The 6 Best Index Funds For 2025 (And Beyond!)

Happy New Year!

Each new year many of us get inspired to transform our lives. “This will be the year I lose weight!” “This will be the year I run a marathon!” “This will be the year I quit alcohol!” etc…

Setting big financial goals for each new year is no different. That’s why today I’m excited to share with you my top six index funds that you can buy, hold, and build your financial future on! These funds are the foundation to any good investment portfolio. They’re built to last and will help your investments weather any storm the market throws at them.

As always, make sure any of these investments fits your personal goals and investment strategy before buying! But here are what I think are the 6 best index funds you can buy and hold forever…

1. Vanguard Total Stock Market Index Fund (VTSAX / VTI)

John Bogle, founder of Vanguard, famously said: “Don’t look for the needle in the haystack. Just buy the haystack!” This fund is the epitome of that philosophy: Vanguard’s Total Stock Market Index Fund (VTSAX or VTI for ETF lovers). There’s no need to hunt for individual stocks when this fund covers over 3,000 companies on the U.S. stock exchange! Through recessions, depressions, wars, and even pandemics, the U.S. stock market has proven resilient, making this a foundational choice for any long-term portfolio. If you’re looking for broad U.S. exposure, this is your fund.

It’s posted returns of +77.4% over the last 5 years, and has an expense ratio of just 0.03%! ($3 for every $10,000 invested)

2. Vanguard Total International Stock Index Fund (VGTSX / VXUS)

Here’s why diversification is key: you don’t want to miss out on the Nestlés, Toyotas, and Samsungs of the world, do you? These companies aren’t part of the U.S. stock market, but they’re top holdings in Vanguard’s Total International Stock Index Fund (VGTSX or VXUS). This fund gives you access to thousands of companies from outside the U.S.—so you’re not missing out on global opportunities. It's like adding another strong layer of protection to your portfolio. US stocks have been dominant in recent years, but that hasn’t always been the case. And international exposure is something you’ll want to have when if and when that trend changes again.

It’s returned +6.3% over the last 5 years, and has an expense ratio of 0.08%. ($8 for every $10,000 invested)

3. Vanguard Total Bond Market Index Fund (VBTLX / BND)

Bonds might not seem exciting, but they’re a safety net that can save you in the long run. Think of the 2008 financial crisis—if you were 64 and planning to retire with a portfolio 100% in stocks, you’d have watched half your wealth vanish! With Vanguard’s Total Bond Market Index Fund (VBTLX or BND in ETF form), you can smooth out those wild stock market swings. Bonds don’t move with stocks, and that makes them crucial for stability, especially as you get closer to retirement.

4. Invesco QQQ (NASDAQ 100)

Now, for those of you focused on growth—here’s where tech comes in. Companies like Apple, Amazon, Microsoft, and Tesla carried the U.S. stock market in 2024. In fact, if you removed just seven tech giants, the S&P 500 would’ve been near flat! Invesco’s QQQ tracks the NASDAQ 100, home to the 100 largest non-financial companies. If you want to zero in on tech and innovation, QQQ gives you that extra growth exposure.

It’s returned +145.1% over the last 5 years and has an expense ratio of 0.2%

5. Schwab U.S. Equity Dividend ETF (SCHD)

If you love the idea of growth AND income, this one’s for you. SCHD is one of my favorite dividend ETFs on the market. While it focuses on dividend-paying companies, it doesn’t sacrifice overall growth. It blends the two as well as Reese’s blends peanut butter and chocolate! SCHD is a great pick for investors looking to benefit from dividend growth while not missing out on the rise in the overall market.

SCHD has returned +42.7% over the last 5 years and has an expense ratio of just 0.06%.

6. Avantis U.S. Small Cap Value Index Fund (AVUV ETF)

Last but definitely not least—this one’s for the true long-term investors. Unlike the other funds on this list which invest mostly in the largest companies in the stock market, AVUV focuses on small-cap value stocks, which have historically outperformed over the long term. Over nearly EVERY 20-30 year period, small-cap value stocks have outperformed the S&P 500! These stocks often don’t get as much attention but can offer big returns. The downside is that they’re very volatile and can see equally as big downswings. They require a true long-term focus, but if you want to supercharge your portfolio, AVUV can be great way to add some serious growth potential.

See THIS VIDEO for more on AVUV & the historical performance of small-cap value stocks

There you have it—six index funds to help you build a rock solid investing portfolio that will stand the test of time. Whether you’re focused on growth, income, or safety. These funds give you a solid mix to secure your future.

I hope you found this helpful, and hit reply if you have any questions. I’m always happy to help!

Let’s all have a great 2025!

• Jay