10 Popular Vanguard Funds for Retirees
Updated on August 22, 2024 / 4 min read
Investments are one of the best ways to achieve financial freedom. But, as one grows old, one might want to avoid investing in volatile funds. Instead, one may look for more stable investment options that will eventually pay off. One of the most popular places to make these investments is with Vanguard. The company offers a wide range of choices for all users, which are also favored by those in retirement.
1. Vanguard Target Retirement 2050 Fund (VFIFX)
As a target-date fund, the VFIFX is often preferred by retirees. The VFIFX fund adjusts its allocation to stocks and bonds over time, growing more conservative as the target retirement date approaches. The target-date option has features such as four low-cost, broadly diversified index funds to gain exposure to global stocks and bonds. One can pick from several target retirement funds with target dates up to 2070. All one needs to do is pick the fund that aligns with the anticipated retirement year. Alternatively, if an investor has already retired, they could choose the Vanguard Target Retirement Income Fund (VTINX).
2. Vanguard Target Retirement 2060 Fund (VTTSX)
This fund type from Vanguard is affordable and easy to understand. The portfolio includes Vanguard’s broad market stock and bond index funds. The Vanguard Target Retirement 2060 Fund targets a five-year window – 2056 to 2060, which makes it appropriate for a more flexible retirement planning strategy.
3. Vanguard Core Bond Fund Investor Shares (VCORX)
Fixed-income funds like the Vanguard Core Bond Fund Investor Shares (VCORX) are stable and can also contribute to protecting one’s capital. The fund is primarily invested in a diversified portfolio of the federal government and government agency bonds and mortgage-backed securities, which range in maturity from short to long term.
4. Vanguard Dividend Appreciation Index Fund (VDADX)
Those in retirement could add the VDADX fund to their portfolio. In the case of pre-retirees, it may help with the long-term growth of an all-equity portfolio enhanced by reinvesting dividends. Those in retirement may benefit from the income stream of these dividends with added capital appreciation to manage inflation complications.
5. Vanguard LifeStrategy Growth Fund (VASGX)
This Vanguard fund is designed to maintain a fixed allocation in perpetuity. Its portfolio consists of 80% stocks and 20% bonds. This allocation makes it an aggressive fund ideal for those who wish to keep the money in for five years before making a withdrawal. VASGX is one of the most reliable and inexpensive investment options.
6. Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX)
This investment fund maintains an approximate 50-50 split between U.S. stocks and federally tax-exempt municipal bonds. Stocks picked in this portfolio help minimize taxable dividends. As a result, the after-tax return over the lifetime of the fund is about 7%. Moreover, it pays a 30-day SEC yield of 2.38%. The fund also features a low 0.09% expense ratio, but one might need to invest at least $10,000 to get started.
7. Vanguard Wellington Fund (VWELX)
About two-thirds of the VWELX fund is balanced and consists of stocks. The rest are bonds. Both of these asset classes are diversified intelligently within the fund. The Vanguard Wellington Fund’s longer-run returns are among the top options when it comes to balanced funds. It sits in a moderate allocation category, meaning it invests about 50% to 70% of the money into stocks. This is one of the best Vanguard funds for retirees, as it is neither too conservative nor aggressive.
8. Vanguard High-Yield Tax-Exempt Fund (VWAHX)
Investors looking for slightly more income could consider the Vanguard High-Yield Tax-Exempt Fund. It has the same tax-exempt approach by investing in municipal bonds but can go lower on the rating spectrum. Investors should note that about 20% of the portfolio might be in below-investment-grade bonds. While it may offer a high yield, investors, particularly those in retirement, should be aware of the potential risk, as it is more volatile and prone to default.
9. Vanguard International Core Stock Fund Investor Shares (VWICX)
The fund invests in companies from developed and emerging markets across all sectors. The fund managers choose a mix of growth and value stocks to balance the portfolio. Since it is an actively managed fund, it has a slightly higher expense ratio. About 45% of the portfolio is primarily invested in Europe, while the rest is split between the Pacific and emerging markets, with about 5% in North America. Investors who can put $50,000 into the VWICX fund could get a 0.1% discount on the fund’s admiral shares.
10. Vanguard Explorer Fund (VEXRX)
This fund focuses on smaller-cap stocks, making it a supplemental option for larger stocks. The Vanguard Explorer fund (VEXRX) has offered exceptional average annual returns over the past decade, making it the company’s top-performing diversified U.S. small-cap portfolio for investors, including those who are retired.
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