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There are thousands of companies listed on major stock exchanges such as NASDAQ and the NYSE. As an investor, picking the right stocks individually to invest in can be a challenge. If you’re new to investing, consider putting your money with index funds to build a better portfolio and earn bigger profits.

What are Index Funds?

Index funds are actively managed funds that mirror the performance of market indices. A market index is a collective measure of a set of similar companies and their impact on the economy. Among the several market indices, Schwab 1000 Index, S&P 500 index and Dow Jones U.S. Select REIT Index are known throughout the world.  

You cannot directly invest in market indices. However, you can invest in many leading companies with a single trade by buying or selling shares of index funds. Index funds hold assets in multiple companies that reflect the performance of market indices. These holdings can vary as per the guidelines of the index fund managers and are periodically regulated to maintain a positive return rate. 

Charles Schwab has been an industry leader in indexing for over 25 years. It gives investors access to index funds and exchange-traded funds (ETFs) from different industry verticals and covers companies from various asset-classes. Schwab provides index funds with some of the lowest costs and highest year-to-date earnings.  

For investors with limited time on their hands, researching individual companies and their financial history can be time-consuming. Index funds and ETFs from Schwab let you own shares of multiple companies without having to worry over their daily performance.

What are Index Funds?

Schwab 1000 Index vs. Actively Managed Funds

Best Schwab Index Funds Right Now

Schwab is the 3rd-largest provider of index mutual funds. The combined assets under management (AUM) of Schwab index funds and Schwab ETFs is $255.8 billion. 

Best Schwab Index Funds Right Now

You can consider investing in these Schwab index funds and ETFs: 

1. Schwab US Large-Cap ETF (NYSEARCA: SCHX)

Schwab US Large-Cap ETF has been on the market since 2009. It tracks the Dow Jones U.S. Large-Cap Total Stock Market Index and has holdings in 756 companies. This index fund focuses on companies from industrial sectors such as information technology, health care, consumer discretionary and financial services. Schwab US Large-Cap ETF consists of large-cap companies in North America that include Apple, Microsoft, Amazon.com, Facebook and Alphabet.

Cumulative Growth of $10,000 Investment in SCHX

This ETF has an expense ratio of 0.03% and a P/E ratio of 21.84. It has a 52-week low of $43.02 and a 52-week high of $57.49. Schwab US Large-Cap ETF has high liquidity and an average daily share volume of over 4 million. It has over $26 billion in total net assets and an annual dividend yield of $2.26 per share. Currently, SCHX has a 1-year return rate of -14.18%, a 3-year return rate of 9.69% and a 5-year return rate of 11.79%. 

Historical performance of Schwab U.S. Large-Cap ETF over the last 5 years

2. Schwab International Equity ETF (NYSEARCA: SCHF)

Schwab International Equity ETF has been open to trade since 2009. It tracks the FTSE Developed ex US Index and has holdings in 1,522 companies. The index fund focuses on multinational companies from industrial sectors such as health care, consumer staples, information technology and communication services. Schwab International Equity ETF includes companies such as Nestle, Roche, Novartis and Samsung.  

Cumulative Growth of $10,000 Investment in SCHF

This ETF has an expense ratio of 0.06% and a P/E ratio of 12.95. It has a 52-week low of $30.90 and a 52-week high of $40.83. It is very liquid, trading an average of over $259 million daily and it paying a dividend yield of 2.95%. SCHF has a 1-year return of -19.8%, a 3-year return of 2.74% and a 5- year return of 2.45%. 

Historical performance of Schwab International Equity ETF in the last 5 years

3. Schwab US Broad Market ETF (NYSEARCA: SCHB)

Schwab US Broad Market ETF was launched in 2009. It tracks the Dow Jones U.S. Broad Stock Market Total Return Index and has holdings in 2,532 companies. The index fund focuses on companies from industrial sectors such as information technology, health care and financial services. Schwab US Broad Market ETF consists of North American companies such as Apple, Johnson & Johnson, Visa and JPMorgan Chase. 

Cumulative Growth of $10,000 Investment in SCHB

This ETF has an expense ratio of 0.03% and a P/E ratio of 22.50. It has a 52-week low of $42.61 and a 52-week high of $57.10. Schwab US Broad Market ETF has high liquidity and has an average daily share volume of over 3 million. It has AUM of $18.88 million and has an annual dividend yield of 1.41%. SCHB has a 1-year return rate of -14.98%, a 3-year return rate of 9.23% and a 5-year return rate of 9.81%. 

Historical performance of Schwab U.S. Broad Market ETF in the last 5 years.

4. Schwab US Dividend Equity ETF (NYSEARCA: SCHD)

Schwab US Dividend Equity ETF has been on the market since 2011. It tracks the Dow Jones U.S. Dividend 100™ Index and has holdings in 104 companies. The index fund focuses on companies from industrial sectors such as financial services, consumer staples and communication services. Schwab US Dividend Equity ETF consists of North American companies such as Blackrock, Qualcomm, 3M and Verizon. 

Cumulative Growth of $10,000 Investment in SCHD

This ETF has an expense ratio of 0.06% and has a P/E ratio of 14.99. It has a 52-week low of $69.86 and a 52-week high of $82.48. Schwab US Dividend Equity ETF has high liquidity and trades over 3.5 million shares per day. It has AUM of $34.19B and has an annual dividend yield of of 3.25%. SCHD has a 1-year return rate of -3.84%, a 3-year return rate of 13.87%and a 5-year return rate of 12.28%.

Historical performance of Schwab U.S. Dividend Equity ETF in the last 5 years.

5. Schwab US TIPS ETF (NYSEARCA: SCHP)

Traders have been investing in Schwab US Tips ETF since 2010. It tracks the Bloomberg Barclays U.S. Treasury Inflation-Linked Bond Index and has holdings in 48 U.S. government securities. 

Cumulative Growth of $10,000 Investment in SCHP

This ETF has an expense ratio of 0.05%. It has a 52-week low of $55.37 and a 52-week high of $64.15. Schwab U.S. Tips ETF has high liquidity and trades more than 6.1 million shares per day. It has AUM of $15.43B and has an average annual yield to maturity of 2.42%. SCHP has a 1-year return rate of -4.11%, a 3-year return rate of 3.68% and a 5-year return rate of 3.30%. 

Historical performance of Schwab U.S. Tips ETF in the last 5 years

Best Online Brokers for Index Funds

Take a look at some of the top online brokers on the market. 

Interactive Brokers

get started securely through Interactive Broker’s website
Best For
Global and Active Traders
N/A
1 Minute Review

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For
  • Access to foreign markets
  • Detailed mobile app that makes trading simple
  • Wide range of available account types and tradable assets
Pros
  • Comprehensive, quick desktop platform
  • Mobile app mirrors full capabilities of desktop version
  • Access to massive range of tradable assets
  • Low margin rates
  • Easy-to-use and enhanced screening options are better than ever
Cons
  • Trading platform may be intimidating for new investors

Interactive Brokers’ “fee waived” no transaction fee (NTF) program offers over 150 exchange-traded funds (ETFs) which reimburse IBKR Pro clients for commissions paid on ETF shares held for at least 30 days. IBKR Lite clients always pay $0 commissions on ETFs.

As a growing sector of the investment products universe, ETFs are well suited for implementing a variety of investment opportunities. They include investment themes covering equities, fixed income, and alternative strategies. Use ETFs to establish a core allocation, diversify existing portfolios, or implement new strategies. The Interactive Brokers platform also offers support for ETFs in options trading and short selling.

get started securely through Webull’s website
Best For
Intermediate Traders and Investors
N/A
1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For
  • Active traders
  • Intermediate traders
  • Advanced traders
Pros
  • No account maintenance fees or software platform fees
  • No charges to open and maintain an account
  • Intuitive trading platform with technical and fundamental analysis tools
Cons
  • Does not support trading in mutual funds, bonds or OTC stocks
get started securely through Moomoo’s website
Best For
Active Traders
N/A
1 Minute Review

Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.

Get started right away by downloading Moomoo to your phone, tablet or another mobile device.

Best For
  • Cost-conscious traders
  • Active and Advanced traders
Pros
  • Over 8,000 different stocks that can be sold short
  • Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
  • No minimum deposit to open an account.
Cons
  • No chat support
get started securely through Interactive Broker’s website
Best For
GlobalAnalyst Product
N/A
1 Minute Review

This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.

Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.

Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.

Best For
  • Price earnings growth valuations
Pros
  • Easily evaluate investment opportunities
Cons
get started securely through CenterPoint Securities’s website
Best For
Momentum traders
N/A
1 Minute Review

CenterPoint Securities is ideal for active traders who demand access to advanced tools and services. While investors and casual traders are likely to be content with the basic offerings of traditional online brokerages, active traders will benefit from CenterPoint’s suite of advanced trading tools. If you value execution quality, access to short inventory, advanced trading platforms, and accessible customer service, CenterPoint is an excellent choice.

Best For
  • Intermediate to Advanced traders
  • High-volume traders
  • Momentum traders
  • Short sellers
Pros
  • Unrivaled access to short inventory
  • Flexible order routing for improved executions
  • Discounts for active traders
  • Advanced platform with fast executions
  • Reliable customer service
Cons
  • Not designed for beginner or low-volume traders

Advantages of Index Funds

Here’s a rundown of the pros of investing in index funds. 

  • Index funds are passively managed. Fund managers are regularly tracking the performance of the index funds. 
  • You can choose from hundreds of low-cost index funds and ETFs to invest in. Most index funds have expense ratios of less than 1% and trade free of commission. 
  • You can instantly diversify your portfolio by investing in index funds. ETFs and index funds constitute a broad range of multi-cap companies from different industrial verticals.
  • Index funds do not actively execute buy and sell positions throughout the day and reduce capital gains. As a result, investing in index funds can be tax-efficient compared to other investments.
  • Most index funds are highly liquid. Millions of index fund and ETF shares are traded every day. 

Disadvantages of Index Funds

Here’s a rundown of the cons of investing in index funds. 

  • Market indices can move their positions rapidly during the day. Due to the frequent fluctuations in stock prices, the index funds may not track the market indices precisely in real-time.
  • Index funds with high expense ratios can take a significant cut from your profits. Investors planning to buy-and-hold shares of index funds must consider recurring costs in the long run. 

Schwab Index Funds can Strengthen your Portfolio

Schwab index funds enable you to own shares in hundreds of growing companies with ease and efficiency. Passively managed index funds from Schwab can also lower the risk of incurring losses from short-term market volatility. The low-cost of investing in index funds has attracted new investors to earn better returns and secure a better financial future. 

Frequently Asked Questions

Q

Which Schwab index fund is the best?

1
Which Schwab index fund is the best?
asked
A
1

Over the past year, the Schwab SCHD has managed to have the best performance despite the bear market.

answered