Can I buy Index Funds on Charles Schwab for S&P 500, NASDAQ, and DOW Jones?

Can I Buy Index funds on Charles Schwab?

Charles Schwab is one of the largest discount broker-dealers in the United States, offering banking, trading, and wealth management services to both individual and institutional clients. Schwab also touts “the power of indexing” to its customers. But what exactly is “indexing”?

An index fund is a rather simple premise. The fund is passively run. That means that rather than a fund manager actively overseeing it and making adjustments, it tracks an index instead. What’s an index, you ask? In essence, an index (or “market index”) is a portfolio of investment holdings set up to represent a particular segment of the financial market.

You have already likely heard of some major indexes, such as the Dow Jones, S&P 500 index, and Nasdaq Composite Index. These indexes are used as general benchmarks to gauge the state of the stock market. They can also be used, however, for developing index funds, which is what this article will be covering.

First, here are four major benefits to index funds:

Performance – Index funds tend to produce better returns on average than actively managed funds.

Diversification – Spreading out risk is an essential part of investing, and index funds can provide easy portfolio diversification. Many index funds provide exposure to hundreds or even thousands of stocks, or even attempt to track almost “the entire investable equity universe,” as Schwab puts it.

Tax efficiency – Actively managed funds tend to have high turnover, which means they potentially generate lots of capital gains. The returns lost to taxes can really add up, so a passively managed index fund might net you thousands of more dollars over time.

Low fees – For an actively managed fund, you’re essentially paying for someone (or a team of people) to beat the market. There’s never a guarantee of that, however, and actively managed funds tend to charge 0.67% on average in annual fees. Index funds, on the other hand, tend to average a mere 0.15% by comparison.

Best Index Funds on Charles Schwab

Schwab launched the Schwab 1000 Index back in 1991 and the Schwab 1000 Index Fund not long thereafter. They now have over $340 billion in Schwab Index Mutual Funds and Schwab ETFs under management and are also the 3rd largest provider of index mutual funds. Here are some top index funds offered by Schwab.

Schwab Total Stock Market Index Fund (SWTSX) – This fund replicates the total stock market, requires a $3,000 minimum investment, and features an expense ratio of only 0.03%.


Schwab Total Stock Market Index Fund (SWTSX)


Schwab S&P 500 Index Fund (SWPPX) – This fund replicates the S&P 500 Index, requires a $3,000 minimum investment, and features an expense ratio of only 0.02%.


Schwab S&P 500 Index Fund (SWPPX)


Schwab 1000 Index Fund (SNXFX) – This fund replicates the Schwab 1000 Index, requires a $3,000 minimum investment, and features an expense ratio of only 0.05%.


Schwab 1000 Index Fund (SNXFX)


Schwab U.S. Large-Cap Growth Index Fund (SWLGX) – This fund replicates the Russell 1000 Growth Index, requires a $3,000 minimum investment, and features an expense ratio of only 0.035%.


Schwab U.S. Large-Cap Growth Index Fund (SWLGX)


Schwab International Index Fund (SWISX) – This fund replicates the MSCI EAFE Index, requires a $3,000 minimum investment, and features an expense ratio of only 0.06%.


Schwab International Index Fund (SWISX)


Schwab U.S. Aggregate Bond Index Fund (SWAGX) – This fund replicates the Bloomberg US Aggregate Bond Index, requires a $3,000 minimum investment, and features an expense ratio of only 0.04%.


Schwab U.S. Aggregate Bond Index Fund (SWAGX)


Schwab Top Competitors

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How to buy index funds on Schwab

Simply go to your Schwab account, then click “Trade” and “Mutual Funds.”

From there, simply enter the symbol of the index fund you would like to purchase. For example, SWISX.

Simply enter the dollar amount you would like, whether you would like to reinvest dividend and/or capital gains, and then review and submit the order.

You can also use Schwab’s “Fund Finder” to look for passively managed (i.e. index) funds and screen for additional criteria, such as Schwab’s “OneSource,” which collects no-load, no-fee funds. Below, you can see that I’ve selected “passively managed,” “OneSource,” and 5-star rating (Morningstar). That yields just 12 funds.

You can also use the same fund screener to search for passively managed ETFs if you prefer.

Wrapping up

Schwab makes it easy to find and screen index funds based on a wide number of useful parameters. Plus, they’re leaders in the index investing game and have been at it for more than twenty-five years. If you want to add index funds in your portfolio, Schwab is definitely a great place to do it.




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