3 Great Funds for the Class of 2024

Jason Kephart: Congrats, class of 2024! You’ve graduated … so now what? Other than the obvious next life milestones, like getting a job, it’s a great time to continue investing in your future. Whether you’re new to investing or already have some experience, we have three great options for new grads.

3 Great Funds for the Class of 2024

1. Schwab US Broad Market ETF SCHB
2. Vanguard Target Retirement 2070 VSVNX
3. BlackRock Sustainable Balanced MDCPX

The first option is a classic. It’s the US total stock market. Rather than making big bets on single companies, investing in the US total stock market gives you access to almost all of the biggest companies based in the US in a single transaction. It’s got all the big market movers you’ve heard of, like Microsoft, Nvidia, and Apple, but it also stretches down to smaller companies you may have forgotten, like Tupperware—you know, the containers you used to pack your school lunches in? With the return to office trend fully underway, maybe it’ll catch an updraft, or maybe not. That’s the beauty of owning the whole US stock market: You don’t have to make a prediction on any single company because you own them all. But, even with the diversification of owning more than 2,000 companies, don’t forget that stocks can still lose a lot of money in a short period, so don’t invest any money you’re saving for short-term needs, like a down payment on a house, all in stocks.

There are several ETFs that track the US total stock market. One we like is Schwab US Broad Market. It’s one of the cheapest options available. It only charges about $3 a year for every $10,000 invested.

Saving for retirement should be a top investment goal for new grads. And with that in mind, there’s no better way for the average person to save for retirement than with a target-date fund. Once you’ve lined up your first postcollege job, this is likely to be an option on your company’s defined-contribution plan, and it’s one that shouldn’t be dismissed. Target-date funds are designed to get you to retirement by investing in a mix of stocks and bonds that gradually reduces the amount of risk it takes as it gets closer to your target retirement date.

The Vanguard Target Retirement series is a great option in this peer group. It’s no-frills approach and low fees are emblematic of Vanguard. Because this is actively managed instead of just tracking an index, it’s a little more expensive than a US stock market ETF, but its $8 annual fee for every $10,000 invested is still about as low-cost as investing in a total portfolio that’s professionally managed can get.

When it comes to investing for the medium term, like five to 10 years, balanced funds are a good option. These portfolios mimic the iconic 60/40 portfolio, with most assets in stocks but enough in safer fixed-income to smooth out returns over longer periods.

The balanced fund we’re highlighting today is BlackRock Sustainable Balanced. As you may have guessed from its name, the management team here is looking at things like climate change and employee satisfaction to pick stocks and bonds from companies that will help drive better long-term results. They won’t exclude any companies based solely on climate risk, but you can reasonably expect less exposure to oil and gas companies—and maybe Tupperware—than in non-sustainable-focused strategies. It’s managed by a team we have a lot of confidence will outperform, whether they are focusing on sustainability or not.

For more of our top US equity ETFs, target-date funds, and balanced funds, check out the links below!

Watch 3 Must-Knows Before Investing in Target-Date Funds With Annuities for more from Jason Kephart.