5 Best Index Funds For Investors Under 40

Investors who are in their prime earning and compounding years have much different needs than those who are seeking income and capital preservation in retirement. You also have one of the single greatest assets on your side – time. Every additional year of saving and compounding is a precious commodity that is critical to long-term success when growing your wealth.

Usually investors under 40 have very specific goals as well. These can include: saving for a home, investing for retirement, or growing your child’s college education fund. No matter what your objective may be, having an investment plan in place and monitoring your progress will help ensure you are on the right track.

With that in mind, exchange-traded funds make a perfect investment vehicle to grow your money. These low-cost index funds provide transparency, liquidity, tax efficiency, and a high degree of diversification for your portfolio.

However, ETFs are just a tool to use within the context of your investment accounts and the wide array of options make selecting an appropriate fund daunting. Paying attention to costs, security selection, asset allocation, and other characteristics of these funds is an important task.

Fortunately, I have curated a short list of passively managed ETFs with attractive features that investors under 40 should consider.

Vanguard Growth ETF (VUG)

Dedicating a portion of your portfolio to high quality, large-cap growth stocks should be a key consideration at this stage of the game. VUG has curated 370 stocks such as Apple Inc (AAPL), Google Inc (GOOGL), and Facebook Inc (FB).

As their name implies, these companies are focused on growing their top and bottom lines to support new products and innovation for the future. While technology dominates the makeup of this index, it also includes a healthy dose of consumer discretionary, health care, and financial companies.

Besides the high level of diversification and sector allocation, one of the most attractive features of VUG is its ultra-low expense ratio of just 0.09%. In addition, ETF sports a very healthy asset base of $19 billion along with steady daily trading volume for excellent liquidity.

1 2 3 4
View single page >> |

Disclosure: FMD Capital Management, its executives, and/or its clients may hold positions in the ETFs, mutual funds or any investment asset mentioned in ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.