2025’s Best Index Funds for Long-Term Investors in the U.S.

Investing doesn’t have to be complicated.

If you're someone who prefers a low-maintenance, low-cost approach to building long-term wealth in the USA, index funds might just be your best ally. They’ve been called the "set it and forget it" strategy of investing and with good reason.

But with so many index funds on the market, how do you choose the right one? Which funds offer consistent growth, diversified exposure, and solid returns?

In this 2025 guide, we’ll break down the top index funds for long-term investors in the USA, explain how they work, who they’re best suited for, and how you can get started today.

What Are Index Funds?

An index fund is a type of mutual fund or exchange-traded fund (ETF) that tracks a specific market index such as the S&P 500, Nasdaq-100, or Russell 2000.

Instead of picking individual stocks, the fund automatically mirrors the performance of the chosen index. This makes index funds:

• Low-cost
• Diversified
• Less volatile than individual stocks
• Excellent for passive, long-term growth

Why Index Funds Are Ideal for Long-Term Growth

Here’s why index funds are a favorite among U.S. investors, especially those planning for retirement or generational wealth:

• Consistent Historical Returns
  Index funds like the S&P 500 have returned ~10% annually over the long term.

• Minimal Fees
  Many index funds charge expense ratios as low as 0.03%, maximizing your returns over time.

• Diversification Built In
  One fund can hold 500+ companies, reducing risk compared to buying individual stocks.

• Time-Tested Strategy
  Even Warren Buffett recommends index funds for most investors.

8 Best Index Funds for Long-Term Growth in the USA (2025)

Let’s look at the top index funds offering strong long-term performance, low fees, and wide market exposure.

1. Vanguard 500 Index Fund (VFIAX / VOO)

Tracks: S&P 500
Expense Ratio: 0.04% (VFIAX), 0.03% (VOO ETF)
Why it’s great:

• Exposure to the top 500 U.S. companies
• Long-term historical growth ~10% per year
• Ideal for beginners and experienced investors alike
  Trusted Link: Vanguard.com - VFIAX Info

2. Schwab U.S. Broad Market ETF (SCHB)

Tracks: Dow Jones U.S. Broad Stock Market Index
Expense Ratio: 0.03%
Why it’s great:

• Holds over 2,500 U.S. stocks across all sectors
• Strong diversification with ultra-low fees
• Great for young investors with long horizons
  Trusted Link: Charles Schwab - SCHB

3. Fidelity ZERO Total Market Index Fund (FZROX)

Tracks: Total U.S. stock market
Expense Ratio: 0.00%
Why it’s great:

• No management fees
• Perfect for small investors starting out
• Offered exclusively to Fidelity account holders
  Trusted Link: Fidelity - FZROX

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

Tracks: S&P 500
Expense Ratio: 0.03%
Why it’s great:

• Direct competitor to VOO
• Offered by BlackRock
• Excellent liquidity and tax efficiency
  Trusted Link: iShares - IVV

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

Tracks: Entire U.S. equity market
Expense Ratio: 0.04% (VTSAX), 0.03% (VTI)
Why it’s great:

• Covers large-, mid-, and small-cap U.S. stocks
• A core holding for millions of American retirement portfolios
  Trusted Link: Vanguard - VTSAX

6. Vanguard Growth Index Fund (VIGAX / VUG)

Tracks: U.S. growth stocks
Expense Ratio: 0.05% (VIGAX), 0.04% (VUG)
Why it’s great:

• Focuses on companies with strong earnings potential
• Great for long-term growth investors willing to accept some volatility
  Trusted Link: Vanguard - VIGAX

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

Tracks: S&P 500
Expense Ratio: 0.0945%
Why it’s great:

• Most heavily traded ETF in the U.S.
• Incredible liquidity, perfect for larger portfolios
  Trusted Link: SPDR - SPY

8. iShares Russell 2000 ETF (IWM)

Tracks: Russell 2000 Index (small-cap U.S. companies)
Expense Ratio: 0.19%
Why it’s great:

• Exposure to fast-growing small-cap U.S. businesses
• Adds a growth tilt to a long-term portfolio
  Trusted Link: iShares - IWM

How to Choose the Right Index Fund for You

Not every fund is for every investor. Here’s how to decide:

Investor Type	Best Fund(s)
Beginner	VOO, SCHB, FZROX
Young Professional	VTSAX, VUG, IWM
Retirement Planner	VFIAX, VIGAX, SPY
Conservative Growth	SCHB, VOO, IVV
Aggressive Growth	VUG, IWM

Bonus Tips for Investing in Index Funds

• Use Dollar-Cost Averaging (DCA)
  Invest regularly (weekly or monthly), regardless of market conditions.

• Reinvest Dividends
  Maximize compounding by reinvesting dividends automatically.

• Don’t Chase Short-Term Gains
  Index funds are designed for the long game.

• Check Expense Ratios
  A 1% fee may seem small but over 30 years, it adds up.

Frequently Asked Questions (FAQ)

Q1: Are index funds safe for beginners?

A: Yes. Index funds are among the safest ways to invest in the stock market, especially for beginners in the U.S. They're diversified and passive, reducing risk over time.

Q2: What's the minimum to start investing in index funds?

A: Many brokerages allow you to start with as little as $1 using fractional shares, especially with ETFs like VTI or IVV.

Q3: How are index funds taxed in the USA?

A: You'll pay capital gains tax when you sell your shares, and dividend tax on any distributions. Holding them in an IRA or Roth IRA can reduce your tax burden.

Q4: Should I choose mutual funds or ETFs?

A: ETFs offer more flexibility and lower fees. Mutual funds like VFIAX require minimum investments ($3,000+), while ETFs like VOO don't.

Q5: Can I lose money in index funds?

A: In the short term, yes markets fluctuate. But over the long term, historically, index funds have always recovered and grown.

Final Thoughts: Invest Once, Grow for Decades

If you're living in the U.S. and want a low-effort, high-reward strategy to build long-term wealth, index funds are one of the smartest moves you can make in 2025.

They take the emotion out of investing, offer broad exposure to the U.S. economy, and let you ride the market’s natural growth over time.

Start with one fund. Stay consistent. Reinvest your dividends. And let compound growth do its magic.

Looking to start your index fund journey today?

• Open a free account with Vanguard or Fidelity
• Pick a fund from this list that fits your goals
• Set up auto-investments and sit back

Start simple. Stay steady. Build wealth.