Low-cost Index Funds – Vanguard Investments

Low-cost Index Funds – Vanguard Investments

December 31, 2017 1 By incomem

An extremely effective way to invest your money is to make use out of Low-cost Index Funds, such as those offered by Vanguard Investments. Your money won’t get eaten up by fees like what can occur in Managed Funds and the performance is also very reliable.

When very financially successful people like Warren Buffett and Tony Robbins swear by using Low-cost Index Funds, it’s a good sign that you should take up the opportunity as well.

The Vanguard 2017 Index chart shows a snapshot of the past 30 years and shows the advantages of being diversified across a different range of assets. Asset allocation is king!

Getting involved with the Vanguard product offering is easy and cheap. I am personally using the Commonwealth Bank’s investment platform, Commsec.

Vanguard low cost index funds VEU Income Master

Source: Commsec

Commsec is a really good value investment platform, I find the mobile app is really nice and simple to use. They have lower brokerage costs (from as low as $10 per trade) than a lot of other competitors, no ongoing account fees, and access to all ASX-listed securities, ETFs, shares, options and warrants. The price of entry is a minimum investment of $500.

The Vanguard low-cost Index Funds such as VEU (VNGD ALL-WORLD EX-US) pay dividends so it is a great way to obtain some passive income. If you are older and have your holdings at a strong level, you could live off the dividend payments or supplement your income. If you’re younger it’s good to just continue to reinvest those dividends and obtain as many units as you can.

ETF’s have been very popular over the last decade, Vanguard has an ETF fee comparison calculator available. Fees add up over time just like we discussed in other posts regarding superannuation and can take away a huge chunk out of your profits.

stock charts income master

Advantages of investing using low-cost index funds

  • Lower fees
  • Shorter settlement period
  • The money is diversified across different sectors
  • Reliable track record of returns over the last 50 years
  • They generally generate smaller capital gains distributions compared to managed funds due to the lower level of trading activity involved
  • Lower tax exposure
  • Exposure to the asset classes you are interested in.