Three Index Funds for Retirement Investment

April 19, 2019
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Index funds are popular for their broad market exposure and simple structures. They’re useful for creating income-based portfolios, with a lower level of risk when compared to trading individual equities. For retirees or anyone soon to retire, index funds make sense.

If you’re new to investing or if you simply want a low-fuss portfolio, Vanguard funds are worth considering. Vanguard manages more than $5.1 trillion in assets and is a trusted firm for investors at all levels.

Here are three funds that should be considered for any late-stage investment portfolio.

Vanguard Stock Admiral Index Fund (VTSAX)

The Admiral Index Fund from Vanguard is one of the most popular investment products for retirees. With a low expense ratio of 0.04%, it can cut the cost of high-exposure investment. The yield of 1.93% is just above the current S&P 500 average of 1.89%. The benefit here is that you can invest in a single index fund and gain exposure to some of the most profitable companies in the United States.

The largest holdings in this fund are Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), and Amazon (NASDAQ: AMZN). It’s more than just a tech fund. Johnson & Johnson (NYSE: JNJ), Berkshire Hathaway (NYSE: BRK.B), and Exxon Mobil Corp. (NYSE: XOM) are examples of other top holdings.

Vanguard Short-Term Admiral Index Fund (VFSUX)

This index fund focuses on short-term investments with high yields. A relatively young portfolio, the fund was first introduced in February of 2001. The current yield is 2.84%, which is notably higher than the average return on the S&P 500. It also provides a better return than most standard savings-based investment packages.

This fund is heavily weighted towards bonds, with 61% of holdings in corporate bonds, and 14.62% in treasury bonds. This is an excellent fund to gain note/bond exposure with lower risk when compared to privately managing a portfolio.

Vanguard Health Care Investor Index Fund (VGHCX)

Healthcare stocks have experienced a slight dip in the last week, but overall the sector is robust and able to withstand periods of market uncertainty. This fund is low yield, but its stability can offer peace of mind for retirees or investors who are preparing for retirement. The fund was opened in 1984 and has a current yield of 1.15%.

VGHCX is comprised of some of the most popular healthcare investments, with holdings including UnitedHealth Group (NYSE: UNH), Novartis (NYSE: NVS), and Merck & Co. (NYSE: MRK).

Index Funds Can Make Retirement Easier

Index funds cut out a lot of the ambiguity and confusion in stock market investing, while allowing you to leverage the skills of top investment firms. As with any investment, returns are not guaranteed, and due diligence is always necessary.

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