10 best index funds to invest in 2023 - Dollarsanity (2023)

The top index funds in 2023 are those that have three main aspects:

• Low spending reasons
• very varied
• Passed the "tests of time"

However, not all index funds are diversified enough to be great.

Others may not be ideal for long-term investments.

With a wide variety of funds to choose from, it is critical that potential investors understand which index funds may best suit their needs.

This is especially true given the uncertainty that 2023 will bring.

Many ETFs (exchange traded funds) and index funds have been launched recently.

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 industry sector, including options like online media, MLPs, or biotech.

These funds have a very narrow focus. They can offer great short-term return potential.

However, they can also experience massive drops if the sector is affected.

Also, these funds tend to have higher expense ratios compared to broader index funds.

The best index funds in 2023 are the ones that are cheap and broadly diversified.

That's why we've cultivated some of the best 2023 index funds to buy for long-term holding and investment purposes.

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The strongest S&P 500-based index funds for 2023

The S&P 500 Index is the gold standard of funding priorities. They are an index of 500 stocks of some of the largest US companies by market capitalization and are an excellent indicator of overall market performance. The top three index funds based on the S&P 500 are VFINX, FXAIX, and SWPPX.

VFINXis 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 studied the markets and found that many investors and portfolio managers could not beat the market averages over the long term. This applies in particular when considering fund management expenses.

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 included in an index), it turned out that investors could earn decent 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: The Fidelity Spartan 500 Index Fund

Fidelity's level of experience, market size, and ability to compete with Vanguard speak in favor of this index fund. In our opinion, FXAIX is the second best index fund for 2023. Index funds are generally indistinguishable from major competitors in terms of performance and cost.

Basically, the competitive nature of FXAIX compared to VFINX creates a much higher quality financial development 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: The Schwab S&P 500 Index Fund

Charles Schwab has long strived to offer its users much more than a standard discount brokerage service for its investors. Instead, they recently dove into the S&P 500 index fund markets and are poised to take on the likes of Fidelity and Vanguard.

They've recently reduced 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 Best Performing Market-Based Index Funds Overall for 2023

Sometimes exposure to over five hundred large-cap US stocks isn't all that diverse for some. In these cases, all funds in the pool are available. These funds invest in thousands of stocks, including a robust mix of large-cap, small-cap, and mid-cap stocks. Vanguard and Schwab dominated the Total Stock Market index fund market by 2023.

VTSAX: Vanguard Total Stock Market index fund

The Vanguard Total Stock Market Index is the largest mutual fund in the world. He got to that level for a good reason. Vanguard basically invented the concept of an index fund, and VTSAX is among the first index funds to dominate the entire stock market.

With expenses low enough to bring Vanguard's typically high expense ratios down to 0.04%, the Vanguard Total Stock Market Index in 2023 is a wonderful index fund for those looking for a sure bet and a wonderful main fund for those looking for a sure bet. in any diversified investment. portfolio mutual fund.

Expense ratio: 0.04% | Minimum investment: $3,000

SWTSX: Fundo Schwab Total Stock Market Index

Schwab's total stock market index, SWTSX for short, has a very low expense ratio of 0.03 percent. It's a wonderful market-based global index fund that's hard to beat, at least at the minimum investment level of $0.

Like many other Schwab funds, its minimum purchase price is extremely low and it is one of the cheapest funds on our list with a minimum investment of $0.

Expense Ratio: 0.03% | Minimum investment: $0

Index funds with more aggressive levels for 2023

If you are a long-term investor, you may not 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 that and are comfortable taking a long-term view, then some of these aggressive index funds might be a better fit for you. These are usually index funds with higher risk and higher returns.

VIGAX: The Vanguard growth index fund

The Vanguard Growth Index Fund invests in large-cap stocks that demonstrate strong growth potential. This makes it a bit riskier to invest compared to the index funds mentioned above. However, it can also be much more rewarding in the long run than 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: Der Fidelity NASDAQ Composite Index Fund

Fidelity's index fund consists primarily of large-cap stocks. However, many of these stocks are in the healthcare and technology sectors. These stocks tend to have greater long-term growth potential relative to broader market movements.

For this reason, over the long term, the Fidelity NASDAQ Composite fund is a great index fund to invest in in 2023 if you aren't put off by the idea of ​​added risk for the added potential of returns. Its expense ratio is on the high end of 0.29%, but the minimum investment is less than Vanguard's $2,500 alternatives.

Expense Ratio: 0.3% | Minimum investment: $0

VIMAX: Vanguard's Mid-Cap Index Fund

Mid-cap stocks are an excellent alternative to their large-cap counterparts. They are an excellent choice to potentially beat out the mighty S&P 500. Historically, they have outperformed larger-cap stocks, but they don't incur the significant risk that small-cap stocks do. This makes VIMAX a great mid-size index fund to buy. It is in the sweet spot, which is when the returns are strong but the risk is not too extreme.

Its expense ratio is also lower than any of the previous 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-oriented index funds for 2023

Bond-based index funds are a much better fit for the average investor. Many with well-diversified portfolios of index funds and mutual funds use these fund options. They are a great vehicle for capturing large portions of the bond market in a low-cost, low-stress investment.

General stock indices are usually related to index-based mutual funds, or ETFs (Exchange Traded Funds). These funds invest in BarCap Aggregate or Barclay's Aggregate Bond Index. This is a broad bond index that covers most securities traded in US indices, as well as some foreign securities traded in the United States.

In 2023, there will be plenty of bond-based index funds that will outweigh the need for simplicity and variety. Two of the strongest are VBMFX and FTBFX.

VBMFX: Total Vanguard Bond Market Index

The Vanguard Total Bond Market Index is the largest bond-focused index fund in existence (in terms of assets under management). That means it's one of the most popular options of all time for buyers of self-investment and fee-based advisory services. Buying the VBMFX Index gives buyers access to the entire US bond market. This includes thousands of securities across multiple types, including:

• US Treasuries
• corporate bonds
• Short, medium and long term bonds

Expense Ratio: 0.15% | Minimum Investment: Closed to new investors

FTBFX: Der Fidelity Total Bond 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. You can hold many more high-yield bonds and because of this you can generate much better long-term returns compared to VBMFX.

However, this comes with a much higher expense ratio of 0.45% compared to almost all funds on our list. However, the additional costs of an index fund may be worth it.

Expense ratio: 0.45% | Minimum investment: $0

All Together: The Best Index Funds for 2023

Some of the best-performing, highest-yielding index funds have been listed as our top picks for 2023. These best buy-and-hold index funds have lower expense ratios than alternatives, are highly diversified, and have proven durable in turbulent markets .

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