The Lazy Investor’s Guide to Building Wealth: 7 Index Funds That Pay Off Big Time
Warren Buffett made a $1 million bet against hedge funds in 2007. He said a simple S&P 500 index fund would beat five hedge funds over ten years. The hedge funds had teams of smart people working 80-hour weeks. They used complex math and fancy strategies.
Buffett won. By a lot.
You don’t need to be a stock-picking genius to build wealth. You don’t need to check your investments every day. You don’t even need to understand complicated financial terms.
You just need the right index funds and a simple plan.
This guide shows you seven index funds that require almost no work from you. Set them up once. Add money regularly. Check them once a year. That’s it.
Your money grows while you focus on your life.
What Makes These Funds Perfect for Lazy Investors?
Index funds are like buying a tiny piece of hundreds or thousands of companies at once. Instead of picking individual stocks, you own them all.
Here’s why they’re perfect if you want to invest but hate spending time on it:
They cost almost nothing: The funds we’ll cover charge between 0% and 0.08% per year. That means if you invest $10,000, you pay between $0 and $8 in fees annually.
They’re boring in the best way: No surprises. No manager is trying to be clever. They just follow the market up and down.
They beat most “smart” investing: A 2024 Morningstar study found that only 18.2% of actively managed funds beat the S&P 500. Most fund managers can’t beat the simple approach.
They save you from yourself: When markets crash, you won’t panic and sell. When markets soar, you won’t get greedy and buy more. You just keep adding money to the schedule.
Fund #1: Vanguard S&P 500 ETF (VOO) – Your Foundation
What it does: Owns the 500 biggest companies in America
Cost: 0.03% per year
Best for: Anyone who wants simple stock market exposure
VOO became the world’s largest ETF in February 2025. There’s a reason millions of people choose it.
When you buy VOO, you own tiny pieces of Apple, Microsoft, Amazon, and 497 other large companies. If these companies do well, you do well. If they struggle, you struggle with them.
Over the past 10 years, VOO returned 14.65% annually. That’s better than most professional fund managers.
Here’s the math: If you invested $100,000 in VOO instead of the older SPDR S&P 500 ETF (SPY) ten years ago, you’d have $2,024 more today. Just from lower fees.
How much to buy: Make this 40-60% of your stock investments. If you only buy one fund ever, make it this one.
Fund #2: Vanguard Total Stock Market ETF (VTI) – The Whole Market
What it does: Owns almost every publicly traded company in America
Cost: 0.03% per year
Best for: People who want to own the entire U.S. stock market
VTI is like VOO’s bigger brother. While VOO owns just the 500 largest companies, VTI owns about 4,000 companies. Big ones, small ones, and everything in between.
This gives you more variety. Sometimes small companies grow faster than big ones. Sometimes it’s the opposite. VTI captures both.
Over 10 years, VTI returned 14.01% annually. Slightly less than VOO, but still excellent.
The trade-off: More companies mean more complexity. During tough times, small companies often get hit harder than big ones. But over long periods, this extra variety usually helps.
How much to buy: Use this instead of VOO if you want broader coverage. Don’t buy both – they overlap too much.
Fund #3: Schwab U.S. Dividend Equity ETF (SCHD) – The Income Producer
What it does: Owns 100 companies that pay steady, growing dividends
Cost: 0.06% per year
Best for: People who want a regular income from their investments
SCHD is different. Instead of chasing the fastest-growing companies, it focuses on companies that pay you cash regularly.
These companies have increased their dividend payments for at least 25 years straight. Think Coca-Cola, Johnson & Johnson, and Home Depot. Boring businesses that make steady money.
SCHD pays about 3.68% in dividends each year. That means if you invest $10,000, you get roughly $368 in cash annually, even if the fund price doesn’t go up.
The downside: SCHD grows more slowly than VOO or VTI. Over 10 years, it returned 12.25% annually. Still good, but not as high as pure growth funds.
How much to buy: Consider 10-30% of your portfolio if you want some income now. Skip it if you’re young and don’t need the money for decades.
Fund #4: Vanguard Total International Stock ETF (VXUS) – The Global Play
What it does: Owns companies from around the world, except the U.S.
Cost: 0.08% per year
Best for: Adding international variety to your portfolio
America has great companies. But it’s not the only country with great companies.
VXUS owns pieces of companies from Europe, Asia, and developing markets. Think Nestlé from Switzerland, Samsung from South Korea, and Taiwan Semiconductor from Taiwan.
Why this matters: Sometimes international stocks do better than U.S. stocks. Sometimes they do worse. By owning both, you smooth out the ride.
International stocks often move differently from U.S. stocks. When the dollar gets strong, international investments might struggle. When the dollar weakens, they might shine.
How much to buy: Most experts suggest 20-40% of your stock investments in international funds. Don’t go overboard, but don’t ignore the rest of the world either.
Fund #5: Vanguard Total Bond Market ETF (BND) – The Stabilizer
What it does: Owns thousands of U.S. bonds
Cost: 0.03% per year
Best for: Adding stability and reducing wild swings
Bonds are loans to companies and governments. You lend them money, and they pay you interest.
BND owns government bonds, corporate bonds, and mortgage bonds. It’s like being a bank that lends to thousands of borrowers at once.
Bonds don’t grow as fast as stocks. But they’re steadier. When stocks crash, bonds often hold their value better. Not always, but usually.
The reality check: Bonds had a rough 2022 when interest rates jumped. BND lost about 13% that year. Bonds aren’t risk-free, but they’re typically less risky than stocks.
How much to buy: A common rule is your age in bonds. If you’re 30, put 30% in bonds. If you’re 50, put 50% in bonds. Adjust based on your comfort with risk.
Fund #6: Fidelity ZERO Large Cap Index (FZROX) – The Free Option
What it does: Tracks large U.S. companies, similar to the S&P 500
Cost: 0.00% per year
Best for: Fidelity customers who want zero fees
Free is hard to beat.
FZROX charges nothing in annual fees. Zero. Fidelity makes money in other ways and gives this away to attract customers.
The fund performs almost exactly like VOO. It was down about 4% in early 2025, matching the S&P 500’s performance.
The catch: You can only buy it through Fidelity. And if you want to move to another broker later, you’ll have to sell and pay taxes.
How much to buy: If you’re already a Fidelity customer, consider this instead of VOO. The performance is nearly identical, but you save on fees.
Fund #7: iShares Core MSCI Total International Stock ETF (IXUS) – The VXUS Alternative
What it does: Owns international stocks, including emerging markets
Cost: 0.07% per year ($7 for every $10,000 invested)
Best for: Non-Vanguard customers who want international exposure
IXUS does almost the same job as VXUS. Both funds own companies from around the world, excluding the U.S. The differences are small but worth understanding.
The key difference: IXUS has slightly more exposure to emerging markets like China, India, and Brazil. These countries grow faster than developed countries but are also riskier. Political instability, currency crashes, and economic problems happen more often in emerging markets.
Geographic breakdown: About 26% of IXUS is in Europe, 25% in Asia Pacific, and 12% in emerging markets. The rest includes Canada and smaller developed markets. This is similar to VXUS but with a bit more emphasis on emerging markets.
Performance comparison: Over the past few years, IXUS and VXUS have performed almost identically. Sometimes one beats the other by a small amount, but there’s no clear winner long-term.
Why consider IXUS over VXUS: If you use a broker like Charles Schwab, E*Trade, or TD Ameritrade, you might get commission-free trading on iShares ETFs but pay fees for Vanguard funds. Check your broker’s fee structure.
Also, if you specifically want more exposure to emerging markets without buying a separate fund, IXUS gives you a bit more.
The fee difference: IXUS costs 0.07% versus VXUS at 0.08%. The difference is tiny – about $1 per year on a $10,000 investment.
Liquidity and size: IXUS has about $30 billion in assets, while VXUS has over $400 billion. Both are big enough to trade easily, but VXUS is more established.
How much to buy: Use the same 20-40% rule as VXUS. Don’t buy both international funds – pick one and stick with it. The choice between them matters less than actually having international exposure.
How to Build Your Lazy Portfolio: 3 Simple Options
Now you know about seven great funds. But how do you put them together?
Here are three simple approaches:
The Ultra-Simple Portfolio
- 60% VOO (or VTI)
- 40% BND
This is as simple as investing gets. Two funds. Mostly stocks for growth, some bonds for stability. Rebalance once a year.
The Three-Fund Classic
- 60% VOO (or VTI)
- 20% VXUS (or IXUS)
- 20% BND
This adds international stocks for more variety. It’s the most popular approach among serious lazy investors.
The Income-Focused Portfolio
- 40% VOO (or VTI)
- 30% SCHD
- 20% VXUS (or IXUS)
- 10% BND
This version emphasizes dividend-paying stocks. You’ll get more income now, but probably less growth over time.
How to choose: Pick based on your age and goals. Younger investors can handle more risk for more growth. Older investors often prefer more stability and income.
Setting Up Your Lazy Portfolio in 3 Steps
Step 1: Pick your broker
The cheapest places to buy these funds:
- Vanguard for VOO, VTI, VXUS, and BND
- Fidelity for FZROX and the others
- Schwab for any of them
Most big brokers don’t charge fees to buy ETFs anymore.
Step 2: Automate your investments
Set up automatic monthly investments. Pick an amount you can afford consistently. Even $100 per month adds up over time.
Don’t try to time the market. Buy the same amount every month regardless of whether stocks are up or down.
Step 3: Rebalance once a year
Check your percentages once a year. If your target was 60% stocks and 40% bonds, but it’s now 70% stocks and 30% bonds, sell some stocks and buy more bonds.
This forces you to sell high and buy low automatically.
