Best Low-Cost Index Funds and ETFs for Beginners (2026)

The best low-cost index funds in 2026 charge almost nothing. Plenty of broad stock and bond index funds cost 0.02% to 0.05% a year, which is $2 to $5 on every $10,000 you invest, and a few charge zero. For comparison, the average index stock ETF cost investors 0.14% in 2025, according to the Investment Company Institute's 2026 report on fund fees.

Here's the part most "best funds" lists skip. For a broad index fund, the company running it matters far less than three other things: which index it follows, what it charges, and which account you hold it in. A total stock market fund from Vanguard and one from Schwab hold nearly the same companies and earn nearly the same return.

So this list is organized by the job each fund does. Each section names two to four real funds from different providers as examples of that job:

• US total stock market funds
• S&P 500 index funds
• International stock funds
• Total world stock funds
• US bond index funds
• Target-date and all-in-one funds

These are examples of a category, not recommendations, and near-identical funds exist at most brokers. Every expense ratio and index name below comes from the provider's own fund page, checked on October 8, 2026. Fees change, so check the fund page before you buy. This is general education, not personal advice.

What counts as a low-cost index fund in 2026

An index fund is a mutual fund or ETF that tries to match the return of a market index, like the S&P 500, instead of trying to beat it. The SEC's definition of an index fund points out that this passive approach usually means less trading, fewer taxable gains and lower fees than active management.

How low is low? ICI's 2025 figures give a useful yardstick. They're asset-weighted, which means they show what investors actually paid on average.

The gap between the asset-weighted 0.14% and the 0.45% simple average for index stock ETFs tells you something. There are lots of pricey index funds out there. Most investors just don't buy them.

My rule of thumb for a broad stock or bond index fund: 0.10% or less is low cost today, and many of the biggest funds charge 0.03%. Anything much above that needs a reason.

How we picked the example funds

The funds in each table had to pass four tests. Two came from the post this guide replaced, which judged funds on diversification and cost, and two are new.

1. It's diversified. It tracks a broad, well-known index with hundreds or thousands of holdings, not a single industry or theme.
2. It's cheap. The expense ratio is at or near the bottom of its category.
3. It's big and easy to trade. Every ETF here holds billions of dollars, which keeps it unlikely to close and usually means a tight gap between buying and selling prices.
4. It comes from a different provider than the others in its table, so you can see how close Vanguard, Fidelity, Schwab and iShares really are.

1. US total stock market funds

A total market fund owns almost every listed US company, from the giants to small firms, in one fund. It's the broadest single bet on the US economy you can make, which is why it sits at the core of so many simple portfolios.

Source: each provider's fund page, as of October 2026.

Notice that the four funds follow four different indexes. VTI, the biggest, now follows a Morningstar index, and the Vanguard fund page shows it holding about 3,500 stocks. For a fund this broad, the index brand barely matters. They all hold the same big companies in roughly the same weights.

Two more options worth knowing. Schwab's mutual fund version, the Schwab Total Stock Market Index Fund (SWTSX), charges 0.03% with no minimum. Fidelity ZERO Total Market Index Fund (FZROX) charges 0.00%, but its summary prospectus says it's available only to individual investors buying through a Fidelity brokerage account. If you ever move brokers, you can't take it with you as is.

2. S&P 500 index funds

An S&P 500 fund holds about 500 of the largest US companies. It's the fund most people picture when they hear "index fund."

Source: each provider's fund page, as of October 2026.

All four track the exact same index, so the only real differences are the fee and the wrapper. A 0.015% fund and a 0.03% fund differ by $1.50 a year on $10,000. That's not worth switching brokers over.

S&P 500 or total market? The large companies in the S&P 500 make up most of the total market's value, so the two tend to move together. In 2025, VOO returned 17.84% and VTI 17.14%, according to Vanguard's fund pages. The total market fund adds mid-size and small companies. Either one is a reasonable core, and I wouldn't lose sleep choosing.

3. International stock funds

International funds own companies based outside the US, in places like Japan, the UK, Europe, Canada, Taiwan and India. They're there so your whole stock portfolio doesn't ride on one country.

There are two flavors. "Total international" funds hold developed and emerging markets together. "Developed" funds leave out emerging markets like China and India.

Source: each provider's fund page, as of October 2026.

VXUS holds about 8,800 stocks, so one share spreads your money across thousands of foreign companies. SCHF is the cheapest here, but it skips emerging markets entirely. That changes what you own, so it's more than a fee decision. Fidelity also has a zero-fee version, Fidelity ZERO International Index Fund (FZILX), with the same Fidelity-account-only catch as FZROX.

How much to hold abroad, if anything, is a genuine debate. Our post on whether to buy a whole-world or US-only index fund walks through both sides.

4. Total world stock funds

A total world fund is the US and international funds above rolled into one. It holds stocks from every major market in roughly the proportions they're worth, so the US share shrinks or grows on its own as markets move.

Source: each provider's fund page, as of October 2026.

Just two examples here, and look at that second fee. ACWI is big and well run, but at 0.32% it costs about five times as much as VT. You could build almost the same mix with a US total market fund and a total international fund for well under 0.10%. "Index fund" doesn't automatically mean "cheap."

5. US bond index funds

Bond funds hold loans to the US government and to companies, and they pay you the interest. They usually move less than stocks, which is why people add them when they want a smoother ride or need the money within a few years.

Source: each provider's fund page, as of October 2026.

These four are about as close to interchangeable as funds get. Each holds more than 10,000 bonds and follows a version of the same Bloomberg index. "Smoother" isn't the same as "safe," though. BND's own page shows it lost about 13% in 2022, when interest rates jumped. For a 25-year-old investing for retirement, bonds are often a small slice or none at all for now.

6. Target-date and all-in-one funds

A target-date fund is a whole portfolio in one fund. It holds stock and bond index funds and slowly shifts toward bonds as its target year gets closer. The year in the name is roughly when you expect to retire, so someone who's 25 in 2026 might look at a 2065 fund.

Source: each provider's fund page, as of October 2026. Stock shares for the three target-date funds as of August 31, 2026. Schwab's 0.08% and iShares' 0.15% are net of fee waivers (0.13% and 0.19% before them).

These cost a little more than single index funds, because you're paying for the mixing and rebalancing. They're still far cheaper than the typical target-date fund, which charged 0.27% on an asset-weighted basis in 2025, per ICI. Minimums vary too. Vanguard's fund asks for $1,000 to start, while the Fidelity and Schwab funds have no minimum.

Funds with the same year can still be quite different inside. The SEC's bulletin on target date funds warns that two 2065 funds can hold different mixes, shift toward bonds at different speeds and charge different fees, sometimes at two levels. They also don't guarantee any level of retirement income. One more thing I see people get wrong: a target-date fund is built to be your whole portfolio, so adding three other funds next to it scrambles the mix it's managing for you.

How to choose between near-identical funds

Once you've picked a job, choosing the fund is mostly about fit. Six things separate one example from another:

1. Expense ratio. Compare within the same category. A 0.03% S&P 500 fund and a 0.015% one are effectively tied. A 0.32% world fund versus 0.06% isn't.
2. The index it tracks. Total international versus developed-only is a real difference in what you own. S&P versus Dow Jones versus Morningstar versions of the "total US market" mostly aren't.
3. Fund size and tracking difference. Big funds rarely close. Tracking difference is how far a fund's return lands from its index after costs, and you can check it on the fund page. In 2025, VTI returned 17.14% against 17.15% for its benchmark.
4. ETF or mutual fund version. ETFs trade all day like a stock, and mutual funds trade once a day at the closing price. The SEC's comparison of mutual funds and ETFs notes that ETFs have often been more tax-efficient, but that there's no tax difference at all inside a 401(k) or IRA. Our explainer on what an ETF is covers why.
5. Minimums and where you can buy it. ETFs need only the price of one share, or less with fractional shares. Some mutual funds have minimums, and some, like Fidelity's ZERO funds, only live at one broker.
6. Where you hold it. Bond funds pay interest that's taxed as ordinary income, so many people keep them in tax-advantaged accounts when they can. Our guide to tax-efficient investing explains how account location works.

In a 401(k), you don't get to shop. You pick from the plan's menu. Look for the cheapest broad index fund or target-date fund on it, whoever runs it.

The simplest portfolios use one, two or three funds

You don't need six funds. The categories above are a menu, and most beginners only need one to three items from it.

• One fund: a target-date fund or a total world fund. Done.
• Two funds: a US total market fund plus a total international fund, which together roughly recreate a world fund at a lower fee.
• Three funds: those two plus a US bond fund, often called the three-fund portfolio.

With two or three funds, the mix drifts as markets move, so you'll want to bring it back to your target now and then. Our guide to portfolio rebalancing shows how often and how. If you want to see how a broad US index behaved over real market history, our index investing calculator replays it for the dates you pick.

What a small fee gap costs over 30 years

Fee differences look tiny as percentages, which is exactly why they're easy to ignore. Here's an illustrative example, not a forecast. Say you invest $250 a month for 30 years and the market returns a steady 7% a year before fees. Real returns are never this smooth.

At a 0.03% fee, you'd end with about $290,600. At 0.50%, which is still cheaper than many actively managed funds, you'd end with about $265,100. That's a gap of roughly $25,500 on the same $90,000 of deposits. About $13,000 of it is the extra fees themselves, and the rest is growth that money would have earned if it had stayed invested.

The SEC's bulletin on fees and expenses makes the same point with a lump sum. On $100,000 growing 4% a year for 20 years, a 0.25% fee leaves about $208,000, and a 1% fee leaves about $179,000. To run your own numbers, try our expense ratio calculator.

What to skip, or treat as extras

The post this one replaced put a tech fund, a gold fund and a dividend fund alongside the core picks. They aren't bad products. They just do a different job from the funds above, and none of them should be where a beginner starts.

1. Thematic and sector funds. These bet on one industry or theme, like clean energy or AI. The best-known example is Invesco QQQ, which charges 0.18% and tracks the Nasdaq-100, the 100 largest non-financial companies on the Nasdaq. It's an index fund, but a concentrated, tech-heavy one, and a total market fund already owns most of those companies. If you want one, keep it a small side bet.
2. Leveraged and inverse ETFs. These aim for two or three times an index's daily move, or the opposite of it, and reset every day. The SEC's bulletin on leveraged and inverse ETFs describes one that fell 53% over four months while its index rose about 8%. They're tools for short-term traders.
3. High-fee "index" funds. Some funds track a common index and still charge many times what the cheapest ones do. That 0.45% simple average for index stock ETFs shows how many of them are out there. If a cheaper fund tracks the same index, the pricier one is just costing you money.
4. Gold. The iShares Gold Trust, which the old list named, tracks the price of gold bullion for a 0.25% fee. Gold isn't a fund of businesses. It doesn't earn profits or pay dividends, so its long-run return depends entirely on what the next buyer will pay. Some people hold a little for diversification. I'd just keep it out of the core.
5. High-dividend funds as a core. The Vanguard High Dividend Yield ETF (VYM) is a low-cost index fund at 0.04%, tracking the FTSE High Dividend Yield Index. It's fine as far as it goes. But it holds one slice of the market, and a dividend isn't free money on top of your return, because the share price drops by the amount paid out. If income is your goal, our dividend calculator shows what a given yield actually pays.