You might think you're the next George Soros or Warren Buffet, a stock-picking genius who will make billions investing in the next Apple, Facebook, or whatever. But did you know that, according to research by the authors of theThe incredible alpha decreasing92% of actively managed large cap mutual funds failed to outperform the S&P500 over a 15 year period?
What does that mean in simple terms? Well, even the so-called experts who manage billions of dollars worth of investments typically can't outperform the market in the long run.
What does this mean for your investment strategies? Well, it's probably better to follow the market than try to beat it! Investing in index funds.
An index fund is just a mutual fund, or ETF, with a portfolio designed to track the movements of a specific index, like the S&P 500. So if the S&P 500 index goes up 5%, so will an index fund. S&P 500.
Index funds are generally considered one of the safest and most cost-effective investments, eliminating the need to spend a lot of time studying individual stocks. Also, as I mentioned earlier, they often have better returns than trying to invest in individual stocks. actions anyway.
But there are a lot of different index funds out there, so in this article I'm going to talk about the 6 index funds that I think are the best options in 2022. These are the 6 best index funds to invest in 2022.
Nº 1: Fidelity ZERO Large-Cap-Index-Investmentfonds (FNILX)
The Fidelity ZERO Large Cap Index (FNILX) mutual fund actually tracks an index known as the Fidelity U.S. Large capitalization ratio, hence the name. that possible.
This allows Fidelity to avoid paying a massive license feestandard and bad, the company that manages the S&P 500. And they can a0% expense fee, which means that investing in the Fidelity ZERO Large Cap Index Mutual Fund is essentially free.
Now, as a warning, the Fidelity fund has typically underperformed its peers in the S&P 500 by 0.08%, and 0.08% is more than the expense ratio of most other index funds we'll discuss.
So, if you're smart, you might be wondering why you should invest in this Fidelity fund rather than a true S&P 500 index fund. Time will become more and more like the S&P 500 index until the two are essentially identical.
That's because the Fidelity fund is still catching up with the older, larger S&P 500 funds. But once they do, you can basically invest in an S&P 500 index fund without paying any fees, which is a pretty good deal.
And that already appears to be the case, considering that the 3-year performance of the Fidelity ZERO Large Cap Index fund and the Vanguard S&P 500 ETF has been about the same since the Fidelity fund's inception in 2018.
#2: State-of-the-art real estate ETF (VNQ)
Over and over again, you'll hear from top investors that real estate is one of the best asset classes to invest in. Why? Since the real estate market is not as volatile as other investments, you get high returns for the risk you take.
Also, real estate mutual funds tend to pay big dividends, which means you have passive income year after year. And if you're investing in a real estate index fund, the Vanguard Real Estate ETF (VNQ) is definitely the best in my opinion.
is by far theLargest Real Estate ETFout there with multiples of assets as the second largest, that is, it will be the most diversified and least risky of the group. And it follows the MSCI North American index. Investable Market Real Estate 25/50, an index widely followed across the US real estate market.
And while this fund does invest in a few real estate development and management companies, the majority of its assets are held in REITs, making it a great choice for those who also want a solid dividend investment.
As of March 15, 2022, the 12-month dividend yield is a solid 2.89%. In addition, this ETF has great growth potential, as evidenced by its historic 5-year return of 8.68%.
All in all, the Vanguard Real Estate ETF is the best choice for a stable ETF that tracks the entire real estate market with a low expense ratio of 0.12%, provides good inflation hedge, and consistently pays high dividends.
Nº 3: Schwab Emerging Markets Stock ETF (THE PLAN)
For all you patriots out there, that might be hard to hear. However, there are other countries that are catching up with the US in terms of economic importance. According to some economists, China could overtake the US as the world's largest economy by 2030. And with a growth rate of 8.2%, India plans tofastest growing economyworld, according to the International Monetary Fund.
So if you want to benefit from these fast-growing economies, I think the best place to invest is in the Schwab Emerging Markets Equity ETF (SCHE).
This fund tracks the FTSE Emerging Index, which contains large and mid-cap companies in more than 20 developing countries, with the highest concentrations in China, Taiwan, India, Brazil and South Africa.
the background is over$8 billion in assetsand its biggest stake is in Taiwan Semiconductor Manufacturing, followed by Tencent Holdings and Alibaba Group, both Chinese companies.
With an expense ratio of 0.11%, this is a very inexpensive option for anyone wanting to share in the growth potential of the developing world. Most of the world's population lives in developing countries, and I think these emerging markets will one day explode with growth.
So if you are comfortable with any risk and you agree with me, the Schwab Emerging Markets ETF is a good place to put some of your money.
#4: Fidelity 500-Indexfonds (FXAIX)
So if you don't want to invest in emerging markets and would rather invest your money in the US economy (and in a fund that can deliver reliable returns with extremely low risk), then it's time to look at the Fidelity 500 Index Fund (FXAIX). .
This is an official S&P 500 index fund, which means it tracks the S&P 500 index almost exactly. And since nearly all S&P 500 index funds yield the same returns as the index itself, your best focus when choosing which to invest in is cost.
And with a wonderfully low 0.15% expense ratio, the Fidelity 500 Index Fund is as cheap as you can get for aS&P Large Cap Index FundsCurrently, the Fidelity 500 has approximately $366 billion in assets under its control, making it one of the largest index funds in the market and a very stable investment. With a minimum investment of $0, this is also the top option on this list for first-time investors.
What makes S&P 500 index funds such a safe bet is that, for example, they contain stocks in the biggest companies from every sector of the US economy; therefore, unless there is a general stock market crash, you will not suffer large losses.
Some of the other index funds discussed in this article definitely carry more risk and more potential for returns. However, if you're looking for something tried and true and safe for your first investment, the Fidelity 500 index fund is for you.
Plus, with a 5-year yield of 13.65%, there's definitely money-making potential too.
Nº 5: Vanguard Russell 2000 ETF (VTDOS)
Generally,small cap companiesThey have much greater growth potential than large-cap companies, but they also carry much greater risk. There is a double issue here.
First, large-cap companies have the financial resources to weather market downturns much better than small-cap companies. However, small-cap companies also need to bring much less money into their bottom line to grow significantly than large-cap companies.
A company with net income of $100 only needs to earn $100 more to double its bottom line, while a company with net income of $1,000 needs to earn $1,000 more to double its bottom line.
For these reasons, investing in small cap companies is riskier but potentially more rewarding. And the best way to do that is with the Vanguard Russell 2000 ETF (VTWO).
This fund tracks the Russell 2000, which tracks 2,000 of the smallest US public companies you've probably heard of. These include Avis Rental Cars, AMC Theaters and BJ's Wholesale Club. and betop holdsOvintiv is a large natural gas company outside of Canada.
With a historic 5-year yield of 7.32%, the Vanguard Russell 2000 has to offerFunds indexed to the S&P 500 lag behindHowever, that could change if things go back to focusing on small businesses in the future.
For example, if legislation is passed that heavily favors small companies, it is possible that these small cap companies will prosper and the Russell 2000 will rise sharply. small capitalization companies.
So if you're willing to take some risk and want some exposure to some of the smaller publicly traded companies, put some money in the Vanguard Russell 2000 ETF and wait.
Nº 6: VanEck Semiconductor ETF (SMH)
As with any investment, you should always know what you are investing in. So if you are sitting and wondering the following:What the hell is a semiconductor?, then this is probably not the best index fund to invest in.
The great Warren Buffett once said, "Never invest in a business you can't understand." But go online, research everything about semiconductors and what they are doing in the world today, and then come back and consider an Invest in the VanEck Semiconductor (SMH) ETF.
This fund accompanies theMVIS Index of US Listed Semiconductors 25th, which includes 25 national and international semiconductor manufacturers all listed in the USA and if you are wondering why semiconductors are so important, they are essentially the brains of electronics and are used in technologies in areas such as communications, computers, health , military systems, transportation and clean energy.
The more smart technology finds its way into everyday life, the more important semiconductors become.
If you've been following this industry, you know that 2022 was a tough year for the semiconductor industry due to huge selloffs due to chip shortages. However, this could mean that now is the best time to invest.stock pricesthey go down
And with the semiconductor industry projected to double in size by 2030, it could be a big win for your long-term portfolio. However, this industry-specific ETF is much riskier than, say, an S&P 500 index fund.
So if you don't want to take any risks, this is not the index fund for you. But if you can handle any risk, the VanEck Semiconductor ETF has tremendous upside potential.