The top index funds in 2023 are those with three main facets:
Location Cost Ratio
Enduring through the "trials of time"
However, not all index funds are diversified enough to be top notch.
Others may not be ideal for long-term investments.
Since there is a wide variety of funds to choose from, it is critical that potential investors understand which index funds will best meet their needs.
This is especially true as we enter the uncertainty that 2023 brings.
Recently, many ETFs (exchange traded funds) and index funds have been launched.
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 set of industries, including options like online media, MLPs, or biotech.
These funds have a very narrow focus. They can offer large-scale return potential in the short term.
However, they can also experience massive drops if the industry is hit.
Also, these funds will generally have higher expense ratios compared to the broader index funds.
The best index funds in 2023 are those that are cheap and broadly diversified.
For this reason, we have cultivated some of the best 2023 index funds to buy for investment and long-term investing purposes.
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The strongest S&P 500-based index funds for 2023
The S&P 500 Index is the gold standard for funding approaches. 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 top three S&P 500-based index funds are VFINX, FXAIX, and SWPPX.
VFINX is the godfather. VFINX was the first index fund to be made available to the public. It spawned the concept from Jack Bogle, founder of Vanguard Investments. Bogle had studied the markets and found that many investors and portfolio managers could not beat the market averages over the long term. This was especially the case when fund management costs were taken into account.
VFIAX has now acquired VFINX and has the same minimum investment size as VFINX, except for a fraction of the price.
Simply by buying low-cost mutual funds (a handful of stocks in an index), it turned out that investors could earn reasonable returns. Thus, the Vanguard 500 index was born.
Expense ratio: 0.04% | Minimum investment: $3,000; Expense Ratio: 0.14% | Minimum Investment: $10,000
FXAIX: Het Fidelity Spartan 500 index fund
Loyalty to Vanguard's experience level, market size, and competitiveness favor this index fund. In our opinion, FXAIX is the second best index fund for 2023. Index funds are often indistinguishable among major rivals in terms of performance and cost.
In summary, the competitive nature of FXAIX compared to VFINX allows for the development of much higher quality financing for investors. FXAIX and VFINX have exactly the same shares. However, these stocks have a lower expense ratio and a lower minimum initial investment (entry point).
Expense Ratio: 0.01% | Minimum Investment: $2,500
SWPPX: Het Schwab S&P 500 Index Fund
Charles Schwab has long strived to offer its users much more than standardized discount brokerage services for its investors. Instead, they recently dove into the S&P 500 index fund markets, ready to take on the likes of Fidelity and Vanguard.
They recently cut their expenses to slightly outperform Fidelity, and with a much lower minimum initial investment, this fund is available to just about anyone looking to get into the S&P 500-based index fund market in 2023.
Expense Ratio: 0.02% | Minimum investment: $1.0
The Strongest Market-Based Index Funds Overall for 2023
Sometimes exposure to over five hundred large-cap US stocks isn't such a high level of diversity for some. In these cases, all the stock funds are available. These funds invest in thousands of stocks, including a strong mix of large-cap, small-cap, and mid-cap. Vanguard and Schwab have cornered the market for Total Stock Market index funds by 2023.
VTSAX: The Vanguard Total Stock Market Index Fund
The Vanguard Total Stock Market Index is the largest mutual fund in the world. It has reached this level for a reason. Vanguard basically invented the concept of an index fund, and VTSAX is one of the first index funds to take the entire stock market by storm.
With fees low enough to bring Vanguard's generally high expense ratios down to 0.04 percent, the Vanguard Total Stock Market Index 2023 is a wonderful index fund for those looking for a safe bet and a great core fund to any diverse portfolio of investment 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's a wonderful index fund based on the total market and is hard to beat, at least at the minimum investment level of $0.
Like many other Schwab funds, its minimum entry is extremely low and it is one of the most affordable funds on our list, with a minimum investment of $0.
Expense Ratio: 0.03% | Minimum Investment: $0
The Strongest Aggressive Tier Index Funds for 2023
If you find yourself as a longer-term investor, you may not have to worry about the occasional fluctuations in the market. In the short term, this means that your balances will go up and down. If you don't mind this and are happy to take the long view, some of these aggressive index funds may be more for you. Typically, these are higher risk, higher reward funds.
VIGAX: The Cutting Edge Growth Index Fund
The Vanguard Growth Index Fund invests in large-cap stocks that have strong growth potential. This makes it slightly riskier to invest compared to previous index funds. However, this can also be much more rewarding in the long run compared to funds based on the S&P 500.
VIGAX has an average expense ratio compared to the other aggressive funds we reviewed.
Expense Ratio: 0.05% | Minimum Investment: $3,000
FNCMX: The Fidelity NASDAQ Composite Index Fund
This Fidelity index fund consists primarily of large-cap stocks. However, many of these stocks are based in the healthcare and technology sectors. These stocks typically have greater long-term growth potential compared to broader market movements.
For this reason, over the long term, the Fidelity NASDAQ Composite fund is a great index fund to invest in 2023, if you're not intimidated by the idea of additional risk in exchange for additional return potential. It's on the high end, at 0.29 percent, but the minimum investment is lower than Vanguard's, at $2,500.
Expense Ratio: 0.3% | Minimum Investment: $0
VIMAX: Vanguard's 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 mighty S&P 500. Historically, these have outperformed larger-cap stocks, but they don't carry the significant risk that small-cap stocks do. This makes VIMAX a great mid-range index fund to buy. They are in the sweet spot which occurs when the returns are strong but the risk is not too extreme.
Its expense ratio is also lower than the previous two aggressive funds. However, like the other Vanguard funds on our list, they have a higher minimum entry.
Expense Ratio: 0.05% | Minimum Investment: $3,000
The Strongest Bond-Focused Index Funds for 2023
Bond-based index funds are much better suited for the everyday investor. Many with well-diversified portfolios of index funds and mutual funds use these fund options. They are a great way to capture large portions of the bond market in a single low-cost, low-stress investment.
General bond market indices are generally a reference to index-based mutual funds or exchange-traded funds (ETFs). These funds invest in BarCap Aggregate or Barclay's Aggregate Bond Index. This is a broader bond index that covers most bonds traded in US indices, as well as some foreign bonds traded within the United States.
There are plenty of bond-based index funds in 2023 that will overcome the need for simplicity and diversity. Two of the strongest are VBMFX and FTBFX.
VBMFX: Vanguard Total Bond Market Index
The Vanguard Total Bond Market Index is the largest bond-focused index fund in existence (in terms of assets under management). This means it's an all-time favorite option for self-investing buyers and pay-only advisory services. Buying the VBMFX Index gives buyers exposure to the entire US bond market. This includes thousands of bonds of many types, including:
US Government Bonds
Short, medium and long term bonds
Expense Ratio: 0.15% | Minimum investment: Closed to new investors
FTBFX: Fidelity total bonus index
The Fidelity Total Bond Index is a great index fund to buy now and is very similar to the Vanguard option above. Alternatively, FTBFX has great flexibility and can balance reward and risk well. It can hold many more high-yield bonds and as a result can earn much higher returns over the long term compared to VBMFX.
However, this comes with a much higher expense ratio compared to almost all funds on our list, at 0.45 percent. However, the additional cost of an index fund may be worth it.
Expense ratio: 0.45% | Minimum Investment: $0
In short: the best index funds for 2023
Some of the best performing and most powerful index funds are our top picks for 2023. These best buy-and-hold index funds have lower expense ratios than alternatives, are highly diversified, and have proven sustainable in tumultuous markets.
Further Reading: Learning to Invest for Beginners
John Bourscheid has been a successful website owner, content writer, and SEO provider on the client side of the internet marketing game since 2007. Based in Jacksonville, Florida, his versatile agency Zesummeis provides dozens of services to local entities. and global brands.
Which fund is best 2023? ›
- Fidelity ZERO Large Cap Index.
- Vanguard S&P 500 ETF.
- SPDR S&P 500 ETF Trust.
- iShares Core S&P 500 ETF.
- Schwab S&P 500 Index Fund.
- Shelton NASDAQ-100 Index Direct.
- Invesco QQQ Trust ETF.
- Vanguard Russell 2000 ETF.
|TAN||Invesco Solar ETF||21.31%|
|QCLN||First Trust Nasdaq Clean Edge Energy Fund||20.98%|
|VGT||Vanguard Information Technology ETF||18.27%|
|IAI||iShares U.S. Broker-Dealers & Securities Exchanges ETF||18.21%|
|Fund||Dividend Yield||Expense Ratio|
|ProShares S&P 500 Aristocrats ETF (NYSEMKT:NOBL)||1.94%||0.35%|
|Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD)||3.39%||0.06%|
|Vanguard High Dividend Yield ETF (NYSEMKT:VYM)||3.00%||0.06%|
|Vanguard Dividend Appreciation Index ETF (NYSEMKT:VIG)||1.96%||0.06%|
1. Vanguard S&P 500 ETF (VOO -0.16%) Legendary investor Warren Buffett has said that the best investment the average American can make is a low-cost S&P 500 index fund like the Vanguard S&P 500 ETF.What are the top 5 sectors to invest in 2023? ›
- Information Technology (IT)
- FMCG (Fast-moving consumer goods)
- Housing finance companies.
- Automobile Companies.
- Bonus: Pharmaceuticals Stocks.
Assuming long-term market returns stay more or less the same, the Rule of 72 tells us that you should be able to double your money every 7.2 years. So, after 7.2 years have passed, you'll have $200,000; after 14.4 years, $400,000; after 21.6 years, $800,000; and after 28.8 years, $1.6 million.What is a good index fund with high annual yield? ›
|Symbol||Fund name||Annual dividend yield|
|SCHD||Schwab US Dividend Equity ETF||3.68%|
|VYM||Vanguard High Dividend Yield Index ETF||3.12%|
|VXUS||Vanguard Total International Stock ETF||2.88%|
|VEA||Vanguard FTSE Developed Markets ETF||2.81%|
- Invest in Stocks for the Long-Term. ...
- Invest in Stocks for the Short-Term. ...
- Real Estate. ...
- Investing in Fine Art. ...
- Starting Your Own Business (Or Investing in Small Ones) ...
- Investing in Wine. ...
- Peer-to-Peer Lending. ...
- Invest in REITs.
Mutual funds are more flexible than index funds because the investment professional managing the fund can respond to market changes and change the fund's holdings. With an index fund, the fund only invests in securities within a specific index.What is a better investment than index funds? ›
ETFs are more tax-efficient than index funds by nature, thanks to the way they're structured. When you sell an ETF, you're typically selling it to another investor who's buying it, and the cash is coming directly from them.
How do I choose the best index fund? ›
If you are looking at index investing, it's better to go with a broader index than select a few stocks in any segment. Therefore, avoid indices like Small Cap 50 and Mid Cap 50. If you compare the small-cap index with the mid-cap index, you will realise why the small-cap should be tactical.What is the #1 safest investment? ›
What are the safest types of investments? U.S. Treasury securities, money market mutual funds and high-yield savings accounts are considered by most experts to be the safest types of investments available.How many index funds should I own? ›
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at. Rather, you should consider the number of different sources of risk you are getting with those ETFs.What are the four investments which is considered the safest? ›
For example, certificates of deposit (CDs), money market accounts, municipal bonds and Treasury Inflation-Protected Securities (TIPS) are among the safest types of investments.What markets will boom in 2023? ›
- Consumer staples. ...
- Precious metals. ...
|Stock||YTD Total Returns Through May 17|
|Walt Disney Co. (DIS)||6.8%|
|PayPal Holdings Inc. (PYPL)||-13.7%|
|EOG Resources Inc. (EOG)||-12.5%|
|Grupo Aeroportuario del Sureste SAB de CV (ASR)||25.8%|
- Energy. Information. technology. Health care. Utilities.
- Real estate. Materials. Industrials. Communication. services.
- Consumer. staples. Consumer. discretionary. Financials.
2023 is a great time to start investing. But so was 2022. The key point is that over the long term, investments generally do grow in value, even if there is some early volatility. It is far better to invest now, whenever now happens to be, rather than waiting for some ideal future opportunity.What is the safest investment with the highest return? ›
High-quality bonds and fixed-indexed annuities are often considered the safest investments with the highest returns. However, there are many different types of bond funds and annuities, each with risks and rewards. For example, government bonds are generally more stable than corporate bonds based on past performance.
How long should you stay in an index fund? ›
Ideally, you should stay invested in equity index funds for the long run, i.e., at least 7 years. That is because investing in any equity instrument for the short-term is fraught with risks. And as we saw, the chances of getting positive returns improve when you give time to your investments.How can I double my money without risk? ›
- Take Advantage of 401(k) Matching.
- Invest in Value and Growth Stocks.
- Increase Your Contributions.
- Consider Alternative Investments.
- Be Patient.
- High-paying money market accounts. ...
- High-yield savings accounts. ...
- Certificates of deposit (CDs) ...
- U.S. Treasury bills. ...
- Treasury Inflation Protected Securities (TIPS)
- BP. 3.32%
- IMB. 0.19%
- BATS. 0.02%
- BFPC050. 0.00%
- BCPT. 1.74%
- B6TK3R0. 0.38%
- SMIF. 0.14%
- BL0RSP8. 0.23%
Annual Return. The Vanguard High-Yield Corporate Fund is the company's top performing bond fund over the past decade, featuring a high-yield, intermediate-term fixed income portfolio.Should I invest in one or multiple index funds? ›
Some index funds provide exposure to thousands of securities in a single fund, which helps lower your overall risk through broad diversification. By investing in several index funds tracking different indexes you can built a portfolio that matches your desired asset allocation.How much is $100 at 10 percent interest at the end of each year forever worth today? ›
Present value of perpetuity:
So, a $100 at the end of each year forever is worth $1,000 in today's terms.
If you invest $10,000 today at 10% interest, how much will you have in 10 years? Summary: The future value of the investment of $10000 after 10 years at 10% will be $ 25940.Does it matter which index fund to buy? ›
Investors, however, must consider the index fund that they select since not every one is low-cost, not some may be better at tracking an index than others. Moreover, owning an index does not mean you are immune from risk or losses if the markets take a downturn.Should I just invest in index funds? ›
If you're new to investing, you can absolutely start off by buying index funds alone as you learn more about how to choose the right stocks. But as your knowledge grows, you may want to branch out and add different companies to your portfolio that you feel align well with your personal risk tolerance and goals.
Are index funds better than IRA? ›
Mutual funds and index funds are both common Roth IRA investment choices. Both types of investments can help you achieve portfolio diversification. But for many investors, index funds are the better choices because the fees are typically lower.What is the main disadvantage of investing in index funds? ›
The benefits of index investing include low cost, requires little financial knowledge, convenience, and provides diversification. Disadvantages include the lack of downside protection, no choice in index composition, and it cannot beat the market (by definition).Are index funds better than 401k? ›
A 401(k) account's major edge over an index fund is the tax advantage. Contributions to 401(k) accounts are pre-tax. Owners don't pay taxes on dollars they put in or the earnings from their investment portfolio until they start withdrawing funds.Can you lose more than you invest in index funds? ›
As is the case with any investment, you can lose money in an index fund. Still, index funds allow investors to track the market in a low-cost, consistent way, according to most analysts and advisors.Which index funds recommended by Warren Buffett? ›
Key Points. Warren Buffett has famously recommended index funds as a way to build wealth. He has also proven that even the most basic funds can outperform big Wall Street firms. The S&P 500 index fund is a powerhouse investment that could make you a lot of money.What type of index fund does Warren Buffett recommend? ›
Buffett recommends passive and low-cost index funds because he believes this is the most rational way to invest for most people. There are so many forms of mistakes ordinary investors can make, but passive index investing limits those risks massively.What are the best index funds according to Warren Buffett? ›
Buffett's only index funds
The SPDR S&P 500 ETF Trust, or SPY for short, is run by State Street. It was the first exchange-traded fund (ETF) listed in the U.S. SPY currently has roughly $360 billion in assets under management. Its annual expense ratio is 0.0945%.
The three safest investments are savings accounts, CDs and Treasury bonds.What is the safest way to invest $1 million dollars? ›
Some options for relatively safe investments include high-quality bonds, certificates of deposit (CDs), and money market accounts. These investments are generally less risky than stocks, but also have lower potential returns.What are the safest investments for a crash? ›
Buy Bonds during a Market Crash
Government bonds are generally considered the safest investment, though they are decidedly unsexy and usually offer meager returns compared to stocks and even other bonds.
Are index funds good for seniors? ›
Index funds are also tax-efficient, which is great news for retirees. This is because index funds generally have lower turnover than actively managed mutual funds. And what does turnover mean, exactly? It's the number of times a fund manager buys and sells stocks within the portfolio over a given period of time.What is the 4 rule for index funds? ›
How the 4% Rule Works. The 4% rule is easy to follow. In the first year of retirement, you can withdraw up to 4% of your portfolio's value. If you have $1 million saved for retirement, for example, you could spend $40,000 in the first year of retirement following the 4% rule.Do index funds double every 7 years? ›
NYU business professor Aswath Damodaran has done the math. According to his math, since 1949 S&P 500 investments have doubled ten times, or an average of about seven years each time.Where is the safest place to put your retirement money? ›
Most of our experts agree that one of the safest places to keep your money is in a savings account insured by the Federal Deposit Insurance Corporation (FDIC). “High-yield savings accounts are an excellent option for those looking to keep their retirement savings safe.What is the safest mutual fund? ›
Money market mutual funds = lowest returns, lowest risk
They are considered one of the safest investments you can make. Money market funds are used by investors who want to protect their retirement savings but still earn some interest — often between 1% and 3% a year. (Learn more about money market funds.)
10-year Treasury Note
U.S. Treasury bonds are considered the safest in the world and are generally called “risk-free.” The 10-year rate is considered a benchmark and is used to determine other interest rates such as mortgage rates, auto loans, student loans, and credit cards.
|Company||Forward Sales Growth Next Year|
|Alphabet (GOOG, GOOGL)||+11.8%|
|Eli Lilly (LLY)||+19.4%|
- Earn more. I think one of the first steps for building wealth is to earn as much as possible for a while. ...
- Watch your student debt. There are different approaches to debt, but I tend to agree that there's good debt and bad debt. ...
- Separate time from money. ...
- Buy assets. ...
- Build assets. ...
- Start saving for retirement. ...
- Educate yourself.
According to Bloomberg data, Bitcoin emerged as the top-performing asset class in Q1 2023, with gains of around 73%, making it the digital currency's best quarter since Q1 2021, where it notably gained 103%, which signalled the onset of the last bull run.What stocks are going to double in 2023? ›
7 Growth Stocks That Can Double in 2023.
What stock will explode in 2023? ›
3 Penny Stocks That Are Poised to Explode in 2023.
- Become a Realtor. ...
- Get Into Aggressive Investing. ...
- Start a Digital Company. ...
- Take on Freelance Work. ...
- Become a Consultant. ...
- Offer Coaching Services. ...
- Start a Small Business. ...
- Jump on the Short-Term Rental Trend.
- Exchange Traded Funds (ETFs) ETFs have grown to become one of the most popular investments. ...
- Dividend Stocks. ...
- Short-term Bonds. ...
- Real Estate. ...
- Alternative Assets. ...
- Plan to be in for the long term. ...
- Know your risk tolerance. ...
- Direct Equity Investment.
- Mutual Funds.
- RBI Bonds.
- Bank Deposits.
- Real Estate.
Stocks are an asset class that tends to have the highest return of any type of investment, but they also tend to have higher-than-average volatility.What asset class returned the best in the 1970s? ›
One asset class investors flocked to was commodities. The S&P GSCI Index, a measure of commodities investment performance, returned 586% between 1970 and 1979.