Best Index Funds — October 2025
A practical, investor‑friendly guide with fees, performance, and how to use each fund in your portfolio.
Updated: Sept. 30, 2025 • Data check completeQuick Summary
S&P 500 Index Funds
| Fund | Type | Expense Ratio | 5‑Yr Ann. Return | Best For |
|---|---|---|---|---|
| Fidelity ZERO Large Cap Index (FNILX) | Mutual fund | 0.00% | 16.3% | No‑fee core holding |
| Vanguard S&P 500 ETF (VOO) | ETF | 0.03% | 16.5% | Low‑cost core ETF |
| SPDR S&P 500 ETF Trust (SPY) | ETF | 0.095% | 16.5% | High liquidity/trading |
| iShares Core S&P 500 ETF (IVV) | ETF | 0.03% | 16.5% | Scale + low fee |
| Schwab S&P 500 Index Fund (SWPPX) | Mutual fund | 0.02% | 16.5% | Lowest‑fee mutual fund |
Nasdaq‑100 Index Funds
| Fund | Type | Expense Ratio | 5‑Yr Ann. Return | Best For |
|---|---|---|---|---|
| Shelton NASDAQ‑100 Index Direct (NASDX) | Mutual fund | 0.51% | 17.3% | Tech‑heavy mutual fund |
| Invesco QQQ Trust (QQQ) | ETF | 0.20% | 17.5% | Low‑friction growth tilt |
More Top Index Funds
| Fund | Type | What It Tracks | Expense Ratio | 5‑Yr Ann. Return | Use Case |
|---|---|---|---|---|---|
| Vanguard Russell 2000 ETF (VTWO) | ETF | ~2,000 U.S. small‑caps | 0.07% | 11.6% | Long‑term small‑cap growth |
| Vanguard Total Stock Market ETF (VTI) | ETF | Entire U.S. market | 0.03% | 15.8% | One‑fund core portfolio |
| SPDR Dow Jones Industrial Average (DIA) | ETF | 30 blue‑chips | 0.16% | 13.0% | Dividend/stability tilt |
How to Invest: 3 Steps
- Research & Choose Exposure — Geography (U.S. vs. international), sector (broad vs. tech), and market‑cap (large vs. small).
- Compare Structure & Costs — ETFs tend to be more tax‑efficient; scrutinize expense ratios and any loads on mutual funds.
- Buy & Automate — Use your broker to purchase and set up monthly contributions (dollar‑cost averaging).
Fees & Why They Matter
Every 0.10% you save compounds. Typical ranges:
- Stock Index Mutual Fund (avg, 2023): 0.05%
- Stock Index ETF (avg, 2023): 0.15%
- Active Stock Mutual Fund (avg): 0.42%
Risks & Best Practices
- Market Risk: Broad funds still fall in bear markets. Match allocation to time horizon.
- Concentration Risk: Nasdaq‑focused funds are tech‑heavy; diversify with S&P 500 or Total Market.
- Tracking Differences: Some funds follow slightly different indexes (e.g., FNILX). Check holdings.
Model Portfolios (Practical Use)
| Profile | Allocation | Rationale |
|---|---|---|
| Simple Starter | VTI 100% | Maximum simplicity with total U.S. exposure. |
| Balanced Growth | VOO 60% • QQQ 20% • VTWO 15% • Cash/Bonds 5% | Core S&P 500 plus tech tilt and small‑cap kicker; small ballast. |
| Income‑Conscious | VOO 50% • DIA 25% • VTI 20% • Cash 5% | Blue‑chip dividend tilt without sacrificing broad exposure. |
Adjust to tax‑advantaged vs. taxable accounts. ETFs often preferred for tax efficiency.
Timing: Should You Buy Now?
Yes — if your horizon is long. Markets often hit new highs yet still deliver strong long‑term returns. Focus on time in the market, not timing the market.
Checklist Before You Buy
- ✔ Expense ratio ≤ 0.10% for core U.S. equity funds
- ✔ No sales load or 12b‑1 fees
- ✔ ETF vs. Mutual Fund: choose for taxes/liquidity/convenience
- ✔ Confirm index methodology and top holdings
- ✔ Plan for rebalancing (calendar or threshold)
- ✔ Automate contributions (DCA)
🏦 Best Index Funds to Invest in — October 2025 Edition
📘 Introduction: Why Index Funds Still Rule in 2025
Index funds have become the foundation of modern investing — simple, low-cost, and historically reliable. In a world where stock picking and market timing continue to frustrate even professionals, index funds offer a disciplined way to build wealth.
They track market indexes like the S&P 500, Nasdaq-100, or Russell 2000, giving investors instant diversification and market-level returns — all while charging minimal fees.
In October 2025, several index funds continue to shine for their low expense ratios, strong long-term returns, and ease of access. Let’s break down the best options and how to use them effectively in your portfolio.
🧭 Section 1: Understanding Index Funds
🔹 What Is an Index Fund?
An index fund is a type of mutual fund or ETF that aims to mirror the performance of a specific market index — like the S&P 500 or Nasdaq-100 — instead of trying to beat it.
- Mutual funds: Buy and hold for the long term; prices update once daily.
- ETFs (Exchange-Traded Funds): Trade like stocks throughout the day.
🔹 Why They Matter
- Diversification: One purchase gives you exposure to hundreds of companies.
- Low Fees: No fund manager means no hefty management cost.
- Predictable Strategy: They follow market performance — not human emotion.
- Strong Long-Term Returns: Historically, major indexes have returned around 10% annually.
📊 Section 2: The Best S&P 500 Index Funds for 2025
The S&P 500 represents the 500 largest U.S. companies — the heart of the American economy. Here are the top options this year:
1️⃣ Fidelity ZERO Large Cap Index (FNILX)
Expense Ratio: 0%
5-Year Annualized Return: 16.3%
💡 Overview
- Part of Fidelity’s ZERO lineup with no expense ratio — a revolutionary offering.
- Tracks the Fidelity U.S. Large Cap Index, which closely mirrors the S&P 500.
- No licensing fees make it unbeatable in cost.
👤 Best For
Investors seeking a no-fee, long-term core fund for wealth building.
🛒 How to Buy
Directly through Fidelity or any major online broker.
✅ Checkpoint
If your goal is long-term compounding with minimal fees, FNILX is one of the best starting points.
2️⃣ Vanguard S&P 500 ETF (VOO)
Expense Ratio: 0.03%
5-Year Annualized Return: 16.5%
💡 Overview
- One of the largest and most trusted ETFs globally.
- Vanguard’s investor-first philosophy ensures low costs and transparency.
👤 Best For
Anyone looking for a tried-and-true ETF for long-term portfolios.
🛒 How to Buy
Available via Vanguard or any online brokerage.
✅ Practical Use
Use VOO in tax-advantaged accounts like IRAs or 401(k)s to grow wealth tax-deferred.
3️⃣ SPDR S&P 500 ETF Trust (SPY)
Expense Ratio: 0.095%
5-Year Annualized Return: 16.5%
💡 Overview
- The original ETF (launched in 1993).
- Massive liquidity — perfect for traders and institutions.
- Tracks the exact S&P 500 index.
👤 Best For
Investors who want a highly liquid ETF for active or passive use.
✅ Checkpoint
SPY is ideal if you want fast execution or intraday trading flexibility.
4️⃣ iShares Core S&P 500 ETF (IVV)
Expense Ratio: 0.03%
5-Year Annualized Return: 16.5%
💡 Overview
- Managed by BlackRock, the world’s largest asset manager.
- One of the top three ETFs in the world by total assets.
👤 Best For
Buy-and-hold investors who value liquidity, longevity, and low cost.
5️⃣ Schwab S&P 500 Index Fund (SWPPX)
Expense Ratio: 0.02%
5-Year Annualized Return: 16.5%
💡 Overview
- Sponsored by Charles Schwab, known for investor-friendly pricing.
- A classic mutual fund with a long record since 1997.
👤 Best For
Investors who prefer mutual funds over ETFs and want to minimize expenses.
🛒 How to Buy
Through Schwab.com or partner brokers.
⚡ Section 3: The Best Nasdaq Index Funds
The Nasdaq-100 is technology-heavy — packed with innovation giants like Apple, Microsoft, and Nvidia. It’s more volatile than the S&P 500 but has delivered superior growth in recent years.
1️⃣ Shelton Nasdaq-100 Index Direct (NASDX)
Expense Ratio: 0.51%
5-Year Annualized Return: 17.3%
💡 Overview
- Tracks 100 of the largest non-financial companies on the Nasdaq.
- A great play for growth investors seeking tech exposure.
👤 Best For
Long-term investors are comfortable with higher volatility for higher potential returns.
✅ Practical Use
Combine NASDX with a stable S&P 500 fund to balance growth and stability.
2️⃣ Invesco QQQ Trust ETF (QQQ)
Expense Ratio: 0.20%
5-Year Annualized Return: 17.5%
💡 Overview
- The benchmark ETF for the Nasdaq-100.
- Consistently ranks among the top-performing large-cap growth funds.
- Managed by Invesco.
👤 Best For
Investors want exposure to the biggest names in tech — like Amazon, Meta, and Nvidia.
✅ Checkpoint
QQQ is perfect for those who believe in long-term U.S. tech dominance.
🌐 Section 4: More Top Index Funds Beyond S&P & Nasdaq
For better diversification, investors can explore funds tracking smaller companies, the entire U.S. market, or blue-chip portfolios.
1️⃣ Vanguard Russell 2000 ETF (VTWO)
Expense Ratio: 0.07%
5-Year Annualized Return: 11.6%
💡 Overview
- Tracks 2,000 small-cap companies — the growth engine of the U.S. economy.
- Offers strong long-term potential and diversification.
👤 Best For
Investors seeking small-cap exposure for growth over decades.
2️⃣ Vanguard Total Stock Market ETF (VTI)
Expense Ratio: 0.03%
5-Year Annualized Return: 15.8%
💡 Overview
- Covers the entire U.S. stock market — large, mid, and small caps.
- Essentially, one-stop exposure to the American economy.
👤 Best For
Anyone wanting a set-and-forget portfolio anchor.
✅ Practical Tip
If you could only pick one fund for life, VTI is one of the smartest options.
3️⃣ SPDR Dow Jones Industrial Average ETF Trust (DIA)
Expense Ratio: 0.16%
5-Year Annualized Return: 13%
💡 Overview
- Tracks the 30 blue-chip companies of the Dow Jones Industrial Average.
- Focused on mature, dividend-paying giants.
👤 Best For
Investors prioritize stability and dividend income.
💰 Section 5: Why Index Funds Dominate Portfolios
1. Attractive Long-Term Returns
- The S&P 500 has returned around 10% annually over the long run.
- Compounding over time is what creates true wealth.
2. Instant Diversification
- A single share of an S&P 500 fund provides exposure to 500 companies.
- Reduces individual stock risk and volatility.
3. Lower Costs = Higher Returns
- Average index fund costs between 0.02 and 0.10%, compared to 0.42% for actively managed funds.
- Every 0.1% saved annually adds thousands over decades.
4. Lower Risk Profile
- Because they’re diversified, index funds are safer than betting on a few individual stocks.
✅ Checkpoint
Over 90% of actively managed funds fail to beat the S&P 500 over 10 years — that’s why index investing wins.
🧩 Section 6: How to Invest in Index Funds — Step-by-Step
Step 1: Research and Analyze
Before buying, understand:
- Geography: U.S., global, or emerging markets?
- Sector: Tech, healthcare, or total market?
- Market Cap: Large, mid, or small companies?
- Investment Goal: Growth, dividends, or stability?
📝 Example:
If you’re 30 with a long time horizon — combine VOO (core) + QQQ (growth) + VTWO (small-cap exposure).
Step 2: Compare Fund Details
- Expense Ratios: Lower is better.
- Taxes: ETFs are more tax-efficient than mutual funds.
- Minimums: Mutual funds may require $1,000–$3,000 to start; ETFs often allow fractional shares.
- Liquidity: ETFs trade anytime; mutual funds trade once daily.
Step 3: Purchase Your Fund
Buy directly through:
- Fund websites: Vanguard, Schwab, Fidelity
- Online brokers: Robinhood, Charles Schwab, Fidelity, E*TRADE
- Robo-advisors: Betterment, Wealthfront, or Schwab Intelligent Portfolios
💡 Pro Tip: Set up automatic monthly contributions to practice dollar-cost averaging.
⚖️ Section 7: Key Factors to Consider
🔹 Long-Run Performance
Always check the 10-year history and consistency across market cycles.
🔹 Expense Ratio
Even small differences matter.
Example:
- 0.05% = $5 per $10,000 per year
- 0.20% = $20 per $10,000 per year
→ Over 30 years, this compounds into thousands.
🔹 Fund Availability & Convenience
Some mutual funds are restricted by broker; ETFs, however, are universal.
🔹 Trading Costs
Most brokers offer commission-free ETF trades, but check for load fees on mutual funds.
⚠️ Section 8: Understanding the Risks
- Market Risk: Index funds move with the market — they can decline in bear markets.
- Sector Concentration: Nasdaq-based funds are tech-heavy; diversification is key.
- Underperformance Risk: Certain indexes (like small-caps) may lag for years.
- Currency & Inflation Risk: For international index funds, FX fluctuations can impact returns.
✅ Checkpoint
Index funds rarely “go to zero,” but patience and a long-term horizon are essential to ride out downturns.
💵 Section 9: Index Fund Fees Explained
Mutual Funds
- May charge:
- Sales Load: A one-time commission — avoidable.
- Expense Ratio: Ongoing management cost.
ETFs
- Charge only an expense ratio (tiny daily deduction).
- No sales load, no minimums, more flexibility.
📈 Average 2023 Costs:
- Stock Index Mutual Fund: 0.05%
- Stock Index ETF: 0.15%
- Average Active Stock Fund: 0.42%
The difference between 0.05% and 0.15% may seem small, but over decades, it’s huge.
⏰ Section 10: Is Now a Good Time to Buy?
Yes — if you’re investing for the long term.
- Markets have hit new highs, but history shows investing at highs still leads to strong long-term gains.
- Time in the market > Timing the market.
- Use Dollar-Cost Averaging (DCA): Invest a fixed amount regularly to smooth out volatility.
🧠 Long-Term Rule:
The best time to invest was yesterday; the next best time is today.
🧠 Section 11: Building a Sample Portfolio (Practical Use)
| Goal | Fund | Allocation | Reason |
|---|---|---|---|
| Core U.S. Exposure | Vanguard S&P 500 (VOO) | 50% | Low-cost, stable growth |
| Tech & Innovation | Invesco QQQ (QQQ) | 20% | High growth, innovation exposure |
| Small-Cap Growth | Vanguard Russell 2000 (VTWO) | 15% | Long-term compounding |
| Blue-Chip Income | SPDR Dow ETF (DIA) | 10% | Dividend stability |
| Cash Reserve | Money Market or Bond Index Fund | 5% | Liquidity & balance |
✅ Checkpoint:
Rebalance annually and keep adding regularly. Consistency beats perfection.
🧩 Section 12: Final Thoughts — The Power of Simplicity
The beauty of index investing lies in its simplicity:
- You don’t need to predict winners.
- You don’t need to time markets.
- You just need to stay invested and keep costs low.
Even legendary investors like Warren Buffett recommend index funds for most people. His advice to his heirs?
“Put 90% of the money in a low-cost S&P 500 index fund and 10% in short-term government bonds.”
🪙 Key Takeaways
✅ Start with broad funds like VOO, IVV, or VTI.
✅ Add growth with QQQ or NASDX.
✅ Balance with small-caps like VTWO.
✅ Avoid high-fee funds — expenses erode compounding.
✅ Stay consistent — time is your biggest ally.
💬 Practical Reminder:
“Wealth isn’t built in days — it’s built in decades.”
Start small, automate your investments, and let compounding do the heavy lifting.
Top 5 Index Funds to Buy in 2025 | Best ETFs for Long-Term Investing
Looking for the best index funds to invest in for 2025? 💰
In this video, we break down the top-performing and lowest-cost index funds across the S&P 500, Nasdaq, and Total U.S. Market — perfect for both beginners and long-term investors.
You’ll learn:
✅ Which S&P 500 funds (VOO, IVV, FNILX, SWPPX) give the best returns and lowest fees
✅ How tech-focused funds like QQQ and NASDX compare
✅ Why Vanguard’s VTI and Russell 2000 ETFs offer true diversification
✅ Practical steps to start investing in index funds today
✅ How to build your own low-cost, long-term portfolio
We’ll also explain key investing principles like expense ratios, dollar-cost averaging (DCA), and diversification, so you can grow your wealth steadily and confidently.
💡 Perfect for:
- Beginners learning how to invest
- Long-term investors seeking financial independence
- Anyone comparing Vanguard, Fidelity, Schwab, and Invesco ETFs
📊 Featured Funds in this video:
- Vanguard S&P 500 ETF (VOO)
- iShares Core S&P 500 ETF (IVV)
- SPDR S&P 500 ETF (SPY)
- Fidelity ZERO Large Cap Index (FNILX)
- Invesco QQQ Trust (QQQ)
- Vanguard Total Stock Market ETF (VTI)
- Vanguard Russell 2000 ETF (VTWO)
- Schwab S&P 500 Index Fund (SWPPX)
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📈 Watch next: [Best Dividend ETFs for 2025]
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