Is It Ok To Invest In High Growth Mutual Funds In 2024?
Most people will advise you to start investing early since doing so will help you reap greater dividends over time. Therefore, if you are new to the investment market, you might have heard about high growth mutual funds – a popular choice for rookie investors.
However, is it ok to invest in high growth mutual funds? What risks do they have? In addition, what are its investment costs, and how much will your income be?
If you wish to know the answer to all these questions, read this post until the end. You will learn what mutual funds are and why they are profitable. Moreover, you will also know the seven best mutual funds to invest in 2024!
What Are Mutual Funds?
As the term suggests, Mutual Funds are investments whose portfolio is made to reflect the performance of actual indexes or benchmarks. The portfolios of high growth mutual funds consist of various bonds and stocks, like exchange-traded funds.
Therefore, since they reflect the performance of actual indexes, most investors consider them a form of passive income. It’s because of choosing between growth stocks vs income stocks.
As such, most investors don’t have a long-term strategy while considering investing in them. Moreover, this strategy is viable since the management fees for investing in such funds are typically low.
Investing in mutual funds primarily aims to provide you with the same returns as investing in stocks of a specific sector or market.
This is the primary reason their portfolio comprises stocks and bonds that mirror specific mutuals and markets. For example, many high growth mutual funds mirror the S&P 500.
Why Invest In High Growth Mutual Funds?
Some of the primary reasons why investing in growth mutual funds is a good option in 2024 are:
1. Lower Expense Ratios
Fund or investment managers actively manage most investment portfolios. However, they don’t actively manage mutual funds. Therefore, mutual funds act as excellent sources of passive income.
Since the managers don’t actively manage such funds, your expenses (their management fees) are low. The expense ratio can be as low as 0.04% to a maximum of 1%.
2. Mirrors Specific Markets
Since mutual funds are like exchange-traded funds, they comprise a portfolio collection of bonds and stocks. Depending on the mutual fund you wish to invest in, they all mimic the performance of specific markets and indexes.
Therefore, you can single out high growth mutual funds by checking which market or mutual they mirror. If they mirror a market or mutual experiencing high growth, that specific mutual funds will experience the same!
3. High Performance
High growth mutual funds have always provided higher returns than many actively managed funds in the long run. This is true since their expense fees are lower.
Therefore, since they are investments that provide passive income over time, your cumulative earnings might be more than that of actively managed funds!
4. Tax Efficiency
According to a report by Statista, Mutual funds have lower annual turnover rates than other investment options. Therefore, this results in a lesser distribution of capital gains.
Lesser turnover results in less tax being levied on your investments, making them more tax-effective in the long run.
How To Choose The Best High Growth Mutual Funds To Invest In 2024?
Now that you know why investing in mutual funds is a good investment option, you must wonder: which are the best high growth mutual funds to invest in 2024?
To get the answer to this question, we have two broad considerations, which are:
Indexes
Before you learn which ones to invest in, you must know which indexes they mirror. All mutual funds on this list mirror one of these indexes:
- Standard & Poor’s 500 (S&P 500): The S&P 500 mutual tracks the stocks of the top 500 largest companies in the USA. It’s one of the most popular indexes since it has provided returns of over 10% annually over long periods.
- Dow Jones Industrial Average (DOW): The DOW mutual tracks the stocks of the USA’s 30 largest blue-chip companies (like Microsoft). It’s the second most popular investing mutual.
- Nasdaq Composite (NASD): The NASD mutual tracks the performance of 3,000 companies in the USA listed on the Nasdaq stock market screens. Most of these companies are the top tech firms in the USA (like Apple, Google, and Microsoft).
- Russell 2000: This mutual fund mutual tracks the performance of 2,000 small publicly traded companies in the USA. Therefore, most companies tracked in this mutual have low capitalization.
Other Consideration Factors
Moreover, we will be considering two primary factors of high growth mutual funds, which are:
- Expense Ratio: Since an investment firm manages all mutual funds, they will charge you for their management. This ratio is known as the expense ratio, a percentage of your investment you must pay annually. For example, if you invest $1,000 in a fund with an expense ratio of 0.10%, you must pay $1 annually.
- 5-Year Annual Returns: This defines the annual growth percentage of the fund. Therefore, the higher this percentage is, the greater your dividends will be!
The 7 Best High Growth Mutual Funds To Invest In 2024!
Here is a list of the best high growth mutual funds you must invest in 2024 based on all the considerations above!
1. Fidelity ZERO Large Cap Fund (FNILX)
Expense Ratio: 0%
Annualized 5-Year Returns: 14.4%
The Fidelity ZERO mutual fund is a fantastic investment option primarily targeted toward new investors without expense ratios. Therefore, this is one of the best high growth mutual funds to help you diversify your portfolio at low costs!
However, it doesn’t directly follow the S&P 500 mutual. Instead, it follows the Fidelity U.S. Large Cap Mutual – which has negligible differences from the S&P 500.
2. Vanguard S&P 500 ETF (VOO)
Expense Ratio: 0.03%
Annualized 5-Year Returns: 14.3%
The Vanguard S&P 500 ETF is one of the market’s most prominent high growth mutual funds since it has a valuation of billions. Moreover, it has backing from Vanguard, a powerful force in the investment industry.
This mutual fund is primarily meant for new investors who wish to diversify their portfolios. Moreover, its low expense ratio against its high makes it a viable investment option for veteran investors!
3. BlackRock iShares Core S&P 500 Mutual Fund (IVV)
Expense Ratio: 0.03%
Annualized 5-Year Returns: 14.4%
BlackRock’s iShares Core S&P 500 is one of the older highest growth mutual funds on this list, with its inception dating back to 2000.
This is a fantastic investment option since BlackRock, an investment giant on the same footing as Vanguard, funds it. Moreover, it has a high rate of return with lower expenses!
4. Shelton NASDAQ-100 Mutual Direct Fund (NASDX)
Expense Ratio: 0.52%
Annualized 5-Year Returns: 19.4%
The Shelton Nasdaq-100 Mutual Direct Fund is one of the best high growth mutual funds with the highest growth rate. This fund tracks non-financial tech companies of the Nasdaq-100 mutual with high growth rates.
Just like the iShares Core S&P 500 Mutual Fund, this also started in the same year – 2000. Moreover, this is a good investment option if you wish to invest in USA’s best tech firms.
5. Invesco QQQ Trust ETF (QQQ)
Expense Ratio: 0.2%
Annualized 5-Year Returns: 19.5%
If you want a cheaper alternative to the Shelton Nasdaq-100 above, the Invesco QQQ Trust ETF is an excellent alternative. Unlike the option above, this fund has a lower expense ratio of 0.2%.
Like the mutual fund above, QQQ is old, with its launch dating back to 1999. With investment giant Invesco managing it, it has beaten small cap stocks to become one of the best large-cap stocks in 2024.
6. Vanguard Russell 2000 ETF (VTWO)
Expense Ratio: 0.1%
Annualized 5-Year Returns: 8.7%
The Vanguard Russell 2000 ETF is one of the best high growth mutual funds tracking the Russell 2000 mutual. Vanguard began trading this fund back in 2010.
Since this fund tracks the Russell 2000 Mutual, it has a lower expense ratio of 0.1%. Therefore, this is an excellent investment if you wish to invest in low-cost funds.
7. SPDR Dow Jones Industrial Average ETF Trust (DIA)
Expense Ratio: 0.16%
Annualized 5-Year Returns: 10.6%
Finally, we have the SPDR Dow Jones Industrial Average ETF Trust fund. It’s the oldest high growth mutual fund in this list since it began trading in 1998. In addition, this fund is worth billions of dollars, tracking the DOW Index, worth 30 of the biggest blue-chip firms.
This is your best option to diversify your investment portfolio by investing in low-cost blue-chip firms.
Bottom Line
Yes, it’s okay to invest in high growth mutual funds in 2024.
Now that you know what mutual funds are and why they are a good investment option, it’s time to start investing!
Therefore, start investing by selecting any of the seven mutual funds listed above. All of them are great investment choices for rookie investors.
Thanks for reading this post! Please comment below if you need further investment guidance.
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