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The 7 Best Vanguard Funds for Retirement

The Vanguard Group differs greatly from most other asset managers and mutual fund companies. Vanguard is organized as a mutual company, meaning the firm is ultimately owned by the shareholders who invest in its funds. When you invest in Vanguard funds, you become a partner as well as a customer.

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Vanguard’s mission statement is: “To take a stand for all investors, to treat them fairly and to give them the best chance for investment success.” The company’s commitment to shareholders and its well-earned reputation for low fees and reasonable expenses make it especially well suited for long-term investing.

Here are seven of the best Vanguard funds to invest in for retirement:

Vanguard Fund Expense Ratio
Vanguard Target Retirement 2050 Fund (ticker: VFIFX) 0.08%
Vanguard LifeStrategy Growth Fund (VASGX) 0.14%
Vanguard Mega Cap Growth ETF (MGK) 0.07%
Vanguard Total Bond Market ETF (BND) 0.03%
Vanguard High Dividend Yield Index Admiral Shares (VHYAX) 0.08%
Vanguard International Core Stock Fund Investor Shares (VWICX) 0.48%
Vanguard Global ESG Select Stock Fund Investor Shares (VEIGX) 0.58%

Vanguard Target Retirement 2050 Fund (VFIFX)

If you’re looking for one fund to rule them all, there isn’t one because every investor has unique needs. However, a target-date fund like VFIFX is about as close as retirement investors can get.

These funds are designed to be one-fund solutions for retirement investing. They adjust their allocation to stocks and bonds over time, growing more conservative as the target retirement date nears. This means you won’t need to do this rebalancing yourself. It’s the epitome of a set-it-and-forget-it investment strategy.

“This target-date series has all the features one would expect from Vanguard’s deeply rooted investment culture,” writes Jason Kephart, director of multi-asset ratings at Morningstar. “It features four low-cost, broadly diversified index funds to gain efficient exposure to global stocks and bonds.”

Vanguard offers a dozen target retirement funds with target dates through 2070. Simply choose the fund that most closely aligns with your anticipated retirement year. Or, if you’re already in retirement, opt for the Vanguard Target Retirement Income Fund (VTINX), which is designed for people already in retirement.

Vanguard LifeStrategy Growth Fund (VASGX)

Another one-fund solution for retirement investors is Vanguard’s LifeStrategy funds. Unlike the target-date funds listed above, the LifeStrategy funds are designed to maintain a fixed allocation in perpetuity. This means that as your time horizon changes, you may need to switch funds since they won’t adjust their risk for you.

For instance, VASGX is about 80% stocks and 20% bonds. This makes it a fairly aggressive fund best used when you have more than five years until you want to withdraw your money.

If that’s too long to wait, consider the Vanguard LifeStrategy Income Fund (VASIX). At 20% stocks and 80% bonds, it’s designed for when you’re three to five years away from withdrawal.

There’s also a 40%-stock-to-60%-bond fund (VSCGX) and a 60%-stock-to-40%-bond fund (VSMGX) for more middle-of-the-road investors.

The LifeStrategy funds’ “straightforward and efficient approach to delivering broad equity and fixed-income exposure should continue to serve investors well,” writes Morningstar Analyst Ben Sater. They are “inexpensive and reliable” options, he says.

Vanguard Mega Cap Growth ETF (MGK)

If you still have a long way to retirement, growth is the name of the game, and few have delivered on that front better than MGK.

It tracks the CRSP US Mega Cap Index, which represents about the top 70% of publicly traded companies in the U.S. These behemoth companies have a median market cap of nearly $2.3 trillion and include the likes of Apple Inc. (AAPL), Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT).

The fund gained a whopping 51.7% in 2023 and nearly 33% in 2024. It boasts an average return of 16.5% over the past 10 years. However, that which rises fastest can also fall hardest. In 2022, the fund lost nearly 34%. So be prepared for a potentially rocky ride. But herein lies the lesson: Investors who sold in 2022 may have lost over 30%, but if you held on through 2023, you’d have enjoyed that impressive nearly 52% rebound.

You may also find this fund as a mutual fund in your employer retirement plan under ticker VMGAX.

Vanguard Total Bond Market ETF (BND)

Don’t neglect fixed-income funds when constructing your retirement portfolio. The stability these funds offer can be key in preserving your capital. Not to mention, the regular income some offer can help provide a paycheck replacement in retirement. That’s why BND is included among the seven best Vanguard funds to buy for retirement.

The fund gives you exposure to the near entirety of the taxable, investment-grade U.S. bond market. Its “advantage comes from its razor-thin fee and expansive portfolio,” writes Morningstar Analyst Lain Anh Tran.

It holds primarily corporate and government bonds, plus some securitized debt. The taxable nature may deter retirees, but as long as you hold this fund inside a tax-advantaged account, you won’t incur any taxes until you withdraw.

BND currently boasts a trailing-12-month yield of 3.7%. And with an expense ratio of only 0.03%, you’re getting a great deal on this exposure. Plus, being an exchange-traded fund means you can start investing in the fund for as little as $1. You may also find this fund as a mutual fund in your employer retirement plan under ticker VBTIX.

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Vanguard High Dividend Yield Index Admiral Shares (VHYAX)

Fixed income isn’t the only way to generate income from your investments. Whether you’re saving for retirement or already in retirement, VHYAX could be a great addition to your portfolio.

Pre-retirees can benefit from the long-term growth potential of an all-equity portfolio enhanced by reinvesting dividends. Meanwhile, retirees can appreciate the income stream of those dividends along with some much-needed capital appreciation to keep up with inflation throughout retirement.

The fund focuses on companies with the highest dividend yields by tracking the FTSE High Dividend Yield Index. Chasing yield can increase portfolio risk, as yields may rise when share prices plummet. But VHYAX balances this by market-cap weighting, which places greater emphasis on larger, more stable companies, according to Morningstar Director Bryan Armour.

Vanguard International Core Stock Fund Investor Shares (VWICX)

There’s often a tendency toward home country bias in retirement investing. It can be easier and more comfortable to invest in companies you recognize. But it’s also important to remember that the U.S. isn’t always the best-performing economy out there. There will likely be times throughout your retirement when other nations are doing better. Including international funds like VWICX in your portfolio will ensure you get to benefit from their successes, too.

VWICX invests in companies from developed and emerging markets across all sectors. The managers look for a mix of growth and value stocks to keep the overall portfolio balanced. It’s predominantly invested in Europe at over 45% of the portfolio. The remaining half is mostly split between the Pacific and emerging markets, with about 5% in North America.

As an actively managed fund, it comes with a slightly higher expense ratio. However, it’s still low for this type of fund, according to Morningstar. If you’re willing and able to put $50,000 into the fund, you can get a 0.1% discount with the fund’s admiral shares (VZICX).

Vanguard Global ESG Select Stock Fund Investor Shares (VEIGX)

Socially conscious retirement investors can rejoice because Vanguard has some great offerings for you, such as the Vanguard Global ESG Select Stock Fund. This actively managed fund uses proprietary screening methods to find global mid- and large-cap stocks with leading environmental, social and governance (ESG) practices alongside strong financials.

“That process is sensible and has been executed very well,” writes Morningstar Senior Analyst David Kathman. “The managers use quantitative screens to narrow down the investment universe before doing a fundamental deep dive on the most promising names.”

ESG-focused companies often prioritize more sustainable and responsible business practices. This can make these investments lower risk since they’ll have less exposure to adverse events like regulatory changes or environmental crises.

VEIGX maintains a “highly selective” portfolio of 35 to 45 stocks intended to be held for the long term. But don’t let the small numbers fool you: It’s still a well-diversified fund with exposure to 11 countries and no more than 5.6% in any one holding.

It’s also available for a slightly lower expense ratio through the admiral shares class as ticker VESGX.

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The 7 Best Vanguard Funds for Retirement originally appeared on usnews.com

Update 01/29/25: This story was previously published at an earlier date and has been updated with new information.

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