10 Best Vanguard Funds To Hold for Long-Term Investing (2024)

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.

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.

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.

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.

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.

Vanguard Total International Stock Market Index(VTIAX)

Most investors will includeinternational 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.

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.

Vanguard Balanced Index(VBIAX)

Vanguard has a small but very nice selection ofbalanced 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.

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.

Vanguard Target Retirement Funds

There are severalVanguard Target Retirement Fundsto 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 Retirement2040 (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. If you're not retiring until close to 2065, the Vanguard Target Retirement2065 (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.

Are You a Long-Term Investor?

Decide whether you're a long-term investor before buying Vanguard funds.

You could hear 10 different explanations about what "long-term" means if you talk with 10 different financial planners. You'd be long-term if you have at least 10 years before you'd need to begin withdrawing from your accounts. This also holds true forlong-term bonds and long-term bond funds.

Retired investors may make the common mistake of thinking of themselves as "short-term" investors. They might be making withdrawals to bolster their retirement income, but they may easily have a life expectancy of at least 10 more years. The average life expectancy in the U.S. is 77 years.

You'd still have 12 years to invest if you were to retire at age 65 and live until you were 77. Depending on your sources of income and your overall financial picture, you'll need to invest at least a portion of your retirement assets in long-term investments, which can include stock mutual funds.

Choosing the Right Funds for Your Needs

The best long-term investments generally consist of stock mutual funds, especially index funds.

Index funds also make smart choices for long-term investing. Vanguard'sindex fundsare among the top choices for long-term investors. They've attracted such a large amount of assets thatVanguard has become the largest mutual fund company in the world.

Vanguard index funds make smart choices for long-term investingbecause index funds are passively managed. They have lowerexpense ratiosthanactively managed funds. They also offer a long-term edge for performance, because their expense ratios are so low. This happens because most active fund managers don't beat the major market indexes for periods longer than 10 years.

You might as well invest in funds that match the market at a lower cost rather than try to beat the market. Beating the market is very hard to do consistently over the long run.

Frequently Asked Questions (FAQs)

The Balance does not provide tax, investment, or financial services and advice. The information is being presented withoutconsideration of the investment objectives, risk tolerance, or financial circ*mstances 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.