Opinion: The Best Index Funds to Invest in during a Recession

Daniella Cressman

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Disclaimer: I am not a financial expert and this is not financial advice. Please consult a finance professional before making any financial decisions.

The general consensus among the population in America is that we are headed for a recession sooner than later.

This is absolutely terrifying, but there is a solution: You can actually protect yourself by investing in the following index funds.

Index funds are a collection of stocks that you can purchase for one relatively affordable price. Statistically, this is probably the best stock market investment you can make because you automatically diversify your income streams.

1. VIFIAX: S&P 500

There are different S&P 500 index funds. Buying this one fund means you own companies that are the most successful in the United States. Generally, this can result in significant returns. You'll be purchasing a lot of stocks, but you may also be supporting weapon manufacturers, so you'll want to keep that in mind.

The drawback is that a minimum of $3,000 is required in order to purchase this fund and there's a 0.04% annual management fee.

2. VTSAX

VTSAX gives you exposure to the entire US equities market: 4100 stocks. The average annual return is also quite good: 8.2% annually.

There is still a $3,000 minimum deposit required and a 0.04% management fee.

3. VTIAX

The Vanguard International fund (VTIAX) covers the market outside of the United States. This is a great index fund because, as other economies develop, your profits will also increase. That being said, international index funds tend to lag behind the United States' but they can sometimes outperform them. The return is about 5% annually. You will likely receive about 3.37% of your investment in dividends every year.

This seems to be a bit of a riskier one, but it still never hurts to diversify your portfolio, especially when you note that international index funds do occasionally outperform the United States'.

They have a $3,000 minimum and a 0.11% expense ratio.

These can actually help you give yourself a bit of a financial safety net, although I would recommend building your emergency fund first.

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Canadian-American author writing about local politics, personal finance, & dining in Albuquerque.

Albuquerque, NM
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