Source: Vanguard Group.
Bonds and fixed-income investments
Vanguard doesn't just have stock index funds. Its Total Bond Market Index Fund offers complete exposure to bonds of all types, including Treasury bonds, corporate bonds, mortgage-backed securities, and even some foreign bonds. Yields have been low due to the poor interest rate environment, but with an expense ratio of just 0.2%, investors keep as much as possible of their meager income.
Vanguard also offers a fund that specializes in real estate investment trusts. REITs have grown popular because they pay high amounts of dividends, and the Vanguard REIT Index Fund has become popular in part because of its returns of nearly 8.5% per year since the end of 2004. Expenses come in at just 0.24% per year, and the fund offers REITs of all kinds, including those focusing onretail, residential, healthcare, and commercial-office properties.
Looking to retire
Finally, Vanguard provides a series of target retirement funds, with specific offerings targeted at five-year intervals all the way out to the year 2060. These funds cost between 0.16% and 0.18% per year, and they include a basket of Vanguard index funds that becomes less aggressive as you draw closer to the end of the defined time horizon. The target retirement fund concept avoids the need to update your portfolio on your own, letting the fund itself handle changing risk exposure as you approach the time when you'll need to draw on your money in retirement.
Vanguard isn't the only choice for index funds, but many investors rely on the company as a leader in the index-fund space. These funds are a good place for any beginning investor to learn more about investing in general.
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