Fidelity Focused Stock (FTQGX) has been a very strong performer. Stephen DuFour has managed Fidelity...
Vanguard Trio for Novice Investors
09/15/2016 9:00 am EST
For novice investors getting started on the right foot is critical to your long-term success, notes David Fabian, money manager and editor of Flexible Growth & Income Report.
Decisions like choosing the right fund, knowing when to buy, and how much money to put into each basket may be difficult at first.
To aid in this effort, I have identified three funds that are perfect for investors who are just getting their feet wet in the stock and bond markets. Note, typical of Vanguard products, their expenses are very low.
Vanguard Wellington Fund Investor Shares (VWELX)
If you are looking for an all-around fund to use as a core holding, you can’t go wrong with VWELX. This is one of the oldest balanced funds in nation and has stood the test of time based on several attractive characteristics.
The strategy is to invest two-thirds of the portfolio (60-70%) in stocks with the remaining one-third (30-40%) in bonds. This approach creates a very diverse portfolio of assets spread across nearly all sectors of the economy.
As a Vanguard product, it should come as no surprise that the expenses of this fund are very low. VWELX charges a net expense ratio of 0.26% and currently has $92.3 billion in assets under management.
Lastly, the performance of this balanced fund has been near the top of its class for quite a while now. It lands in the top 5% of all comparable funds over the previous 10-year time period. Morningstar ranks this fund as 5-stars with a gold rating -- one of its most prestigious acknowledgements.
Vanguard Total Stock Market ETF (VTI)
Choosing individual stocks, sectors, or market caps can be a difficult journey. An easier solution is to simply own every stock in the US in a single, low-cost investment vehicle.
That is the simple concept behind VTI, an ETF that owns more than 3,600 publicly traded US companies. This gives you maximum diversification across the entire domestic stock market for a total annual expense of 0.05%.
This fund is often touted as one of the simplest and most convenient methods to gain stock exposure as a core holding. It is transparent, liquid, and highly tax-efficient as well.
Vanguard Total International Stock ETF (VXUS)
Accessing a portfolio of US stocks is likely to be a higher priority and larger position size than international stocks. However, there may also be a desire to enhance your diversification in foreign companies as well.
One simple vehicle to accomplish this task is VXUS. Using a similar concept as VTI, this fund owns a conglomeration of over 6,000 stocks outside the US in both developed and emerging market nations.
This ETF would be suitable to use in conjunction with VTI to encompass virtually every publicly traded company in the world. It also charges a very meager expense ratio of just 0.13%.
By David Fabian, Editor of Flexible Growth & Income Report
Related Articles on FUNDS
I think we’re finally seeing the bottom forming in MLPs, which is good news for JPMorgan Aleri...
When we recommended large-blend Parnassus Core Equity Fund (PRBLX) a year ago, what stood out most w...
On November 1, we featured Doug Hughes' recommendation for investment banking firm Oppenheimer Holdi...