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In the quest for Financial Independence through savvy investing, we’ve gathered insights from Presidents and CEOs to share their top index fund picks.
From choosing a high-dividend yield ETF to recommending a total stock market index fund, explore the seven expert recommendations that could pave your path to financial freedom.
- Choose High-Dividend Yield ETF
- Suggest Vanguard Total Stock ETF
- Prefer Zero Fee Total Market Fund
- Select Australian-Domiciled International ETF
- Opt for Monthly Distribution Index
- Pick Broad-Market S&P 500 ETF
- Recommend Total Stock Market Index Fund
Choose High-Dividend Yield ETF
My go-to for building Financial Independence has got to be the Vanguard High-Dividend Yield ETF. A lot of folks who’ve made it to FIRE (Financial Independence, Retire Early) live off dividends, and if that’s your goal, this ETF is worth considering. It sports a yield of 3.65% and keeps costs low with an expense ratio of just 0.06%. The fund aims to mirror the performance of the FTSE High-Dividend Yield Index.
It’s packed with stocks known for higher-than-average yields. You won’t find many fast-growing tech stocks here because those companies usually reinvest their profits into growth rather than paying out dividends. Instead, the ETF focuses on older, established companies with a strong history of profitability. As of the last update, the top five holdings included big names like Johnson & Johnson, JPMorgan Chase, Procter & Gamble, Verizon Communications, and Comcast.
While it might not match the S&P 500 in terms of rapid growth or impressive returns, the stability and consistent income it offers can be a major advantage, especially if you’re looking for reliable dividend income. — Eric Croak, CFP, President, Croak Capital
Suggest Vanguard Total Stock ETF
As a CFO, I recommend index funds like the Vanguard Total Stock Market ETF (VTI) for building long-term wealth. It provides broad exposure to over 3,600 U.S. stocks with an ultra-low expense ratio of 0.03%.
Over the past 25 years, the total U.S. stock market has returned over 9% annually. While volatile, for long-term investors, index funds are a simple, low-cost way to earn solid returns. I have leveraged index funds in my own portfolio and for clients to build wealth over time.
Vanguard’s scale and expertise allow for minimal costs and maximum tax efficiency. For small or large portfolios, VTI should be a core holding. For clients aiming to retire early or build wealth, low-cost broad market exposure is the most effective strategy. Total U.S. stock market funds provide the broadest, most diversified exposure available. — Russell Rosario, Owner, RussellRosario.com
Prefer Zero-Fee Total Market Fund
The Fidelity Zero Total Market Index Fund is my top pick for building Financial Independence. It covers the full spectrum of the U.S. market without charging any management fees, which means your investment grows faster without extra costs. This fund’s wide exposure to both established and emerging companies helps balance risk and reward. For anyone serious about long-term growth, it’s a great tool to steadily build wealth over time. — Jonathan Gerber, President, RVW Wealth
Select Australian-domiciled International ETF
As an Australian, Vanguard MSCI Index International Shares ETF (VGS) is my favorite index fund for a variety of reasons. Vanguard MSCI Index International Shares ETF seeks to track the return of the MSCI World ex-Australia (with net dividends reinvested), in Australian dollars Index, before taking into account fees, expenses, and tax.
First, it is an Australian-domiciled fund, so I get to buy it in my local currency and not be exposed to double taxation. It tracks companies around the world, excluding Australia, so I have less local exposure as I already own real estate in Australia.
Second, its fees are 0.18% p.a., which is the lowest amongst most index funds that track the S&P 500 or a relative index.
Third, Vanguard offers no-cost brokerage to buy this index, which basically means I pay no brokerage fees on transactions I make regularly to add to my index portfolio.
Fourth, Vanguard issues a yearly statement, which I simply forward to my accountant to simplify my capital gains and other tax calculations.
Finally, it seems to consistently outperform most of the local and international indexes with a consistent dividend-paying pattern, which makes it easy to plan your future income. — Ajay Chavda, CTO, Mojo Dojo
Opt for Monthly Distribution Index
My favorite index for building Financial Independence is Global X NASDAQ 100 Covered Call ETF (QYLD).
It pays monthly distributions equivalent to an ROI of 1% per month, and it aligns with my belief that Financial Independence is built on solving for your income, not your equity.
I’m using it to build assets and welfare by consistently investing every month. Now, the income it generates on a monthly basis covers our monthly expenses.
At the end of the day, once our monthly expenses are covered from passive income, we’ll have the financial freedom to do what we want and not have to work as hard to support ourselves. — Jeremy Horowitz, CEO, Let’s Buy a Biz!
Pick Broad-Market S&P 500 ETF
The Vanguard S&P 500 ETF (VOO) is beneficial because it saves me time, is inexpensive, and gives me broad-market exposure — and because I’ve found out the hard way how difficult it is to pick individual stocks. — Matt Miczulski, Investments Editor, Finder.com
Recommend Total Stock Market Index Fund
For building Financial Independence, I often recommend a broad-market index fund like the Vanguard Total Stock Market Index Fund (VTSAX).
Here’s why:
- Diversification: This fund provides exposure to almost the entire U.S. stock market, offering excellent diversification across various sectors and company sizes.
- Low Costs: Vanguard is known for its low expense ratios, which significantly impact long-term returns.
- Simplicity: By investing in a single fund, you can simplify your investment strategy without sacrificing returns.
- Long-Term Focus: Index funds generally outperform actively managed funds over the long run, aligning with the core principle of building wealth through time. — Nikolay Krastev, SEO Consultant, Pemo
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