Did you know that there’s are index funds other than the Vanguard (S&P) 500? When I started learning about investing, plenty of websites and magazines told me the following:
Index funds are sexy! The S&P 500 has beaten 90% of all mutual funds for the past million years! 11% interest per year! Woot woot!
Since the S&P 500 is the darling of index funds, the other index funds get neglected. There’s an index fund for all kinds of things. Here are some non S&P 500 index funds from Vanguard.
Want to invest in the U.S. bond market? Try the Total Bond Market Index Fund. I used to have a bond index but then I realized it’s for old people so I sold it. Bonds are more for people who want less volatility.
What about small companies? Try the Small-Cap Index Fund. Don’t be like me. I really dropped the ball on this one. This one has averaged +14% each year for the past 5 years. Thanks for not telling me, magazines!
What about medium companies? Try the Mid-Cap Index Fund. You could have had +14% for each of the previous 5 years with this gem.
Real estate? Have whirl with the REIT Index Fund Fund. If you missed the housing bubble with this index fund, you also missed returns of +24% each year for the past 5 years.
European companies? European Stock Index Fund. +15% each year for 5 years.
All international stocks? Total International Stock Index Fund. +16% each year for 5 years.
These are just a drop in the bucket. If Vanguard doesn’t show you love, there are hundreds of index funds in all shapes and sizes from other companies too, including Fidelity, Schwab, and T. Rowe Price.
Words of caution from fin_indie :
It’s true. Indexing is the bedrock of my portfolio and it works. Make sure you understand the risks of any index you buy, however. S&P500 — LOW risk, Phili-semiconductor index — HIGH risk.
[I am not affiliated in any way with Vanguard.]
More index fund links around the horn:
Get Rich Slowly: Intro to Mutual Funds: Index Funds
Binary Dollar: 4 Reasons To Invest In Index Funds