Top 10 Low Cost Index Funds To Buy in 2024

top 10 best low cost index funds

Are you an investor who prefers investing to be as simple and inexpensive as possible? Here’s a great alternative: Top 10 Low-Cost Index Funds to Buy in 2024.

The Best Long-Term Low-Cost Index Fund is a passively managed fund that tracks a specific index, such as the Standard and Poor’s 500 (S&P 500), which means it seeks to track rather than outperform the underlying index’s performance.

In recent years, index funds have grown in popularity as investors have grown tired of paying high fees for managed funds that have failed to deliver superior returns.

Furthermore, many index funds with low expense ratios are available, making them a worthwhile choice for cost-conscious investors.

Selecting a good low-cost index fund involves considering factors such as expense ratio, tracking error, and overall investment strategy. We have listed the top 10 low-cost index funds that you can buy in 2024. You can also check out these best investments for inflation in 2024.

Top 10 Low-Cost Index Funds

Index funds have several advantages over other types of investments, including lower costs and greater diversification. They also require less time and effort to maintain because they are managed passively.

There are dozens of low-cost index funds available, but these are 10 of our favorites:

1. iShares Core S&P Total US Stock Market ETF (ITOT)

Investing in more than 3,000 mid- and small-cap stocks that are not part of the S&P 500 is worthwhile. Despite the greater volatility, these stocks may provide slightly higher long-term returns.

To invest in the entire stock market, you can buy ITOT, which tracks the S&P Total US Stock Market Index. Approximately 82% of the 3,617 stocks that ITOT owns are large-capitalization names.

The ETF and IVV have comparable performance, and they complement each other well when it comes to tax-loss harvesting—the intentional taking of a capital loss to reduce taxes. ITOT has an expense ratio of 0.03%.

2. iShares Core S&P 500 ETF (IVV)

Investing in the S&P 500 is simple with IVV, which has a low expense ratio of 0.03%, making it a low-cost option. Annual costs for a $10,000 investment are around $3, which is less expensive than actively managed funds, which can charge up to 1%.

IVV is easily bought and sold on most brokerage platforms due to its solid daily volume and assets under management (AUM).

If you already invest with Vanguard, compare IVV to VOO—Vanguard’s S&P 500 fund—to determine which is the best fit for your situation.

3. Invesco NASDAQ 100 ETF (QQQM)

QQQM is a market capitalization index comprised of 101 of the Nasdaq Stock Exchange’s largest non-financial sector stocks. The Nasdaq 100 is more volatile than the S&P 500, which means it is more risky and has the potential for higher returns.

If you want more exposure to companies like Meta Platforms, Apple, Amazon, Netflix, and Alphabet, this is the best option.

QQQM is Invesco’s “mini” version of the well-known QQQ fund. QQQM has less volume and assets under management than QQQ, but it has a lower expense ratio of 0.15% versus 0.2% for QQQ.

4. SPDR S&P 500 ETF Trust (SPY)

SPY is one of the largest and best-known S&P 500 funds. With over $370 billion in assets under management and a daily trading volume of more than 50 million shares on average,.

SPY is a favorite among retail and institutional traders due to its massive volume. Traders looking for the best order fills frequently prefer SPY over IVV. As a result, if you’re looking for a trading instrument, SPY might be a better choice.

The ETF’s higher expense ratio of 0.09% makes it less suitable for long-term holding, but it is still less expensive than several actively managed funds.

When you want to invest in the S&P 500 at a lower cost, compare SPY vs. VOO to see which one is best for you.

5. iShares US Treasury Bond ETF (GOVT)

Some investors may be put off by corporate bonds’ increased default risk and stronger link to the stock market. They also lose value when the stock market fluctuates. As a result, some investors may prefer treasuries, which are government-issued bonds that are backed by the US government.

GOVT, which tracks the ICE (Intercontinental Exchange) US Treasury Core Bond Index, is an excellent choice for buying treasuries. This index is made up of a series of Treasury bonds with AAA credit ratings and maturities ranging from one to thirty years.

While GOVT may provide better crash protection than AGG, it has a lower yield to maturity or rate of return, assuming an investor holds it until maturity. Furthermore, the ETF’s expense ratio is 0.05%.

6. iShares Core US Aggregate Bond ETF (AGG)

AGG is made up of investment-grade corporate bonds of all maturities as well as US government Treasury securities. AGG represents the entire bond market in the United States.

Passive investors frequently hold bond ETFs such as AGG to limit volatility and drawdowns during volatile market periods. As an intermediate-duration bond ETF, it provides a balanced combination of protection, yield, and interest rate sensitivity. The ETF’s expense ratio is 0.03%.

7. Vanguard Total International Stock ETF (VXUS)

Investors can index entire portfolios of international stocks by combining VEA’s developed market fund and the Vanguard FTSE Emerging Markets (VWO) fund in various ratios. However, this method requires manual balance and the inconvenient task of determining how much of each to hold.

VXUS, which tracks the FTSE Global All Cap ex-US Index and holds 7,896 equities from developed and emerging markets, is a hands-off option for investors.

VXUS is currently about 25% VWO and 75% VEA. Vanguard automatically rebalances assets and modifies the fund’s allocations based on changes in the weightings of the world’s stock markets over time. The fund’s expense ratio is 0.07%.

8. Vanguard FTSE Developed Markets ETF (VEA)

VEA is a fund that seeks to replicate the performance of the FTSE Developed Markets Index, a benchmark index for developed market stocks. The fund invests in large and midcap stocks from developed countries such as the United States, Canada, Japan, and Germany.

VEA has a low expense ratio of 0.05% and currently manages over $62 billion in assets. The fund’s sector and geographic diversification make it an appealing option for investors seeking broad exposure to developed markets.

Furthermore, VEA’s dividend yield of 2.72% is significantly higher than developed market bond yields, making it an appealing income-generating investment.

9. Schwab US Broad Market (SCHB)

The Schwab U.S. Broad Market Fund seeks to replicate the Dow Jones US Total Stock Market Index. The fund invests in all of the index’s stocks in proportion to their weightings.

The index includes 2,500 publicly traded companies in the United States, with small, mid, and large-cap companies represented. The Schwab U.S. Broad Market ETF is one of the largest ETFs in terms of assets and one of the most popular among investors.

SCHB has a lower expense ratio of 0.03% than many other funds.

10. Vanguard Total World Stock ETF (VT)

The FTSE Global All Cap Index is followed by VT, which includes 9,435 large, mid, and small-cap stocks from established and emerging markets worldwide.

The fund currently has a 60/40 US/non-US split, but Vanguard will adjust this as the composition of the global stock market changes. With a 0.07% expense ratio, it is the most passive type of stock investment.

What are the different indices?

Have you ever wondered how data is calculated in the stock market? Whether you are an experienced investor or just starting out, it is important to first understand the differences between different stock indexes. Let’s take a look at some of the most famous of them:

Dow Jones Industrial Average (DJIA)

The Dow Jones is one of the oldest and most famous stock indices in the world. It consists of 30 large publicly traded companies, including well-known brands such as Coca-Cola and Boeing. The Dow Jones is a “value-weighted” index, meaning that higher-priced stocks have a greater impact on the index.

Standard & Poor’s 500 Index (S&P 500)

The S&P 500 is a broad market index comprised of 500 large publicly traded corporations. The S&P 500 is a “market-weighted” index, meaning that each company’s weight is proportional to its market value. As a result, the S&P 500 now provides a more accurate representation of the overall stock market.

Nasdaq Composite Index (NASDAQ)

NASDAQ is a listing of over 3,000 companies that sell stock to the general public on the NASDAQ stock exchange. “It’s a big group of companies, many of which are focused on technology. So, when we talk about NASDAQ, we’re primarily concerned with how well technology companies are performing. NASDAQ, S&P Like the 500, it gives more importance to larger companies in determining how the overall market is performing.

The best platform to buy index funds

There are two main ways to buy low-cost index funds: directly from a mutual fund company or through a brokerage. Buying directly from the mutual fund company is often the simplest option, since you can usually set up an account and make purchases online.

However, brokerages may offer more options and lower fees. ETFs are similar to mutual funds, but they trade like stocks throughout the day, meaning you can buy and sell them at any time, although you’ll usually have to pay a commission.

How to buy index funds

To purchase index fund shares, you must have an investment account. To begin, you can use a traditional brokerage account or a Roth IRA. Then, when purchasing the fund, specify a specific dollar amount or number of shares.

The key to building up wealth over time is to make consistent contributions. Even $25 per month can have a huge long-term impact. Many people wonder how to invest and earn money on a daily basis; the answer is to start small and work your way up.

The best low-cost index funds to invest in

Warren Buffett, one of the world’s most successful investors, recommends index funds as a long-term investment. So why not? Low-cost index funds provide numerous benefits, including increased diversification and the ability to keep more money in your pocket rather than paying high management fees.

With this list of low-cost index funds, you can better understand and explore your investment options.


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