Best Index Funds 2026: Top Funds for Long-Term Investing

· Updated

Compare the best index funds for building long-term wealth with low fees.

Best Index Funds Overview

Category Top Pick Expense Ratio Min Investment
Total US Stock VTSAX / VTI 0.03% $3,000 / $1
S&P 500 VOO / IVV / FXAIX 0.03% $1
Total International VTIAX / VXUS 0.11% $3,000 / $1
Total Bond VBTLX / BND 0.03% $3,000 / $1
Total World VT 0.07% $1

Best S&P 500 Index Funds

Fund Ticker Expense Ratio Min 10-Yr Return*
Vanguard 500 ETF VOO 0.03% $1 12.8%
iShares Core S&P 500 IVV 0.03% $1 12.8%
SPDR S&P 500 SPY 0.09% $1 12.7%
Fidelity 500 Index FXAIX 0.015% $0 12.8%
Schwab S&P 500 SWPPX 0.02% $0 12.8%

*Annualized returns through 2025; past performance doesn’t guarantee future results

Advantage Explanation
Ultra-low cost 0.02-0.03% expense ratio
500 largest companies Instant diversification
Long track record ~10% historical annual return
Tax efficient Low turnover
Highly liquid Trade anytime

Best Total Stock Market Index Funds

Fund Ticker Expense Ratio Holdings Min
Vanguard Total Stock Market ETF VTI 0.03% 3,900+ $1
Vanguard Total Stock Admiral VTSAX 0.04% 3,900+ $3,000
Fidelity Total Market Index FSKAX 0.015% 4,000+ $0
Schwab Total Stock Market SWTSX 0.03% 3,400+ $0
iShares Total US Stock Market ITOT 0.03% 3,600+ $1

S&P 500 vs Total Market

Factor S&P 500 Total Market
Holdings 500 large-cap 3,000-4,000 all sizes
Mid/small cap No Yes (~20%)
Historical return Very similar Very similar
Recommendation Either is excellent Slightly more diversified

Best International Index Funds

Fund Ticker Expense Ratio Holdings Min
Vanguard Total Int’l ETF VXUS 0.08% 8,000+ $1
Vanguard Total Int’l Admiral VTIAX 0.12% 8,000+ $3,000
iShares Core MSCI Total Int’l IXUS 0.09% 4,300+ $1
Fidelity Total Int’l Index FTIHX 0.06% 5,000+ $0
Schwab International Index SWISX 0.06% 830+ $0

Why Include International?

Reason Benefit
Diversification Not all eggs in US basket
Growth opportunity Some countries grow faster
Currency diversification Hedge against dollar decline
Valuation International often cheaper

Typical allocation: 70-80% US / 20-30% International

Best Bond Index Funds

Fund Ticker Expense Ratio Yield Duration
Vanguard Total Bond ETF BND 0.03% 4.5% 6.3 yrs
iShares Core US Aggregate AGG 0.03% 4.5% 6.2 yrs
Fidelity US Bond Index FXNAX 0.025% 4.5% 6.1 yrs
Schwab US Aggregate Bond SCHZ 0.03% 4.5% 6.2 yrs

When to Include Bonds

Age/Timeline Suggested Bond %
20s-30s 0-10%
40s 10-20%
50s 20-30%
60+ 30-50%+

Common rule: Bond % = Your age (e.g., 30 years old = 30% bonds)

Best Target Date Index Funds

“Set it and forget it” all-in-one funds:

Fund (Vanguard) Ticker Expense Ratio Stock/Bond
Target Retirement 2065 VLXVX 0.08% 90/10
Target Retirement 2055 VFFVX 0.08% 90/10
Target Retirement 2045 VTIVX 0.08% 88/12
Target Retirement 2035 VTTHX 0.08% 77/23
Target Retirement 2025 VTTVX 0.08% 58/42

How they work: Automatically shift from stocks to bonds as you age.

Cost Comparison: $100,000 Over 30 Years

Expense Ratio Annual Fee 30-Year Fee Drag*
0.03% (Index) $30 $13,500
0.50% (Avg mutual fund) $500 $180,000
1.00% (High-cost fund) $1,000 $315,000

*Assumes 7% annual return; fee drag includes lost growth

Index fund advantage: Save hundreds of thousands in fees over a lifetime

Simple Portfolio Examples

One-Fund Portfolio

Fund Allocation
VT (Total World) 100%

Simplest option - global diversification in one fund

Two-Fund Portfolio

Fund Allocation
VTI (Total US) 70%
VXUS (Total Int’l) 30%

Three-Fund Portfolio

Fund Allocation (Young) Allocation (Near Retirement)
VTI (Total US) 60% 40%
VXUS (Total Int’l) 25% 20%
BND (Total Bond) 15% 40%

Where to Buy Index Funds

Brokerage Commission Proprietary Funds Account Min
Vanguard $0 VTSAX, VOO, etc. $0
Fidelity $0 FXAIX, FSKAX, etc. $0
Schwab $0 SWPPX, etc. $0
E*TRADE $0 None $0
TD Ameritrade $0 None $0

All major brokerages offer commission-free ETF trading

Index Fund vs ETF

Feature Mutual Fund ETF
Trading End of day Anytime
Minimum Often $1,000-$3,000 ~$1 (price of 1 share)
Tax efficiency Good Slightly better
Automatic investing Easy to set up May need workaround
Fractional shares Standard Depends on broker

Both are excellent choices for index investing

Getting Started

Step-by-Step

  1. Open brokerage account - Vanguard, Fidelity, or Schwab
  2. Choose strategy - Target date or 3-fund portfolio
  3. Set up automatic investing - Monthly contributions
  4. Rebalance annually - Keep allocations on target
  5. Stay the course - Don’t panic sell

Best Practices

Practice Why
Invest regularly Dollar-cost averaging
Minimize fees More money compounds
Stay diversified Reduce risk
Think long-term 10+ year horizon
Ignore daily news Avoid emotional decisions

Related: Best ETFs | How to Start Investing | 401(k) Guide | Roth IRA Guide

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