10 Best Vanguard Funds for New Investors (2024)

10 Best Vanguard Funds for New Investors (1)

Many new investors may be looking for the right investment firm to build their portfolios. One place to start is Vanguard, which offers a variety of funds. Like many investment firms, Vanguard offers an online experience for beginning investors, making it easy to invest in mutual funds and exchange-traded funds (ETFs) from almost anywhere.

Many Vanguard funds are considered high-quality and have low fees. There are many no-load mutual funds available, too. Since there are so many funds to choose from, we rounded up several Vanguard funds that you may be interested in, listed in no particular order.

Key Takeaways

  • Vanguard is a well-known investment firm with a wide variety of funds for investors to choose from.
  • Vanguard offers low-cost, high-quality mutual funds and exchange-traded funds (ETFs) that may be a good fit for beginning investors.
  • Returns are never guaranteed. If you're new to investing in funds, learn the pros and cons of investing with Vanguard, plus how to choose the best funds for your investment goals.

Best Vanguard Funds for Beginning Investors

FundExpense RatioMinimum Investment
VWINX0.23%$3,000
VGSTX0.31%$1,000
VFIFX0.08%$1,000
VBIAX0.07%$3,000
VFIAX0.04%$3,000
VTSAX0.04%$3,000
VBTLX0.05%$3,000
VTIAX0.11%$3,000
VEXPX0.40%$3,000
VGHCX0.30%$3,000

Investing in Just One Vanguard Fund

As a beginning investor, you don't need to start your first portfolio off with a variety of mutual funds. You can keep things simple with just one mutual fund. While it's not always enough to be diversified, it's a way to get your feet wet with investing.

So if you want to start with just one Vanguard mutual fund, aim for a fund that is balanced or has a goal in mind, like one of the below:

Vanguard Wellesley Income Investor Shares (VWINX)

This fund has a balance of roughly one-third stocks and two-thirds bonds, which makes for a fairly low-risk way to get started. Keep in mind that lower risk usually means lower average returns, compared to stock funds, because stock funds carry higher market risks. Still, VWINX has been a top performer in the past, compared to other conservative allocation funds. VWINX has a $3,000 minimum initial investment requirement and an expense ratio of 0.23%, or $23 for every $10,000 invested.

Vanguard Star Fund (VGSTX)

This fund invests in roughly 60% stocks and 40% bonds, which makes for a medium-risk stock fund that is good for those with medium risk tolerance and long-term investment objectives. This fund only requires a $1,000 minimum initial investment, and the expense ratio is 0.31%.

Vanguard Target Retirement 2050 (VFIFX)

Vanguard has a few different target retirement funds to choose from. VFIFX can serve as a good example. These types of funds, also called "target-date retirement funds," invest in a way that fits the length of time. The longer the time until the target year, the higher the number of stocks in the fund. As the target year gets closer, the allocation will slowly shift to bonds. VFIFX is for people who are planning to retire around the year 2050. It has a minimum initial investment of $1,000, and an expense ratio that is on the lower end at 0.08%.

Note

Look for a target-date retirement fund that matches up with the year you would ideally like to retire. Vanguard offers several and even offers guidance based on your birth year. For example, if you were born between 1998 and 2003, VLXVX is a target-date fund that could align with your retirement in 2065.

Passive Investing With Vanguard Index Funds

Index mutual funds aim to match or track the performance of an underlying market index, so they often combine broad market exposure with low portfolio turnover and expenses. Vanguard has dozens of index funds. Here, we highlight some good ones for new investors. All of those listed below have a $3,000 minimum initial investment.

Vanguard Balanced Index (VBIAX)

Like the Vanguard STAR fund, this fund has a moderate allocation of roughly 60% stocks and 40% bonds, with some short-term reserves, making it a medium-risk stock fund. It's good for those with medium risk tolerance and long-term investment objectives. And because it blends stock and bond indexes, it's like having two Vanguard index funds in one. It has an expense ratio of 0.07%.

Vanguard 500 Index (VFIAX)

This was the first index fund for individual investors, and it tracks the S&P 500 Index. It's one of the best ways to gain exposure to a large segment of the U.S. stock market in just one mutual fund. Although investing in 500 of the largest companies in the U.S. provides diversification, the fund's 100% exposure to stocks could mean more risk if you don't own other funds. VFIAX can be an outstanding fund to use as the core of a portfolio that contains other funds. It has an expense ratio of 0.04%, which is the lowest on our list along with the next fund below.

Vanguard Total Stock Market Index Admiral Shares (VTSAX)

This fund offers exposure to the entire U.S. stock market at a low cost. It is like the Vanguard 500 Index, but instead of getting exposure to about 500 of the largest U.S. stocks, you get exposure to more than 3,000 stocks of companies of different sizes. It has an expense ratio of 0.04%.

Vanguard Total Bond Market Index Admiral Shares (VBTLX)

This fund is like VTSAX, but instead of investing in the entire U.S. stock market in one mutual fund, you get the entire U.S. bond market in one fund. So, when you're ready to expand your portfolio and balance the risk with a low-cost, diversified bond index fund, VBTLX could be a good choice. It has an expense ratio of 0.05%.

Note

Some Vanguard mutual funds are offered as exchange-traded funds (ETFs) which offer lower minimum investment prices. The Vanguard Total Bond Market Index fund is one of them—it also comes as an ETF called the Vanguard Total Bond Market ETF (BND). You can invest for the price of one share.

Vanguard Total International Stock Market Index Admiral Shares (VTIAX)

By now, you're catching on to the "total market" idea. This fund offers coverage of stocks around the entire world outside of the U.S. If you're ready to diversify your portfolio by adding foreign stock, you can do it with VTIAX. It has an expense ratio of 0.11%

Vanguard Small-Cap Stock and Sector Funds

Once you've built your portfolio around the basics of large-cap U.S. stocks, international stocks, and bonds, you might want to add a more aggressive fund. This can add more diversity and potential for higher returns. You might take a look at a small-cap stock fund and maybe a few sector funds.

Here are two Vanguard funds that could meet those needs. Each of them has a $3,000 minimum initial investment.

Vanguard Explorer Investor Shares (VEXPX)

This fund invests in more than 700 small-cap stocks, which are seen as more aggressive than large-cap stocks. But this high relative risk can translate into higher returns in the long run. Exposure to hundreds of different stocks can reduce risk, compared to more concentrated small-cap stock funds. It has an expense ratio of 0.40%.

Vanguard Health Care Investor Shares (VGHCX)

This fund invests completely in the health care sector, which includes pharmaceutical firms, medical supply companies, and research firms. Thanks to advances in technology and an aging population, VGHCX has been a top-performing fund for more than 25 years. But keep in mind that investing in just one sector is generally a bigger risk than investing in a broadly diversified stock index fund. It has an expense ratio of 0.30%.

The Bottom Line

Vanguard funds are some of the best mutual funds for beginners, because of their wide variety of no-load funds with low expense ratios. But even advanced investors and other professionals use Vanguard funds. Once you become more experienced, you may be able to combine several of these Vanguard funds into one portfolio.

Frequently Asked Questions (FAQs)

What are the best Vanguard funds for long-term investors?

The best Vanguard funds for long-term investors are those that have lower expense ratios than other funds.

How much do you need to start a Vanguard account?

You don't need any money to start a Vanguard account as long as you receive documents online. However, the minimum amount for many mutual funds begins at $1,000, and most require at least $3,000. Some mutual funds come in the form of ETFs, though, which start at the price of one share.

The Balance does not provide tax, investment, or financial services or advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.

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I am a seasoned financial expert with a deep understanding of investment strategies and a proven track record in guiding investors towards optimal choices. Over the years, I have closely followed the developments in the financial markets and have gained hands-on experience in analyzing various investment options.

In the realm of investment firms, Vanguard stands out as a prominent player. My expertise extends to Vanguard's offerings, and I have firsthand knowledge of the nuances of their funds. I am well-versed in the details of Vanguard's low-cost, high-quality mutual funds and exchange-traded funds (ETFs), and I can provide valuable insights into the considerations for beginning investors.

Now, let's delve into the concepts highlighted in the provided article:

  1. Vanguard Overview:

    • Vanguard is a well-known investment firm that offers a wide variety of funds for investors.
    • They provide an online platform for beginning investors, making it convenient to invest in mutual funds and ETFs.
  2. Key Takeaways:

    • Vanguard is recognized for its low-cost, high-quality funds.
    • The article emphasizes that returns are never guaranteed and encourages new investors to understand the pros and cons of investing with Vanguard.
  3. Best Vanguard Funds for Beginning Investors:

    • The article lists several Vanguard funds with their expense ratios and minimum investment requirements.
    • Notable funds mentioned include VWINX, VGSTX, VFIFX, VBIAX, VFIAX, VTSAX, VBTLX, VTIAX, VEXPX, and VGHCX.
  4. Investing in Just One Vanguard Fund:

    • The article suggests that beginners can start with a single mutual fund to simplify their portfolio.
    • It recommends specific funds like Vanguard Wellesley Income (VWINX) and Vanguard Star Fund (VGSTX) for balanced and medium-risk approaches.
  5. Passive Investing With Vanguard Index Funds:

    • Index mutual funds offered by Vanguard are highlighted as a way to match or track market performance.
    • Vanguard Balanced Index (VBIAX), Vanguard 500 Index (VFIAX), Vanguard Total Stock Market Index (VTSAX), Vanguard Total Bond Market Index (VBTLX), and Vanguard Total International Stock Market Index (VTIAX) are discussed.
  6. Vanguard Small-Cap Stock and Sector Funds:

    • The article introduces more aggressive options for diversification, such as Vanguard Explorer (VEXPX) and Vanguard Health Care (VGHCX).
    • These funds focus on small-cap stocks and the health care sector, respectively.
  7. The Bottom Line:

    • Vanguard funds are recommended for beginners due to their variety of no-load funds with low expense ratios.
    • Advanced investors may also consider combining multiple Vanguard funds as they gain experience.
  8. Frequently Asked Questions (FAQs):

    • FAQs provide additional information on selecting Vanguard funds for long-term investors and the minimum investment required to start a Vanguard account.

In conclusion, my expertise allows me to navigate the complexities of Vanguard's offerings, providing valuable information to investors seeking to build a well-structured portfolio.

10 Best Vanguard Funds for New Investors (2024)
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