Investing in stocks is the easiest and convenient way to invest in the stock market. Today, I will be sharing six investment funds you need to be looking at buying in order to build wealth.
What is a fund?…
A fund is a basket of commodities through which you can invest in a certain number of commodities; it is an easy and convenient way to invest in the stock market. Investing in a fund means you are simply investing in all of the content of that fund.
If an investor buys a fund that is invested in twenty items; such investor is indirectly also invested in the twenty items within the fund.
It is a cheap way to invest because you can simply pay one fee to buy a single fund; instead of paying individual fees to buy stocks and shares.
Buying funds is cheaper because majority of them track indexes which also mean they are not actively managed. You get to pay a lesser fee than if you are buying actively managed stocks and shares.
So what are these six funds you should be buying this year?
Vanguard S&P500 ETF
The Vanguard S&P500 ETF is a low-cost fund based on the S&P 500. It is invested in the stocks that make up the S&P500 index.
The S&P500 is a US index representing 500 of the largest US companies; and buying it means that you are investing in the 500 largest US companies in one fair slope.
The goal of the Vanguard S&P500 ETF is to closely track the return of the S&P500 index; considered to be a gauge of overall US stock returns.
This fund offers a high potential for investment growth. Share value rises and falls more sharply than funds that hold bonds; because it has a little more risk than bonds.
Therefore, it is a more appropriate investment for long-term goals where your money’s growth is essential. So if you want to build wealth long-term, the vanguard S&P500 ETF is the one for you.
If you had put in 10,000 dollars in 2016, your money would be worth a little over 20,000 dollars today; that is why you want to be investing in this fund.
Fidelity 500 Index Fund (FXAIX).
The Fidelity 500 Index Fund (FXAIX) is an open-ended investment fund that seeks to provide investment result; which corresponds to the total return performance of common stocks publicly traded in the united states.
Common stocks publicly traded in the united states include the 500 largest companies and a little more. The FXAIX fund usually invests at least 80% of its asset in common stocks including the S&P 500 funds and a few more funds.
Its top investments are Apple, Microsoft, Amazon, Facebook, and Tesla. If you had put in 10,000 dollars in 2016, your money would be worth a little over 20,000 dollars today. Risk-wise, the Fidelity 500 Index Fund is a well-balanced fund that gives returns commensurate with a medium level of risk.
You must compare your risk appetite with the risk level of whatever fund you are buying so that there is no disconnect between your risk level and the fund you are trying to buy.
So if you have a low-risk appetite, a medium fund might not necessarily be the one for you.
Baillie Gifford American Fund
The Baillie Gifford American Fund is a firm favorite of mine, and even though it has not performed well in recent years, I am still rooting for it. The fund is a US large-cap American growth equity fund benchmarked against the S&P500.
Although the Baillie Gifford American Fund is a performing fund, it is costs a little more than passively managed funds like vanguard S&P500 ETF. It was the best performing fund in 2020; the pandemic year. This fund invests about 90% of its content in shares of US companies.
Its stock holdings include Shopify, Amazon, Wayfair, and Rocco; it endeavors to invest 98.5% of its holdings in stocks and then holds the rest in cash. Investors need to bear in mind that this fund is heavily invested in stocks which increases its risk levels.
The Baillie Gifford American Fund is a firm favorite of mine because if you had put in 10,000 dollars in 2016, your money would be worth a little over 42,000 dollars today.
Vanguard FTSE250 UCITS ETF
The Vanguard FTSE250 UCITS ETF is a fund that is invested in the FTSE250 companies where it employs a passive management or indexing investment approach and so is not actively managed.
Through the physical acquisition of securities, it seeks to track the performance of the FTSE250 index. This index comprises midsized companies in the UK.
The base currency of this fund is the British pound, and so it is domiciled in the UK. This Vanguard FTSE250 UCITS ETF is an income fund which means that income from the fund is paid quarterly, so it is not appropriate for short-term investment.
Etf shares are often listed on one or more stock exchanges, but this particular ETF is listed on the London stock exchange, which indicates that it is easier to buy and sell.
As long as the stock market is open, you will always be aware of the price of Vanguard FTSE250 UCITS ETF, and its shares can be bought or sold daily except on bank holidays. This fund is considered to have a risk rating of 6 out of 7 which is somewhat high.
Ishares Core FTSE 100 UCITS ETF
The Ishares Core FTSE 100 UCITS ETF is a fund that tracks the FTSE 100, and the FTSE 100 are the 100 largest UK stocks by full market value.
This fund is an exchange-traded fund which means it is traded on the stock market; and it aims to track the FTSE index as closely as possible. It invests in physical index securities, and offers flexible and easy access to a wide range of market and asset classes.
Buying this fund is an opportunity for you to invest in the top 100 companies in the UK; instead of trying to buy their shares one by one.
The Ishares Core FTSE 100 UCITS ETF will attempt to reflect the returns of the top 100 companies in the UK. It is a passively managed fund because of its index tracking feature and this means lower costs.
Etf funds are likely to have lower costs because they are mostly passively managed. This particular fund is traded on the London stock exchange and you can buy and sell it daily except on bank holidays.
It is suitable for medium to long-term investment; you could buy for shorter time exposure to the index, but you need to consider that you might not get a lot of returns if you do it on a short-term basis.
It pays income quarterly; so you can do it, get the income, and opt out. The Ishares Core FTSE 100 UCITS ETF is dominated by the British pound sterling because it is domiciled in the UK; however, it may be traded in currencies other than the British pound sterling for those trying to buy abroad.
The performance of your shares may be affected by currency differences if you are buying from outside the UK. This applies to all the funds that are domiciled in the UK and traded in great British pounds.
ISHARES UK DIVIDENDS UCITS ETF
This particular fund focuses on really high dividend-paying UK stocks and shares. If you are interested in income from your investment, this is a fund for you.
The ISHARES UK DIVIDENDS UCITS ETF focuses on UK stocks that pay dividends well which means they are heavy and profit-yielding companies.
This particular fund focuses on that kind of company and intends to pay you dividends from your investment. It comes with a 6.6% dividend that beats the UK market comfortably; while seeking to track the performance of an index composed of just 50 stocks with leading dividend yields from just UK-listed companies excluding investment trusts.
Its top holdings include BAT, VODAFONE, British Petroleum, National grid, legal and general group, imperial brands, and many more; and it is traded on four different exchanges; the London stock exchange, the dutch exchange, the Italian exchange, and the Swiss stock exchange.
It is traded across different places like Italy, Switzerland, and Europe and you can easily buy it in your currency. This means you would not have the impact of currency differences if you are trying to buy this fund in any of these countries.
Now that you have these six investment funds, nothing is stopping you from building wealth and living that bulletproof life.
Till next time.
Love,
Ronke O.
