,000 |
| VGSTX | 0.31% | $1,000 |
| VTIAX | 0.11% | $3,000 |
| VIGAX | 0.05% | $3,000 |
| VBIAX | 0.07% | $3,000 |
| VIMAX | 0.05% | $3,000 |
| Target Retirement Funds | Varies | Varies |
1. Vanguard Total Stock Market Index (VTSAX)
Vanguard’s VTSAX is a diversified stock index mutual fund. The fund provides exposure to the entire U.S. stock market, including small-, mid-, and large-cap stocks. This mix includes over 4,000 stocks. The expense ratio is 0.04%, or $4 for every $10,000 invested. The minimum initial investment is $3,000 for Admiral Shares.
2. Vanguard Wellesley Income (VWINX)
VWINX is a balanced fund from Vanguard. It holds a conservative (low-risk) allocation of about 40% stocks and 60% bonds. VWINX may be the right choice for long-term investors with a somewhat low tolerance for risk or retired investors looking for both income and growth. The expense ratio for VWINX is 0.23%. The minimum initial investment is $3,000.
3. Vanguard 500 Index (VFIAX)
This index fund tracks the S&P 500, so it holds about 500 of the largest U.S. stocks. VFIAX shareholders get exposure to stocks like Apple (AAPL), Meta (META), Amazon (AMZN), and Alphabet (GOOG, GOOGL), the parent company of Google.
VFIAX is a smart choice for building a portfolio that includes other stock funds, such as small- and mid-cap funds. The expense ratio for VFIAX is 0.04%. The minimum initial investment is $3,000.
4. Vanguard Total Bond Market Index (VBTLX)
Long-term investing is often associated with stocks, but most investors will need to have a portion of their portfolios invested in bonds.
VBTLX is a smart choice for the same reason as most other index funds. They’re well-diversified, and they’re low-cost. The VBTLX portfolio consists of more than 10,000 U.S. government and corporate bonds. The expense ratio for VBTLX is 0.05%. The minimum initial investment is $3,000.
5. Vanguard STAR Fund (VGSTX)
You may have noticed that you’ll need $3,000 to start investing in most Vanguard funds, but VGSTX has a lower minimum of just $1,000. It’s also known as a “fund of funds,” which means that it invests in other mutual funds, all in one fund option.
The STAR fund invests in a diversified mix of 10 Vanguard funds, making it a solid option for beginning investors or those who want a single-fund solution. The expense ratio is 0.31%, but Vanguard claims that funds with similar holdings have an average expense ratio of 0.84%, making its fund cheaper.
6. Vanguard Total International Stock Market Index (VTIAX)
Most investors will include international stock funds to build a complete long-term portfolio. VTIAX is one of the best Vanguard funds for this purpose.
VTIAX tracks an index that includes almost 8,000 non-U.S. stocks. It includes both developed and emerging markets. Shareholders can gain exposure to the entire stock market outside the U.S. for an expense ratio of 0.11%. The minimum initial investment is $3,000.
7. Vanguard Growth Index (VIGAX)
Investors who are willing to take more risk in exchange for higher returns than the broad market indexes can take a look at VIGAX. This index fund holds large-cap growth stocks that have historically outperformed the S&P 500, especially for periods of 10 years or more. Expenses for VIGAX are 0.05%. The minimum initial investment is $3,000.
8. Vanguard Balanced Index (VBIAX)
Vanguard has a small but very nice selection of balanced funds—mutual funds or ETFs that invest in stocks and bonds. VBINX has a moderate (medium risk) allocation of about 60% stocks and 40% bonds. The stock portion invests in a total stock index. The bond portion invests in a total bond index. The expenses are 0.07%. The minimum initial investment is $3,000.
9. Vanguard Mid-Cap Index (VIMAX)
Historically, small- and mid-cap stocks have performed better than large-cap stocks in the long run, but mid-cap stocks can be the wisest choice of the three. Although mid-cap stocks generally have a higher market risk, they typically have a lower risk than small caps.
Investors often consider mid-caps to be the sweet spot of investing, because of their returns in relation to risk. VIMAX has a low expense ratio of 0.05%. The minimum initial investment is $3,000.
10. Vanguard Target Retirement Funds
There are several Vanguard Target Retirement Funds to choose from. Some investors are wise to consider this unique investment type. As the name suggests, the strategy of these funds is geared toward the target retirement year that is specific to the fund.
For example, Vanguard Target Retirement 2040 (VFORX) has an asset allocation of about 80% stocks and 20% bonds across four Vanguard funds, which is about right for an investor who will be retiring near the year 2040. It has an expense ratio of 0.08% and a minimum investment of $1,000.17 If you’re not retiring until close to 2065, the Vanguard Target Retirement 2065 (VLXVX) may be a better fit. It is made up of four other Vanguard funds, with an expense ratio of 0.08% and a minimum investment of $1,000.
Pros and Cons of Vanguard Funds
There are some pros and cons when it comes to investing in mutual funds from Vanguard, but this is the case with any mutual fund company.
Pros
- Low-cost funds with the ability to replicate the performance of a particular market index
- Bond funds and international stock funds can provide good diversification
- Many mutual funds are also available as an ETF with a lower minimum investment required
Cons
- Long-term investment funds mean leaving your money in the account for years
- Large number of funds means you’ll have to do more research
- Many funds require a minimum investment of $3,000