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Vanguard is an American investment company that provides a series of financial products, primarily mutual funds.[1] In addition, the company provides access to exchange-traded funds, stocks, bonds, and a wide range of brokerage services as well as retirement and college funds. As with most other investment firms, Vanguard makes it exceptionally easy for investors to purchase its mutual funds.


[Edit]Understanding Your Investment Needs

  1. Understand your risk profile. Before you even begin to invest, you need to understand that investment is, by definition, an act of risking your own money. You stand to lose some, or even all, of what you invest. While mutual funds tend to balance risk by distributing investments across a variety of securities,[2] the possibility always exists that you will lose money.
    • Ask yourself how much you’re willing to lose. It may be that you’re only willing to take a small risk with your money because you want to keep as much of it as possible. On the other hand, you can afford to lose some money so you’d like to take more risks with the chance of a greater return.
    • Keep in mind: it’s generally the case that the more risk you take with your investments, the more money you can make.[3] However, you can also lose a great deal of money with risky investments. That’s why they’re called “risky.”
  2. Set your financial goals. There’s a probably a reason why you want to invest in mutual funds. Do you want to retire early? Are you saving for a boat? Are you putting money away for a child’s college education? The goal you set will help determine the types of mutual funds that you want to buy.
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  3. Consider timing. One of the major considerations you should make when choosing a mutual is your timeframe for investing and taking out your money. Funds that are needed within a year should not be invested in high risk funds. The longer the term of investment, the less impact of minor fluctuations will have on fund value and the lower the odds that you will need to liquidate at bad time.
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  4. Talk to a financial adviser. There may be too many moving parts within the world of finance and investment opportunities for some investors to keep track of it all while still focusing on your job and other responsibilities. It’s always best to sit down with a financial adviser who can help you understand the best way to invest your money. If you are interested in knowing exactly how the funds are invested and how to best keep track of your money, let your advisor know and they will be happy to tell you.
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    • You can also invest in mutual funds yourself with enough research and an online brokerage account.
  5. Decide on the types of mutual fund(s) that you want to buy. Many investors find that their risk is adequately reduced with an investment in only one mutual fund. This especially true for index funds and balanced funds, which in themselves are diversified across the market. However, for other types of mutual funds, especially riskier ones, you may want to invest in more than one to reduce your risk. Mutual funds fall into one of the following categories:
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    • Money market funds are low risk mutual funds. They generally consist of securities that are very unlikely to lose investors money, such as treasury bills. Money market funds provide a low return for investors.
    • Bond funds are mutual funds with a portfolio of bonds. Generally, they’ll include a mix of corporate and government bonds. They provide interest income to investors but offer little in the way of appreciation in value.
    • Balanced funds provide investors with a balance of safety, income, and capital appreciation. The portfolio of balanced funds usually includes a mix of about 60% stocks and about 40% bonds.
    • Equity funds are mutual funds that invest primarily in stocks. However, not all equity funds are created equal. Some invest in more risky stocks while others invest in stable, household-name companies. Still others invest in companies that pay high dividends while some invest in smaller companies that have the potential for phenomenal growth. There are also index funds that match the performance of stock market indices, such as the S&P 500 or Dow Jones Industrial Average. You’ll have to evaluate each equity fund on a case-by-case basis to determine if it matches your financial goals.

[Edit]Buying Vanguard Mutual Funds

  1. Research the various Vanguard funds that you’re considering. Once you’ve established your financial goals, it’s important to evaluate the various types of funds that Vanguard offers so that you can purchase the right one.
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    • Every mutual fund has a prospectus. That’s a document, required by federal law, that describes the fund’s goals. It also lists the fees and expenses associated with the fund and explains the risk associated with buying into the fund. Before buying any mutual fund, review its prospectus carefully to ensure that it’s the right type of fund for your financial goals.
  2. Open an account at the Vanguard website.[4] One of the easiest ways to buy Vanguard mutual funds is to open an account at the company website and buy the funds you want directly from Vanguard.
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    • You’ll need to deposit some money into your Vanguard account that you’ll use to purchase the mutual funds. You can send a check to Vanguard or wire transfer the money from your bank. As of this writing, you’ll need $3,000 to open a standard Vanguard account and $1,000 to open a retirement account.[5]
    • One of the advantages of opening an account on the Vanguard website is that you’ll be buying mutual funds directly from the company that manages them. That will save you money in transaction fees.[6]
    • Additionally, if you have a great deal of money to invest, you can save even more money thanks to Vanguard’s Admiral Shares program. If you’ve got $10,000 to put into an index fund or $50,000 to invest in an actively managed fund, Vanguard saves you even more money with expense ratios that are 16% lower than the company’s standard Investor Share class.[7]
    • Keep in mind if you have an existing account with another brokerage, you can transfer that account to Vanguard.[8] However, account transfers are rarely fast. Be prepared to wait several days and maybe even a few weeks for your account to be fully funded with a transfer.
  3. Call Vanguard. If you prefer the personal touch of human interaction, you can also call Vanguard at 800-319-4254 and open an account that way. You can also buy Vanguard mutual funds over the phone, but you’ll need to have a fully funded account first.
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    • Keep in mind, some people have complained about the quality of customer service at Vanguard.[9]. You might actually have a better experience with trying to open the account online.
  4. Buy Vanguard funds from your existing brokerage account. Most of the major online brokerage services allow you to purchase Vanguard mutual funds. Just access your account and search for mutual funds in the “Vanguard” family.
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    • Your service will most likely allow you to search for the kind of fund you want as well, such as a bond fund, an equity fund, or a balanced fund.
    • Follow the directions from your online brokerage for buying mutual funds. Keep in mind that the sale won’t be “official” until after the market closes. That’s because the share price of your mutual fund is based on that day’s closing prices of securities that are in the fund.


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