The Best Index Funds for Beginners

Index funds are the simplest way most people can start investing: one purchase gives you a slice of hundreds or thousands of companies, at a very low cost. The hard part is choosing among the dozens of options. This guide narrows the list to a handful of widely used, low-cost funds and explains how to pick between them.

What makes an index fund good for beginners?

• Low cost: look for an expense ratio (the yearly fee) of about 0.10% or less. On $10,000, a 0.03% fee is $3 a year.
• Broad diversification: the fund should hold hundreds of companies, not a narrow theme.
• Low or no minimum: ETFs can be bought for the price of one share, or less with fractional shares.
• A plain, well-known index: the S&P 500, the total U.S. market or the total world market.

Best index funds for beginners, by goal

The expense ratios below are the published figures as of 2025 and are rounded. Funds that track the same index tend to perform almost identically, so the best choice is usually the low-cost option available at the brokerage you already use.

1. Total U.S. stock market funds

• Vanguard Total Stock Market ETF (VTI): about 0.03%. The mutual fund version is VTSAX.
• Schwab U.S. Broad Market ETF (SCHB): about 0.03%.
• Fidelity ZERO Total Market Index Fund (FZROX): 0.00%, but it can only be held at Fidelity.

These own nearly every publicly traded U.S. company, large and small. For many beginners, one of these is enough to start.

2. S&P 500 funds

• Vanguard S&P 500 ETF (VOO): about 0.03%.
• iShares Core S&P 500 ETF (IVV): about 0.03%.
• Fidelity 500 Index Fund (FXAIX): about 0.015%.
• Schwab S&P 500 Index Fund (SWPPX): about 0.02%.

The S&P 500 holds about 500 of the largest U.S. companies. It covers most of the U.S. market's value, so its returns have tracked total-market funds closely over time.

3. International stock funds

• Vanguard Total International Stock ETF (VXUS): about 0.05%.
• iShares Core MSCI Total International Stock ETF (IXUS): about 0.07%.

Adding companies outside the U.S. spreads your risk across countries. Many investors keep somewhere between 20% and 40% of their stocks in international funds.

4. One-fund options

• Vanguard Total World Stock ETF (VT): about 0.06%. U.S. and international stocks in one fund.
• Target-date index funds, such as Vanguard Target Retirement 2060 or Fidelity Freedom Index funds: they mix stocks and bonds and shift toward bonds as the target year approaches. Fees are often around 0.08% to 0.12%.

If you never want to rebalance or choose a mix, a target-date fund matching your retirement year is the most hands-off choice, and it is a common default in 401(k) plans.

5. Bond index funds

• Vanguard Total Bond Market ETF (BND): about 0.03%.
• iShares Core U.S. Aggregate Bond ETF (AGG): about 0.03%.

Bonds usually rise and fall less than stocks. They matter more as you get closer to needing the money.

Simple starter portfolios

• One fund: a target-date fund, or VT.
• Two funds: about 70% total U.S. market and 30% total international.
• Three funds: U.S. stocks, international stocks and a bond fund, with a bigger bond share the sooner you need the money.

Before you buy

• Have an emergency fund first, so you won't need to sell during a downturn.
• Pay off high-interest debt such as credit cards.
• Pick the account: a 401(k) with a match, a Roth or traditional IRA, then a regular brokerage account.
• Set up automatic monthly investments and leave them alone.

The bottom line

There's no single best index fund. A low-cost total market, S&P 500 or target-date fund, bought regularly and held for years, puts a beginner ahead of most people trying to pick stocks. Choose one, automate it, and spend your energy on your savings rate instead.

Where to hold your index funds

The type of account you use can matter as much as the fund you choose. Tax-advantaged retirement accounts such as a 401(k), traditional IRA or Roth IRA let your investments grow without annual taxes on dividends and gains, though rules and limits apply. A taxable brokerage account offers more flexibility to withdraw money but generally means paying taxes on dividends and on gains when you sell.

Many beginners start with a workplace plan to capture any employer match, then add an IRA. Within each account, check which index funds are available and compare their expense ratios. Then set up automatic contributions so you invest consistently regardless of what markets are doing. Keeping it simple, low-cost and automatic is a strategy that works for beginners and experienced investors alike.