Which of these Vanguard funds do you like the best?

[Xiphoid]

Fund | Morningstar Rating | Expense Ratio | 5yr Return

Vanguard Small-Cap Growth Index Fund (VISGX) | **** | .23 | 12.09%
Vanguard REIT Index Fund Investor Shares (VGSIX) | *** | .21 | 21.18%
Vanguard Total International Stock Index Fund (VGTSX) | **** | .31 | 8.75%
Vanguard Mid-Cap Index Fund Investor Shares (VIMSX) | *** | .22 | 11.26%
Vanguard Growth and Income Fund Investor Shares (VQNPX) | **** | .37 | 3.17%
Vanguard 500 Index Fund Investor Shares (VFINX) | *** | .18 | 2.28%

I'm 24, 401k, and won't be touching it for a long long time.

The easy thing to do would pick the one with the highest return, but it seems to me that this is the most volatile one (REIT) and may not be the best for the long-term. I'm leaning towards the Small Cap Growth fund because there will always be budding companies with very promising futures and this is the area of the market that I'm most interested in. I know that you probably can't go wrong with any Vanguard fund, but which one do you think will make me the most money in the end?

[erby]

You're young, so I would recommend picking one of the more aggressive funds. I'd go small or mid cap. They have historically performed very well.

[mwgr5]

First, do you have money invested in other mutual funds?

If not, I would first invest in the 500 Index. You want to build a portfolio that is composed of multiple funds that specialize in different areas. Traditionally, in an equity portfolio, large cap stock funds should compose the largest percent of the portfolio. Start investing in the 500 Index. Later start investing in the mid, small, and international indexes.

Small Cap Growth has traditionally had weaker performance. Small Cap Value, has historically outperformed Small Cap Growth. If you can invest in the Small Cap Index, a blend of value and growth, I would do that insead of the growth index.

[buffett]

[ QUOTE ]
easy thing to do would pick the one with the highest return

[/ QUOTE ]
Why is this the easy thing to do?

[ QUOTE ]
won't be touching it for a long long time

[/ QUOTE ]
So why are you concerned about volatility?

[ QUOTE ]
which one do you think will make me the most money in the end?

[/ QUOTE ]
If it's diversified passive investing you're after, I suggest you read a bunch of Scott Burns' articles. (He's the Dallas Morning News finance columnist, and his Couch Potato and Margarita things are pretty easy and cheap to implement and understand.)

If it's "the most money" you want, study a bunch and pick individual stocks.

[Xiphoid]

[ QUOTE ]
First, do you have money invested in other mutual funds?

[/ QUOTE ]

No, I'm just starting out my 401k.

[ QUOTE ]
Why is this the easy thing to do?

[/ QUOTE ]

For anyone not knowing anything about investing, they'd probably pick the one with the highest five year return and assume it would continue to produce those type of returns decades into the future.

[ QUOTE ]
So why are you concerned about volatility?

[/ QUOTE ]

The REIT fund seems risky to me because it's based on real estate, which is bloated in my opinion.

[ QUOTE ]
If it's "the most money" you want, study a bunch and pick individual stocks.

[/ QUOTE ]

I do intend to do this, but this is separate for my 401k.

Thanks everyone for the advice. [img]/images/graemlins/smile.gif[/img]

[buffett]

[ QUOTE ]
For anyone not knowing anything about investing, they'd probably pick the one with the highest five year return and assume it would continue to produce those type of returns decades into the future.

[/ QUOTE ]
If I'm understanding you here.....the quote above seems to say "this is what an ignorant person would do" in answer to my question of why you thought a certain strategy would be the easy thing to do. With respect, that just doesn't sound like very good thinking to me.

In other words, "I think this strategy will do well over the next few decades because it did well from the years 2001 through 2005." Why are those five years so great? Why not pick the strategy that did the best from 1983-87 or 1946-50?

Anyway, my point is....if you want to think about your investments, then really think about them. Otherwise, I suggest some variation of Mr. Burns' Couch Potato or Margarita portfolios.

[Xiphoid]

Hi Buffet, I think we are misunderstanding each other. Your explanation is exactly why I'm NOT taking that route. Maybe it wasn't necessary to include that phrase in my initial post, but my intention was to show that I'm not that person and want (and am) to do the necessary research. I have the beginning foundation of investing knowledge, but it pales in comparison to some of the members here, including yourself, so I highly value your opinions. [img]/images/graemlins/smile.gif[/img] Thanks for the links.

[Sniper]

Xip,

My personal suggestion, if you are just starting with this 401K (ie we are talking relatively small dollars, added to every paycheck), would be to stick it in the MidCap fund, and then start reading and doing more research.

[eastbay]

Or you could just go with one of the meta-funds like the Vanguard Target Retirement funds. Truly hands free.

http://www.vanguard.com/jumppage/retire/

eastbay

[Sniper]

Eastbay, since he didn't list those, its possible those funds aren't available in his 401K plan.