11 Best Index Funds for Beginners of February 2025

There are thousands of U.S.-listed stocks and bonds available to investors. You don't need to buy all of them, but having exposure to many helps build a diversified portfolio.

If you don't want to spend hours researching individual investments, another option is to buy index funds — baskets of stocks or bonds that track broad-market indexes like the S&P 500.

Below, we're looking at some of the best index funds that track the S&P 500 and Nasdaq-100 indexes, as well as index funds that track major bond indexes. We'll also discuss how to build a simple investment portfolio entirely out of index funds.

Note that it's important to research these funds before buying, just as you'd research stocks.

Best index funds by investment minimum and expense ratio

When it comes to index funds that track the S&P 500 and Nasdaq-100 indexes, two funds stand out in terms of expense ratio and investment minimum:

• The Fidelity Zero Large Cap Index (FNILX) is the cheapest major S&P 500 index fund we track.

• The Invesco Nasdaq 100 ETF (QQQM) is the cheapest major Nasdaq-100 index fund we track.

• The Fidelity US Bond Index Fund (FXNAX) is the cheapest bond index fund we track.

5 of the best index funds tracking the S&P 500

Index funds work by tracking specific market indices. So you'll need to know which market index you want your index fund to track before you start investing.

Here are some of the best index funds pegged to the S&P 500.

Vanguard 500 Index Fund Admiral Shares (VFIAX)

This fund is also known as the Vanguard S&P 500 Index fund. It was founded in 1976 and is the granddaddy of all index funds. Like the other S&P 500 funds on this list, this fund gives exposure to 500 of the largest U.S. companies, which make up about 75% of the U.S. stock market’s total value.

Schwab S&P 500 Index Fund (SWPPX)

As research firm Morningstar notes, this is one of the cheapest S&P 500-tracking funds out there. Launched in 1997, this Schwab fund charges a scant 0.02% expense ratio and requires no minimum investment. That makes it attractive for investors concerned about costs.

Fidelity 500 Index Fund (FXAIX)

Founded in 1988 (and formerly known as Institutional Premium Class fund), Fidelity removed this fund's investment minimum so investors with any budget size could get into the low-cost index fund action.

Fidelity Zero Large Cap Index (FNILX)

In the race for the lowest of the low-cost index funds, this Fidelity fund made news by being among the first to charge no annual expenses. That means investors can keep all their cash invested for the long run.

T. Rowe Price Equity Index 500 Fund (PREIX)

Founded in 1990, the fund’s expense ratio is competitive with other providers. However, the $2,500 minimum may be steep for beginning investors.

Top 3 index funds for the Nasdaq-100

Here are some of the best index funds pegged to the Nasdaq-100 index.

Invesco NASDAQ 100 ETF (QQQM)

QQQM includes 100 of the biggest nonfinancial companies listed on the Nasdaq. It also includes at least 90% of the assets on the NASDAQ-100 index and is rebalanced quarterly.

QQQM has an expense ratio of 0.15%. For every $1,000 invested, you'd pay a $1.50 fee annually.

Invesco QQQ (QQQ)

QQQ holds 101 companies, tracks the NASDAQ-100, and has $151.51 billion in assets under management^[0]

Fidelity NASDAQ Composite Index Fund (FNCMX)

FNCMX aims to mirror the performance of the Nasdaq Composite index. The fund usually holds 80% of stocks included in the index. In addition to the typical sectors represented by a Nasdaq index fund (such as IT, consumer services and health care), FNCMX also includes the real estate and material sectors.

FNCMX has an expense ratio of 0.34%. For every $1,000 invested, you'd pay a $3.40 fee annually.

Top 3 bond index funds

Here are some of the cheapest index funds that track the bond market. We compiled this list by screening for bond index funds with a Morningstar rating of at least 4 stars, and then selecting the three lowest-expense-ratio funds.

Fidelity US Bond Index Fund (FXNAX)

The Fidelity US Bond Index Fund tracks the Bloomberg US Aggregate Bond Index, a broad index of corporate bonds and government bonds.

It's the cheapest bond index fund we track, with no investment minimum and an expense ratio of just 0.025%.

Fidelity Inflation-Protected Bond Index Fund (FIPDX)

The Fidelity Inflation-Protected Bond Index Fund tracks the return of Treasury inflation-protected securities (TIPS), a subset of the government bond market.

Like FXNAX, it has no minimum. Its expense ratio is just 0.05%.

Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

Like FXNAX, the Vanguard Total Bond Market Index Fund tracks a broad range of government and corporate bonds. Like FIPDX, it has a reasonably-low expense ratio of 0.05%.

But unlike the previous two index funds, VBTLX come with a steep investment minimum of $3,000 (like many other Vanguard funds with the Admiral Shares label).

How to build an investment portfolio with index funds

A well-diversified investment portfolio generally includes investments in a variety of stocks and bonds. Index funds can make this easier — in fact, it's possible to build a diversified portfolio with just two index funds.

A common portfolio allocation for beginner investors is 85% stocks and 15% bonds. If you're starting out with just $200, you can set up this portfolio simply by buying $170 worth of FNILX and $30 worth of FXNAX (the cheapest S&P 500 index fund and bond index fund we track, respectively).

If you stay invested in these index funds, and add more money to them periodically, you'll be well on your way to achieving your investment goals. The stock index fund can grow your money during bull markets, while the bond index fund can reduce your losses in the event of a stock market correction.