Best Mutual Funds for the Average Investor — Low Fees, Minimum Requirements
The best mutual funds come with low fees and minimum investment requirements. What are the best mutual funds for the average investor?
May 12 2022, Published 11:54 a.m. ET
If you’re seeking a convenient way to build a diversified portfolio, consider investing in a mutual fund. With a mutual fund, investors pool their money together to invest in stocks, bonds, and other types of securities. What are the best mutual funds for the average investor in 2022?
Mutual funds come in various forms. Some primarily invest in stocks or bonds, while others mix them on certain ratios. Funds also differ on whether they’re actively or passively managed.
Regardless of the fund’s investment style, an investment in a mutual fund usually comes with an ongoing cost called the "expense ratio." Many funds also charge a transaction fee called the "load" when you sell or buy the shares. Other types of fees may apply. Many funds also have a minimum investment requirement, which can run from a few hundred dollars to millions.
There are thousands of funds out there for investors to select. While that means investors have more choices, it can also be overwhelming when trying to decide the perfect fit for your portfolio. When shopping for a fund, keep in mind that while it can be tempting to peep into what others are doing, the best mutual fund for another investor won’t necessarily suit your taste.
These are the best mutual funds for low costs in 2022.
As a fund investor, you make money when the fund’s holdings appreciate in value. Some funds also pay dividends or interest to their shareholders. However, costs can reduce what you actually earn. If you want to retain most of your earnings, go for mutual funds with a low expense ratio.
Here are some of the best funds for cost-conscious investors.
Schwab Total Stock Market Index Fund (SWTSX)
The Schwab Total Stock Market Index Fund (SWTSX) tracks the entire U.S. stock market. It has a low minimum investment requirement, no load fee, and the expense ratio is 0.03 percent. The fund’s largest holdings are Apple, Microsoft, Amazon, Tesla, and Google parent Alphabet.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) seeks to give investors exposure to the entire U.S. stock market. The fund charges an expense ratio of 0.04 percent when the average fee of similar funds is 0.80 percent. VTSAX is also accessible to the average investor given its minimum investment capital of only $3,000. The fund’s top holdings are Apple, Microsoft, Alphabet, Amazon, and Tesla.
Fidelity Inflation-Protected Bond Index Fund (FIPDX)
The Fidelity Inflation-Protected Bond Index Fund (FIPDX) primarily invests in inflation-protected debt securities, including bonds issued by the U.S. government. You can start investing in the fund with any amount you have since it doesn’t have minimum investment capital. The fund charges an expense ratio of 0.05 percent.
What are the best mutual funds for crypto investors?
Bitcoin Strategy ProFund (BTCFX)
For investors seeking exposure to bitcoin, the Bitcoin Strategy ProFund (BTCFX) can be a great fit. The fund tracks bitcoin’s performance. Although crypto has sometimes seen steep dips, its price prediction remains mostly bullish. For example, Cathie Wood of ARK Invest has forecast that bitcoin could surpass $500,000 by mid-decade and hit $1 million by 2030.
Although some prominent investors like Warren Buffett and Ken Griffin have remained skeptical of bitcoin, many crypto critics are converting. A growing number of investors are adding Bitcoin to their portfolios, with many taking advantage of price dips to accumulate the flagship crypto.
Investing in bitcoin through a mutual fund saves you the many troubles that come with holding the crypto directly. The BTCFX fund requires a starting investment of $1,000 and the expense ratio is 1.15 percent.