The Best Low-Cost Index Funds from Vanguard and Fidelity

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Feb 21, 2026 9 views

Imagine building wealth steadily over decades without paying a fortune in fees—that's the power of low-cost index funds from Vanguard and Fidelity. These giants offer some of the most affordable ways for Americans to invest in broad market exposure, helping you grow your 401(k), IRA, or taxable brokerage account efficiently in 2026.^[1]^[2]

With expense ratios often under 0.05%, these funds track major indexes like the S&P 500 or total stock market, delivering diversification across thousands of stocks at rock-bottom costs. Whether you're a beginner saving for retirement or a seasoned investor fine-tuning your portfolio, Vanguard and Fidelity stand out for their reliability, low minimums, and tax advantages under U.S. rules like those from the IRS.^[1]^[4]

Why Choose Low-Cost Index Funds from Vanguard and Fidelity?

Index funds passively mirror market indexes, avoiding the high fees and underperformance of many actively managed funds. Vanguard pioneered this approach, and Fidelity has matched it with zero-expense-ratio options. In 2026, their funds boast expense ratios as low as 0%, saving you hundreds annually on a $50,000 investment compared to higher-cost alternatives.^[1]^[2]^[4]

Key benefits include:

Broad diversification: Own slices of the entire U.S. or global market, reducing risk from single stocks.
Low turnover: Minimal trading means fewer capital gains taxes in taxable accounts.^[3]
Proven performance: Historically, low-cost index funds outperform 80-90% of active funds over 15+ years.^[3]
Accessibility: No sales loads, and many have $0 minimums—perfect for dollar-cost averaging into a Roth IRA or 401(k).^[8]

For U.S. investors, these funds align with tax-efficient strategies. Use them in tax-advantaged accounts like Traditional or Roth IRAs (contribution limits $7,000 for 2026, or $8,000 if 50+) to maximize compound growth.[irs.gov reference implied, but cite search].

Top Vanguard Low-Cost Index Funds for 2026

Vanguard's lineup dominates "best of" lists for their simplicity and ultra-low fees. Here's a curated selection of standout funds, focusing on stocks and bonds suitable for long-term American portfolios.^[1]^[3]^[4]

Best Vanguard Stock Index Funds

Fund Name (Ticker)	Expense Ratio	Minimum Investment	Key Focus
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)	0.04%	$3,000	Entire U.S. stock market (4,000+ stocks)
Vanguard 500 Index Fund Admiral Shares (VFIAX)	0.04%	$3,000	S&P 500 large-caps
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)	0.09%	$3,000	8,600+ global stocks ex-U.S.
Vanguard Total Stock Market ETF (VTI)	0.03%	$0 (per share)	ETF version of VTSAX
Vanguard S&P 500 ETF (VOO)	0.03%	$0 (per share)	ETF version of VFIAX
Vanguard Small-Cap ETF (VB)	0.05%	$0 (per share)	U.S. small-caps

VTSAX is a cornerstone for buy-and-hold investors, covering large-, mid-, and small-caps for true market exposure. Its ETF sibling, VTI, trades commission-free at most brokers with no minimum—ideal for automated investing.^[1]^[4]^[6]

For international diversification, VTIAX tracks the FTSE Global All Cap ex US Index, blending developed and emerging markets to balance U.S.-heavy portfolios.^[1]

Best Vanguard Bond Index Funds

Bonds provide stability. Vanguard's options shine for fixed-income exposure:

Vanguard Total Bond Market Index Fund (VBTLX / BND ETF): 0.05% / 0.03% expense ratio. Tracks U.S. investment-grade bonds.^[3]^[6]
Vanguard Intermediate-Term Corporate Bond Index (VICBX / VCIT): Gold-rated by Morningstar for steady income.^[3]
Vanguard Tax-Exempt Bond ETF (VTEB): Municipal bonds free from federal taxes—great for high-tax-bracket Americans in taxable accounts.^[3]

Top Fidelity Low-Cost Index Funds for 2026

Fidelity competes fiercely with zero-fee funds and no minimums, making it beginner-friendly. Their ZERO series eliminates expense ratios entirely.^[1]^[2]^[4]

Best Fidelity Stock Index Funds

Fund Name (Ticker)	Expense Ratio	Minimum Investment	Key Focus
Fidelity 500 Index Fund (FXAIX)	0.015%	$0	S&P 500
Fidelity Total Market Index Fund (FSKAX)	0.015%	$0	Entire U.S. market
Fidelity ZERO Large Cap Index Fund (FNILX)	0%	$0	Large-caps (S&P 500-like)

FNILX tracks Fidelity's U.S. Large Cap Index, mimicking S&P 500 performance without licensing fees—pure savings passed to you.^[1]^[4] Pair FSKAX with FXAIX for core U.S. exposure at just $1.50 yearly per $10,000 invested.^[2]

Vanguard vs. Fidelity: Which is Right for You?

Factor	Vanguard	Fidelity
Lowest Expense Ratios	0.03%-0.09% (ETFs often cheapest)	0%-0.015% (ZERO funds win)
Minimums	$3,000 for many Admiral shares; $0 ETFs	$0 across the board
Account Options	Strong IRAs, 401(k)s	Excellent brokerage, ZERO funds exclusive
Best For	Long-term buy-and-hold, bonds	Cost-obsessed beginners, no-minimum investing

Choose Vanguard for ETF flexibility and bond variety; Fidelity for zero fees and seamless app-based investing.^[1]^[2]^[8]

How to Buy These Funds as an American Investor

Open an account: Use Vanguard.com or Fidelity.com for IRAs/brokerages. Link your bank for free transfers.
Fund it: Contribute up to 2026 IRA limits ($7,000/$8,000).
Select funds: Search tickers; buy via mutual fund or ETF shares.
Automate: Set recurring investments to dollar-cost average.
Monitor taxes: Hold ETFs in taxable accounts for lower capital gains; funds in IRAs for deferral.[irs.gov]

Both offer tools like retirement calculators. Fidelity's app excels for mobile users; Vanguard's for research.^[8]

Practical Tips for Building Your Portfolio

Start with 60-80% stocks (e.g., 50% VTSAX/VTI, 20% VTIAX/VXUS, 10% small-cap VB), 20-40% bonds (BND/VBTLX) based on age.^[3]
Rebalance annually to maintain allocation.
Use in 401(k)s—many employers match, free money!
Avoid timing the market; consistency wins.
For tax efficiency, harvest losses in taxable accounts.

FAQ

What’s the difference between mutual funds and ETFs from these providers?

Mutual funds (e.g., VTSAX) trade once daily at net asset value; ETFs (e.g., VTI) trade like stocks intraday. ETFs often have lower minimums and better tax efficiency.^[4]

Are there income requirements to invest?

No—anyone with earned income can open an IRA. Fidelity's $0 minimums make it accessible.^[8]

Can I lose money in index funds?

Yes, markets fluctuate, but long-term (10+ years), U.S. indexes have averaged 7-10% annually after inflation.^[1]

Which is better for retirement?

Both; use Target Date Funds like Vanguard's VTIVX (0.08% expense) for hands-off allocation.^[6]

Do they pay dividends?

Yes—reinvest for compounding. VTI yields ~1.3% as of 2026.^[4]

How do fees impact returns?

A 0.04% fee vs. 1% saves ~$50,000 over 30 years on $10,000 initial at 7% return.^[2]

Start Investing Today

Low-cost index funds from Vanguard and Fidelity offer Americans a simple path to financial independence. Pick 2-4 funds matching your risk tolerance, invest consistently, and let compounding work. Open an account this week—your future self will thank you. Consult a fiduciary advisor for personalized advice, and check IRS.gov for contribution rules.