Best Index Funds and How to Invest in Them

By Matthew Frankel, CFP – Updated Oct 14, 2025 at 3:51 PM | Fact-checked by Robin Hartill, CFP

Key Points

Index funds track financial indexes, enabling simple, broad market investment.
Low expense ratios make Vanguard ETFs an accessible choice for new investors.
Choosing an index like the S&P 500 leads to diverse long-term investment options.

You don't need to be a stock market expert to be a good investor. Index funds are a big reason why. If you want to put money to work in the stock market, you don't necessarily need to buy individual stocks or pay expensive fees to investment managers.

Index funds can put your stock investment strategy on autopilot. And they can do this while still producing excellent appreciation over the long run.

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A digital board displaying stock market indexes and what they're trading for. — Image source: Getty Images.

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Passive Indexing

Investing in a portfolio that mirrors a market index, aiming to match its returns rather than actively selecting stocks.

2. Choose the right fund for your index

Once you've chosen an index (or just a specific industry), you can generally find at least one index fund that tracks it. For popular indexes, like the S&P 500, you might have a dozen or more choices. If you have more than one option for your chosen index, you'll want to examine the costs.

Of the top index funds that meet your needs, which has the lowest costs? Even a seemingly small difference can have a big impact over the long term. You can determine which index fund is more cost-effective by comparing the expense ratios of two or more index funds.

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An infographic explaining the pros and cons of investing in index funds. — Image source: The Motley Fool.

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Top 8 Index Funds for Dividends in 2025

These 8 top index funds pay dividends, too. Learn more about these potential investments.

Best Small-Cap Index Funds for October 2025

Smaller companies can add up to big returns, and these index funds track them.

How to Start Investing in Crypto Index Funds

Crypto, a volatile investment; index funds, a stable, long-term play. How can they work together?

Stock Market Basics for Beginners

If you're just getting started investing, these basics can help guide you.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelCFP

Matt Frankel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF, Vanguard Total Bond Market ETF, Vanguard Total International Stock ETF, and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.

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Why not invest in index funds?

As simple as index funds are, they're not for everyone. The downsides of investing in index funds include the following:

No chance of beating the benchmark: Index funds are designed solely to match the market's performance or the performance of a certain benchmark index. If you want to prove your mettle as a superior investor, index funds won't give you that chance.

Short-term downside risk: Index funds track their respective markets in good times and bad. They can be volatile places to put your money. Investors may have been reminded of this lesson during a stock market correction in early 2025, fueled by tariff uncertainty, to name a recent example. If your primary objective is capital preservation (not losing money), investments like bonds or high-yield certificates of deposit (CDs) may be better choices for you.

Many different stocks: The diversification of an index fund works both ways. Depending on the index you choose, you could end up owning some stocks you'd rather not own while missing out on others you'd prefer.

How to invest in index funds

Index funds can be rather easy to invest in, especially if you already have a brokerage account. Simply follow these steps to get started:

Open your brokerage app: Log in to your brokerage account where you handle your investments.

Search for the index fund: Enter the ETF or mutual fund's ticker or name into the search bar to bring up the stock's trading page.

Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this index fund.

Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.

Submit your order: Confirm the details and submit your buy order.

Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Best Index Funds and How to Invest in Them

Key Points

Passive Indexing

2. Choose the right fund for your index

Top 8 Index Funds for Dividends in 2025

Best Small-Cap Index Funds for October 2025

How to Start Investing in Crypto Index Funds

Stock Market Basics for Beginners

About the Author

Our Guides

Premium Investing Services

Top 8 Index Funds for Dividends in 2025

Best Small-Cap Index Funds for October 2025

How to Start Investing in Crypto Index Funds

Stock Market Basics for Beginners

Is now a good time to invest in index funds?

Can I withdraw from index funds?

How long do you keep your money in an index fund?

What is the average index fund return?

What are low-cost index funds?

How can I directly invest in index funds?

How much is needed to invest in an index fund?

How do I start investing in an index fund?

Are index funds a good investment?

1. Pick an index

2. Choose the right fund for your index

3. Buy index fund shares

Pros and cons

Types of index funds

Why invest in index funds?

Why not invest in index funds?

How to invest in index funds

Related investing topics

Are index funds right for you?

FAQ

How do index funds work?

Four great index funds to get you started in 2025