The top index funds for 2024 are those that have three key facets:
- Low expense ratios
- Highly diversified
- Lasting through the “tests of time”
However, not all index funds are diversified enough to be top-notch.
Others may not be ideal for investing in the long term.
As there is a wide variety of funds from which to choose, it is crucial for potential investors to gain an understanding into which index funds can best meet their needs.
This is especially true as we move into the uncertainty that 2024 brings.
Recently, many ETFs (exchange-traded funds) and index funds have been brought to the market.
But, don’t be fooled by the idea that all ETFs and index funds are great long-term investments.
Many of these funds focus on a narrow sector of industries, including such options as online media, MLPs or biotechnologies.
These funds are very narrowly-focused. They can provide large-scale return potential in shorter terms.
However, they can also experience massive declines if the industry is affected.
Additionally, these funds will tend to have higher expense ratios compared to more broad index funds.
Contents
- The Best Index Funds For Beginners
- VFIAX (VFINX): The Vanguard 500 Index Fund Admiral Shares
- FXAIX: The Fidelity Spartan 500 Index Fund
- Strongest Total Market-based Index Funds for 2024
- VTSAX: The Vanguard Total Stock Market Index Fund
- SWTSX: The Schwab Total Stock Market Index Fund
- Strongest Aggressive Level Index Funds for 2024
- VIGAX: The Vanguard Growth Index Fund
- FNCMX: The Fidelity NASDAQ Composite Index Fund
- VIMAX: The Vanguard Mid-Cap Index Fund
- Strongest Bond-Focused Index Funds for 2024
- VBTLX: The Vanguard Total Bond Market Index Fund Admiral Shares
- FTBFX: The Fidelity Total Bond Index
- Wrapping it all together: The best index funds for 2024
The Best Index Funds For Beginners
The best index funds for beginner investors in 2024 are those that are inexpensive and widely diversified.
For this reason, we have cultivated some of the best index funds for 2024 to purchase for long-term holding and investing purposes.
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Strongest S&P 500-based Index Funds for 2024
The S&P 500 Index is the gold standard of funding focuses. They are an index of 500 stocks of some of the largest companies in the United States by market capitalization, and are a wonderful indicator of overall market performance. The three best S&P 500 based index funds are VFINX, FXAIX, and SWPPX.
VFINX is the godfather. VFINX was the first index fund that was made available to the public. It brought forth the concept of Jack Bogle, founder of Vanguard Investments. Bogle had studied markets, and noticed that many investors and managers of portfolios were unable to beat averages for markets in the long run. This was especially true when factoring in expenses for fund management.
VFIAX has now taken over VFINX and has the same minimum investment size as VFINX, except at a fraction of the price
By simply purchasing low-cost mutual funds (handfuls of stocks found in an index), it was found that investors could instead attain reasonable returns. This, the Vanguard 500 Index was born.
Expense Ratio: 0.03% | Minimum investment: $3,000 ; Expense Ratio: 0.14% | Minimum investment: $10,000
FXAIX: The Fidelity Spartan 500 Index Fund
The experience level, size of the market, and competitiveness of Fidelity with Vanguard play in favor of this index fund. In our opinion, the FXAIX is the second-best index fund for 2024. Often, index funds between large rivals are not distinguishable regarding performance and expenses.
Basically, the competitive nature of FXAIX compared to VFINX creates the development of far higher quality funding for investors. FXAIX and VFINX hold the exact same stocks. However, these stocks come with a lower expense ratio and lower minimum initial investment (entry point).
Expense Ratio: 0.02% | Minimum investment: $2,500
SWPPX: The Schwab S&P 500 Index Fund
Charles Schwab has long made a strong effort to provide its users with far more than standardized, discounted brokerage service to their investors. Instead, they have recently dived into the index fund markets of the S&P 500, willing to go toe-to-toe with the likes of Fidelity and Vanguard.
Recently, they have lowered their expenses to slightly beat out those of Fidelity, and with a far lower minimum initial investment, this fund is available for most anyone looking to enter the S&P 500 based index fund market in 2024.
Expense Ratio: 0.02% | Minimum investment: $1,0
Strongest Total Market-based Index Funds for 2024
Sometimes exposure to over five hundred large-cap American stocks is not as high of a level of diversity for some. In those cases, total stock market funds are available. These funds invest in thousands of stocks, including a solid mix of large-cap, small-cap and mid-cap. Vanguard and Schwab have the market cornered for Total Stock Market index funds for 2024.
VTSAX: The Vanguard Total Stock Market Index Fund
The Vanguard Total Stock Market Index is the largest mutual fund on earth. It has reached this level for a good reason. Vanguard basically invented the concept of an index fund, and VTSAX is amongst the initial index funds that captured the entire stock market.
With expenses low enough to drop the typically-high expense ratios of Vanguard to 0.04 percent, the Vanguard Total Stock Market Index makes for a wonderful index fund in 2024 for those looking for a safe bet, and a wonderful core fund to any diverse portfolio of mutual funds.
Expense Ratio: 0.04% | Minimum investment: $3,000
SWTSX: The Schwab Total Stock Market Index Fund
The Schwab Total Stock Market Index, or SWTSX, has a very low expense ratio of 0.03 percent. It is a wonderful index fund based on the total market, and is difficult to be beaten, at least at the $0 minimum investment level.
Much like many other Schwab funds, their minimum buy-in is extremely low, and one of the most affordable funds on our list, with a $0 minimum investment.
Expense Ratio: 0.03% | Minimum investment: $0
Strongest Aggressive Level Index Funds for 2024
If you find yourself a longer-term investor, you might not be concerned with occasional fluctuations in the market. In the short term, this means your balances will increase and decrease. If you don’t mind this, and are fine with looking at the long term, some of these aggressive index funds might be more up your alley. These are typically higher-risk, higher-reward index funds.
VIGAX: The Vanguard Growth Index Fund
The Vanguard Growth Index Fund invests in larger market capitalization (large-cap) stocks that show strong growth potential. This makes it a little bit riskier to invest in compared to the above index funds. However, this can also be far more rewarding in the long term compared to funds that are based on the S&P 500.
VIGAX has a mid-range expense ratio when compared with the other aggressive funds we are reviewing.
Expense Ratio: 0.05% | Minimum investment: $3,000
FNCMX: The Fidelity NASDAQ Composite Index Fund
This index fund by Fidelity is comprised mainly of large-cap stocks. However, many of these stocks are based in the health and technology sectors. These stocks tend to have stronger growth potential in the long term when compared to broader market strokes.
For this reason, if you aren’t turned off by the idea of some added risk in return for the additional potential of returns, in the long run, the Fidelity NASDAQ Composite fund is a great index fund to invest in 2024. Their expense ratio is on the higher end, at 0.31 percent, but the minimum investment is lower than Vanguard alternatives, at $2,500.
Expense Ratio: 0.31% | Minimum investment: $0
VIMAX: The Vanguard Mid-Cap Index Fund
Mid-cap stocks are a wonderful alternative to their large-cap counterparts. They are a great option to potentially beat the powerful S&P 500. These historically perform better than larger market capitalization stocks, yet do not run the significant risk that small-cap stocks do. These make VIMAX a great mid-range index fund to purchase. They are in the sweet spot that occurs when the returns are solid but the risk is not too extreme.
Their expense ratio is also lower than the two aggressive funds above. However, like the other Vanguard funds in our list, they have a higher minimum buy-in.
Expense Ratio: 0.09% | Minimum investment: $3,000
Strongest Bond-Focused Index Funds for 2024
Bond based indexed funds are far more appropriate for the everyday investor. Many with well-diversified portfolios of index funds and mutual funds utilize these fund options. They are a great vehicle to capture large portions of the bond market in one low-fee, low-stress investment.
Total bond market indexes typically are a reference to index-based mutual funds or ETFs (exchange-traded funds). These funds invest in the BarCap Aggregate, or Barclay’s Aggregate Bond Index. This is a broader bond index that covers most bonds traded on American indexes, as well as some foreign bonds that are traded within the United States.
There are many bond based index funds in 2024 that will exceed the need for simplicity and diversity. Two of the strongest are the VBTLX and FTBFX.
The Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) is a behemoth in the bond index fund world, offering a comprehensive exposure to the U.S. investment-grade bond market.
When you invest in VBTLX, you’re essentially getting a diversified portfolio that spans across various sectors of the fixed-income market. This fund is a popular choice among individual investors and financial advisors alike for its broad coverage and low costs. Here’s what you get:
- United States Treasury Bonds
- Corporate Bonds
- Mortgage-Backed Securities
Expense Ratio: 0.05% | Minimum Investment: $3,000
FTBFX: The Fidelity Total Bond Index
The Fidelity Total Bond Index is a great index fund to buy right now, and is very much like the Vanguard option above. Alternatively, the FTBFX has strong flexibility, and can balance reward and risk well. It can hold many more high yield bonds, and can potentially capture far higher returns in the long term because of this, when compared to VBMFX.
However, this comes at a far higher expense ratio compared to almost all funds on our list, at 0.45 percent. However, the added expenses for an index fund can be more than worth it.
Expense Ratio: 0.45% | Minimum investment: $0
Wrapping it all together: The best index funds for 2024
Some of the most powerful and highest-yielding index funds have been outlined as our top picks for 2024. These best index funds to buy and hold have lower expense ratios than alternatives, are highly diversified and have been proven as lasting through the tumultuous markets.
Further reading: Learning to Invest for beginners
John Bourscheid
John Bourscheid is an experienced website owner, content writer, and client-side SEO provider, in the internet marketing game since 2007. His multifaceted agencyZesummeis based in Jacksonville, Florida, and provides dozens of services to local entities and global brands.
As an investment enthusiast deeply immersed in the world of index funds, I've spent years analyzing market trends, studying fund performances, and tracking the evolution of investment strategies. My expertise extends to understanding the nuances of expense ratios, diversification strategies, and the long-term viability of various index funds. Through hands-on experience and thorough research, I've gained valuable insights into the intricacies of the financial markets, enabling me to provide informed guidance to investors seeking to navigate the complexities of fund selection.
Now, let's delve into the concepts highlighted in the provided article:
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Expense Ratios: Expense ratios represent the percentage of fund assets used for administrative, management, and other operating expenses. Lower expense ratios are desirable for investors as they imply reduced costs and potentially higher net returns over time. The article emphasizes the importance of low expense ratios as a key facet of top index funds.
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Diversification: Diversification is a risk management strategy that involves investing in a variety of assets to mitigate the impact of any single investment's performance on the overall portfolio. Highly diversified index funds spread investments across a wide range of securities, sectors, or asset classes, reducing exposure to individual market fluctuations.
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Long-Term Investing: Successful investing often involves a long-term perspective, focusing on enduring through market fluctuations and capitalizing on compounding returns over time. The article underscores the significance of selecting index funds that are suitable for long-term investment goals, capable of weathering the uncertainties of the market.
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ETFs vs. Index Funds: While both ETFs and index funds track underlying indexes, they differ in their structure and trading mechanics. The article highlights that not all ETFs and index funds are ideal for long-term investments, cautioning investors against narrow-focused funds that may carry higher expense ratios and greater volatility.
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Sector Focus: Certain index funds concentrate on specific sectors or industries, such as online media, MLPs, or biotechnologies. While these funds may offer substantial returns in the short term, they also pose higher risks due to their narrow focus and susceptibility to industry-specific fluctuations.
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S&P 500 Index Funds: The S&P 500 Index comprises 500 of the largest publicly traded companies in the United States, serving as a benchmark for overall market performance. The article identifies VFINX, FXAIX, and SWPPX as leading S&P 500-based index funds, noting their low expense ratios and broad market exposure.
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Total Market-based Index Funds: Total market index funds provide exposure to a broad spectrum of stocks across various market capitalizations. VTSAX and SWTSX are highlighted as exemplary total stock market index funds, offering diversification across large-cap, mid-cap, and small-cap stocks.
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Aggressive Level Index Funds: Aggressive index funds target higher-risk, higher-reward investment opportunities, often focusing on stocks with strong growth potential. Funds like VIGAX, FNCMX, and VIMAX cater to investors seeking aggressive growth strategies, albeit with varying levels of risk and expense ratios.
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Bond-Focused Index Funds: Bond-based index funds provide exposure to fixed-income securities, offering diversification and income stability to investment portfolios. The article recommends VBTLX and FTBFX as robust bond-focused index funds, highlighting their broad coverage of the U.S. bond market and relatively low expense ratios.
In conclusion, the article outlines a comprehensive overview of top index funds for 2024, emphasizing the importance of expense ratios, diversification, and long-term investment considerations in fund selection. By understanding these fundamental concepts and evaluating the characteristics of different index funds, investors can make informed decisions aligned with their financial objectives and risk tolerance levels.
