Which fund(s) should I invest in?

Here’s another post for beginners. But I see the same question over and over:

What fund should I invest in?


I hear a lot about VTSAX? Should I invest in that? What about VTI?


Which of these 5 funds should I invest in?

These questions are obviously posed by beginner investors. That’s ok, you’ve got to start somewhere, but that somewhere is not having people on the internet determine your investments.

The best anyone online can do without any meaningful info is to:

(1) Steer you toward low cost-index funds, as opposed to high cost actively managed mutual funds. Read about that in the first section of this article.

(2) Suggest that you to choose a widely diversified portfolio. Read here about asset allocation. Remember that you can likely accomplish this with 3 index funds, or potentially less if you choose a balanced fund or target date retirement fund.

(3) Encourage financial literacy and suggest resources for you to look at, such as books and blog entries. Once you know more about investing, and have thought about your own risk tolerance and investing horizon, you’ll be in a position to make your own decisions.

You need a plan

You need a financial plan and steps to achieve that plan. Fortunately, it’s got a name – an investment policy statement. Prominent blogs such as the White Coat Investor and Physician on Fire offer reading on how (and why) to write one. I highly suggest reading them.

If you’d like a shortcut to get started, here are my suggested steps to get you started:

(1) Become financially literate. It’s not that difficult to learn the basics of personal finance. It’s probably much easier than whatever you had to learn for your career. If you spend a few weeks reading, you’ll start to see concepts repeat. You can start here, by reading my articles under “Fundamentals.” You can also pore over the Bogleheads wiki by starting here.

(2) Determine an appropriate overall asset allocation based on your risk tolerance and investing time horizon. It might look something like: 50% domestic stock, 25% international stock, 15% total bonds, 10% REIT (real estate).

(3) Think of all of your investments as a whole. For instance, if it makes sense for you to keep municipal bonds in a taxable account, then that’s fine. But find a desired asset allocation for each account, the sum of which will equal your overall desired allocation.

(4) Now choose low cost index funds for each account. If it’s your own IRA or taxable account with Vanguard or another low cost provider, then it’ll be easy to find options, because they are plentiful. If it’s an employer plan, then options may be more limited. Choose the best options available, again looking for low cost index funds. Here’s an article that covers choosing funds within a retirement plan, and another that discusses what to do if your plan offers poor choices.


I know it’s easier to just ask the internet what you should invest in, but the truth is that it’s a personal decision, and there’s no one better equipped to make the decision than you – after you educate yourself that is!

A great starting place that I highly recommend is “The Bogleheads’ Guide to the Three-Fund Portfolio.”