Is Vanguard S&P 500 index fund a good investment?
The Vanguard S&P 500 ETF (VOO 0.59%) is one of the largest investment vehicles in the world, and many investors consider it to be a backbone of their long-term investment strategy.
Year | Capital return by NAV | Total return by NAV |
---|---|---|
2021 | 26.91% | 28.66% |
2020 | 16.24% | 18.35% |
2019 | 28.82% | 31.46% |
2018 | -6.23% | -4.42% |
Index fund | Minimum investment | Expense ratio |
---|---|---|
Schwab S&P 500 Index Fund (SWPPX) | No minimum. | 0.02%. |
Fidelity Zero Large Cap Index (FNILX) | No minimum. | 0.0%. |
Fidelity 500 Index Fund (FXAIX) | No minimum. | 0.015%. |
T. Rowe Price Equity Index 500 Fund (PREIX) | $2,500. | 0.19%. |
Ticker | Index fund | Expense ratio |
---|---|---|
VFIAX | Vanguard 500 Index Fund Admiral Shares | 0.04% |
VTSAX | Vanguard Total Stock Market Index Fund Admiral Shares | 0.04% |
VIGAX | Vanguard Growth Index Fund Admiral Shares | 0.05% |
VSMAX | Vanguard Small-Cap Index Fund Admiral Shares | 0.05% |
The Vanguard 500 Index Fund Admiral Class (VFIAX) and the SPDR S&P 500 ETF (SPY) are similar investment products. Both track the S&P 500, a U.S. stock index comprising 500 companies with the largest market capitalizations. Both funds have expense ratios significantly lower than those of the average fund.
Month-end | 5 YEAR | |
---|---|---|
VFIAX | 2.13% | 15.93% |
Benchmark S&P 500 Index 2 | 2.14% | 15.98% |
+/- Benchmark The difference in a fund's non-fee adjusted return versus an identified benchmark or peer group. | -0.01% | -0.05% |
Average annual returns as of 09/30/2024 1 | ||
---|---|---|
Sort table ascending by Fund name | Sort table descending by Symbol | Sort table descending by 1 yr |
Consumer Discretionary Index Fund Admiral Shares | VCDAX | 27.51% |
Consumer Staples Index Fund Admiral Shares | VCSAX | 22.91% |
Core Bond Fund Admiral Shares | VCOBX | 12.09% |
They're a low-cost way to gain exposure to the performance of U.S. large-cap stocks. Is the S&P 500 a good investment for beginners? The S&P 500 is attractive due to its low fees and simplicity. It's a straightforward way to gain exposure to some of the largest and successful U.S. companies.
For new investors, the best way is through an ETF or mutual fund. While there are some differences between the two that we'll explain below, funds are a low-cost way to gain exposure to the S&P 500 and provide instant diversification to your portfolio.
Fund | 2023 performance (%) | 3yr performance (%) |
---|---|---|
MS INVF US Insight | 52.26 | -47.18 |
Sands Capital US Select Growth Fund | 51.3 | -20.88 |
Natixis Loomis Sayles US Growth Equity | 49.56 | 26.07 |
T. Rowe Price US Blue Chip Equity | 49.54 | 5.81 |
How much money do I need to invest in Vanguard Index Funds?
$3,000 for most actively managed funds. Most Vanguard index funds no longer offer Investor Shares to new investors. For the few that do, most have $3,000 minimums. $3,000 for most index funds.
- Vanguard Target Retirement 2050 Fund (VFIFX)
- Vanguard LifeStrategy Growth Fund (VASGX)
- Vanguard 500 Index Admiral Shares (VFIAX)
- Vanguard Intermediate-Term Bond Index Admiral Shares (VBILX)
- Vanguard High-Yield Tax-Exempt Fund (VWAHX)
- Vanguard International Core Stock Fund Investor Shares (VWICX)
Nonetheless, overall Vanguard is an excellent choice for long-term and retirement investors—especially those who want access to professional advice and some of the lowest-cost funds in the industry.
The goal of the Vanguard S&P 500 ETF is to track the returns of the S&P 500 index. VOO appeals to investors because it's well-diversified and made up of equities of large corporations—called large-cap stocks.
- Sign up for a brokerage account on Public. It's easy to get started.
- Add funds to your Public account. ...
- Choose how much you'd like to invest in VOO ETF. ...
- Manage your investments in one place.
The Vanguard Wellesley Income Admiral, the Vanguard Tax-Managed Balanced Fund Admiral, and the Vanguard High-Yield Tax-Exempt Fund are all popular vanguard funds.
- Vanguard S&P 500 ETF (which tracks the
- S&P 500 index) has earned an average annual return of 12.66% over the past 10 years, and the market itself has averaged returns of around 10% per year, historically.
Period | Average annualised return | Total return |
---|---|---|
Last year | 24.6% | 24.6% |
Last 5 years | 15.8% | 108.3% |
Last 10 years | 15.0% | 303.0% |
Last 20 years | 11.1% | 727.4% |
Morningstar Category: Large Blend Close AS OF 09/30/2024 | VFIAX Vanguard 500 Index Fund Admiral Shares |
---|---|
Transaction Fee (Online) 2 | $100.00 |
Minimum to Invest 4 | $2,500.00 |
Expense Ratio (Net | Gross) | 0.04% | 0.04% |
YTD (Daily)* AS OF 10/10/2024 | 22.47% |
Vanguard is the king of low-cost investing, making it ideal for buy-and-hold investors and retirement savers. But beginner investors and active traders will find the broker falls short despite its $0 stock trading commission, due to the lack of a strong trading platform and accessible educational resources.
What is considered high net worth at Vanguard?
Investors with $1 million to $5 million*
You're a Flagship client at Vanguard, which means you get personalized services reserved for our high-net-worth investors.
- AAPL. Apple Inc. 6.96%
- MSFT. Microsoft Corporation 6.54%
- NVDA. NVIDIA Corporation 6.19%
- AMZN. Amazon.com, Inc. 3.45%
- META. Meta Platforms, Inc. 2.41%
- GOOGL. Alphabet Inc. 2.02%
- BRK-B. Berkshire Hathaway Inc. 1.82%
- GOOG. Alphabet Inc. 1.70%
So imagine you put $1,000 into either fund 10 years ago. You'd be up to roughly $3,282 with VOO or $3,302 from SPY. That's not exactly wealthy, but it shows how you can more than triple your money by holding an asset with relatively low long-term risk.
The S&P 500 might be starting to look expensive. But that doesn't make a low-cost S&P 500 ETF a bad idea. The S&P 500 just hit a fresh all-time high, and if the current bull market continues, it probably won't be the last one in the near future.
The main drawback to the S&P 500 is that the index gives higher weights to companies with more market capitalization. The stock prices for Apple and Microsoft have a much greater influence on the index than a company with a lower market cap.