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subscribe and click the bell notification. Let's talk about the best Vanguard funds for 2019
We're going to have some assumptions here. The first assumption is you're basically looking to simplify investing
You might not have the time or desire to select individual stocks
My personal opinion is selecting individual stocks, if that's what interests you, that's
likely to lead to better overall returns for many individuals that put in the time and
effort to learn how to do it properly. If you're looking for more of a hands-off approach, which many people are, you have
kids, you have a full-time job, maybe a full-time and part-time job, and you just don't have
the time to spend to adequately research stocks, then investigating low-cost ETF index funds
or mutual funds may be the best approach for you. With these Vanguard funds, the goal here is to keep fees low, have a long-term mindset
and again, make sure you talk with an investment advisor. I'm not an investment advisor, so this isn't financial advice
This is just something for you to consider when you do have that discussion with your
financial advisor. You can adjust this approach for your own risk tolerance and investment goals
This is something that your investment advisor should discuss with you. The first fund I'm going to talk about is the Vanguard Total World Stock ETF
This fund is basically, again, creating a relatively hands-off portfolio. The Vanguard Total World Stock ETF fund, symbol VT, it gives you two things
It gives you basically stock exposure that covers the whole world. Many ETFs will cover mostly US stocks, and then you would need something else to cover
the rest of the world. As you can see here, the portfolio composition of the Vanguard Total World Stock fund is
basically, there's a large portion that is North America, so 58%, but it also covers
Europe, the Pacific, Middle East, and some emerging markets. You get a wide swath of diversification across the world
Having a portfolio composition that encompasses the globe, basically different countries perform
well at different times. Sometimes they do poorly at the same time, but generally speaking, when you look over
history, there are times where stocks across the world do better than US stocks, and again
there's times where the US stock market does better than the world market as a whole
This gets you both of those, and you can catch when one is doing better than the other
You have that covered. It just simplifies things, basically. We're looking at performance here
The 10-year average for the Total World Stock Index is 8.5%. Since inception, it is 6.46%
That's nothing great, but again, the US stock market has been flying where the global stock
market hasn't been doing as well in recent history. Again, that impacts the stock, but again, you're getting exposure to both of those
Another benefit is there's a low overall expense ratio of 0.10%. This is 91% lower than similar funds
Again, Vanguard generally has lower fees, so this is a great option for those individuals
that are looking for lower fees, because again, that basically adds to your bottom line when
you pay less fees. The fund also covers 8,000 stocks, and it has a 2.34% dividend yield
That's a fairly decent dividend yield when it comes to ETF funds
The second fund we're going to cover here is the Vanguard Total Bond Market ETF fund
Generally it's accepted that everybody invested in stocks have some type of bond exposure
There are different levels and percentages of exposure that you may want to have based
on things like your risk tolerance, your age, things like that. Make sure you consult a financial professional to determine what percentage of your portfolio
should be allocated to a bond fund or bond ETF in this case
The Vanguard Total Bond Market ETF, it covers, as you can see here, the composition is over
50%, 65% U.S. government bonds. It also has bonds of different risk ratings, from AAA, which is less risky, to BAA bonds
that are more risky. There's a 14.7% allocation to that. From a performance perspective, since inception this bond fund has returned 3.75%, which again
bonds are more to help stabilize the up and downs of your portfolio and also provide some
income exposure. Again, touching on some of the benefits of this fund is you get broad exposure to U.S
government grade bonds, you get a reliable income stream and it diversifies some of the
risk of being in an all stock portfolio. As you know, right now we're going through a period of volatility in late December 2018
where the stock market is from day to day, it's swinging up and down
Having exposure to bonds helps cushion or smooth this swinging somewhat. When you're deciding on a portfolio composition, if you're older, generally the recommended
position there is to have more exposure to bonds. This will provide more income, generally, over an all stock portfolio and again, it'll
also smooth out some of the volatility that can be experienced if you have a 100% equity portfolio
This next slot here, it's kind of like the wild card slot
In my personal retirement portfolio, I like having some exposure to real estate so I added
the Vanguard Real Estate ETF, symbol VNQ. As you can see here, there's basically every kind of REIT or Real Estate Investment Trust
that is presented to us in the market. You got everything from diversified real estate activities to healthcare REITs to hotel and
resort REITs to residential REITs. It covers all different kinds of REITs and basically how I look at this slot is if you
want exposure to real estate, add a REIT fund here. If you want an exposure to say natural resources, you can add a natural resource fund here
You may have another slot on top of this one and have exposure to REITs as well as a natural
resource fund. This is that slot that is not just part of the total world stock market index fund where
there's all kind of different equities and it's not part of a bond market fund
My personal portfolio, I like having the income that REITs present. As you can see here, the VNQ has around a 4.23% yield
That provides a decent income stream of a yield that you're not going to get with the
total world stock market index fund. With that said, moving on to the next slide here, there's adjustments you can make to
this portfolio. This is kind of the core portfolio of somebody who wants hands off, low fee funds
My personal portfolio, my personal retirement portfolio is set up pretty much like this
In my employer's retirement fund, I can't invest in individual stocks or else I probably would
I have funds that are outside of my retirement accounts that are in individual stocks
Like I said, I prefer that. Some potential adjustments you can make here is if you're a younger individual, you may
not want to have bond exposure. That's something you have to discuss with your significant other, with your financial
professionals, decide if that's right for you. You may not want global stock exposure, so you may get rid of the total world stock market
ETF and you may want something like a Vanguard S&P 500 or a Vanguard growth ETF, something
like that, that doesn't have exposure to the whole world. Basically, this is just kind of a simple portfolio, something to consider
It's not the only one by far. It's not necessarily going to have the best returns
Again, this is a long term mindset, low fees, decent income, kind of cover all your bases
and keep it simple. I hope you enjoyed the video. If you have any questions, post them in the comments below
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