Basics of Investing

Question: Which Vanguard fund is best for investment?

Answer: The only way to tell which is the best is 5 years from now looking back. There is no other way to know. A good strategy is to invest in various sectors of the market. Some in foreign developed markets, some in developing markets, some in large cap, some in small cap, some in mid cap, and some in a cash reserve. Unfortunately, Vanguard and as far as I know no other mutual fund companies have just one fund that has such a diverse mix of investments. One must instead purchase somewhere between 6 and 10 different mutual funds or index funds.

Now if you had asked which Vanguard fund was the best investment 5 years ago, I can answer that question. It was VGPMX with an annual return of 30.85%. Not bad at all. Who knows what the next 5 years might bring?

Couples and finances: First comes love, then comes reality – Vanguard

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