---
title: 'Best Index Funds for Beginners 2026 (How to Buy Vanguard, iShares ETFs)'
source: 'https://youtube.com/watch?v=a7Z8MqVFLfc'
video_id: 'a7Z8MqVFLfc'
date: 2026-08-05
duration_sec: 930
---

# Best Index Funds for Beginners 2026 (How to Buy Vanguard, iShares ETFs)

> Source: [Best Index Funds for Beginners 2026 (How to Buy Vanguard, iShares ETFs)](https://youtube.com/watch?v=a7Z8MqVFLfc)

## Summary

This video serves as a comprehensive beginner's guide to index funds, explaining what they are, how they work, and how to buy them through providers like Vanguard and iShares. It covers key concepts such as tracking an index, comparing expense ratios, understanding tax implications (especially for non-US investors), and choosing the right brokerage account.

### Key Points

- **What is an index fund?** [00:14] — An index fund is a type of fund that tracks a specific index, such as the S&P 500, providing diversified exposure to all the companies in that index. It's simple and easy to buy, and you can invest any amount.
- **S&P 500 as an example** [01:07] — The S&P 500 is an index of the 500 leading US companies. Fund providers like Vanguard and iShares track this index, allowing investors to buy a single fund and get exposure to all those companies.
- **Asset classes and index funds** [02:38] — The main investable asset classes are real estate, bonds, shares, and commodities. Index funds can provide exposure to any of these, and you can search for funds tracking specific indexes like the Nasdaq 100.
- **Comparing providers and fees** [04:54] — When choosing a fund, compare the expense ratio (the annual fee). For example, both Vanguard and iShares S&P 500 ETFs have an expense ratio of 0.03%, which is extremely low. Lower fees lead to better long-term performance.
- **Currency and domicile considerations** [06:03] — For non-US investors, consider the currency the fund is traded in and the fund's domicile. US-domiciled funds may have higher withholding taxes and estate taxes for non-US residents. UCITS funds (often domiciled in Ireland) offer better tax treatment.
- **Tax implications for non-US investors** [09:00] — Non-US investors buying US-domiciled funds may face a 30% withholding tax on dividends and estate tax on US property. UCITS funds reduce withholding tax to 15% and avoid US estate tax.
- **Choosing the right account type** [11:40] — To minimize taxes, use tax-advantaged accounts like IRAs or Roth IRAs in the US, or ISAs in the UK. Max out these accounts before using a taxable brokerage account.
- **How to buy an index fund** [13:43] — You can buy index funds through any brokerage account. Search for the fund by ticker (e.g., VOO for Vanguard S&P 500 in the US) or by name. Most brokerages allow fractional shares, so you can invest any amount.

### Conclusion

Index funds are a simple, low-cost way to gain diversified exposure to the market. By understanding expense ratios, tax implications, and account types, beginners can make informed decisions and start investing effectively.

## Transcript

good providers out there. You might be looking at Vanguard or iShares. I'll go through the different pros and cons of the providers and how to figure out might have found this video by searching for how to buy an index fund. So what
exactly is an index fund? These are by far and away the most popular types of funds that people trade. They have the most assets under management and that's because they're simple and easy. So the way it works is, let's say you
the US. Can you go ahead and do that? No. individually is going to take you forever. Then you have to manage those, right? So maybe some grow and some don't. Do you need to sell some of them?
complete nightmare. You can't do it. So what we do is we go over to Vanguard and say, "You do that for us and you just give us this bucket of stocks that we over time and then just make that easy
for us to buy." So as you can see with Vanguard, the most popular fund by far and away is the S&P 500 ETF right here. And if you go over to another provider like iShares, exactly the same, S&P 500 ETF.
This is an index. So the S&P 500 is the 500 leading shares in the US. And what these fund providers will do is track that index perfectly and all we have to do is just buy one share or any amount that we want of that fund and we
get exposure to all of those companies. This is how most people invest, right? So here are the investable asset classes different indexes. So you have, for example,
mid caps, large caps, etc. Those are indexes and left-hand side. So what we can do, if we want exposure
to one certain part of the market, we just go and search for it. We buy the fund, simple and easy, and we get diversified access into everything within that index fund. So instead of going out and buying all
of these stocks individually, which is impossible, Vanguard or iShares, they go out and buy them. They do everything. And they just give us an exchange-traded fund, an index fund, traded on an exchange that we can simply
access. We can buy one share, we can buy $10, we can buy $100. It doesn't matter. And we get access to the blended performance of all of these companies. So, some might go up, some might go down. But if overall these 500 companies
move 1% to the upside, that is what our investment will do. It will move 1% to the upside. So, easy, simple, low fees, low cost, and we get access to a broad diversified basket of investments. There are only a few asset classes that we can
in the real world, right? You have real estate, you have government bonds or corporate bonds, you have shares in companies, and then you have commodities do is go and search for the fund that you want, find the provider that
provides it, and that's it. And then you can search via their trading fees or else to make sure that you're getting the best deal. So, for example, let's go and search for a Nasdaq 100 ETF. So, we're going to
search on iShares, and they do provide one. If we scroll down here, you can see the Nasdaq 100. So, the Nasdaq 100 is the 100 leading non-financial companies listed on the Nasdaq exchange in the US. And
that's way more specific than, for example, the S&P 500, which is just the 500 leading companies. So, let's say that we want to buy the Nasdaq 100. You can see that we are offered that right here, Nasdaq 100. Now, if we go to
Vanguard, for example, as of at making this video, Vanguard do not focus on funds that track specific exchanges, and so they actually don't provide a Nasdaq 100 ETF. What they provide is the S&P 500 ETF. They also have an information
similar to the Nasdaq, but it's not exactly the same. So, what you can do firstly is figure out which index do I actually want to track? What do I want exposure to? Once you found that particular index, for
example, the S&P 500 index, something like that, you can say, "Okay, which provider actually gives this?" And then I can choose a provider. We don't have to be loyal to Vanguard or iShares or any of the others. We can just find what
exactly we want, find who provides it, is that available in our brokerage it. So, you can find all of them here. And what we'll do is we can click into one of the funds, and then you can find what is it tracking?
and everything else? And do I actually want to go ahead and buy that? Now, I'll prospectus pages of these different funds. This is going to show you which over time, the cost, the fees, the charges, everything else. And you can
next as well. If you have the exact same fund, and one provider is cheaper, then go with the cheaper fund, because if you're just paying more fees, that is going to affect your performance over time. So,
couple of different providers. I'll link all of the different provider websites can just quickly get to them. But let's say that we've figured out we want to buy the S&P 500. This is the Vanguard version right here.
We also have the iShares version from BlackRock S&P 500. Exactly the same fund, so it should have pretty much exactly the same constituents and fees What you want to do is just go to the kind of snapshot here. Expense ratio is
the most important thing. 0.03% every year. 0.03% of the value of what you have will be taken as a fee for them managing this fund. That is extremely low. That's why a lot of people choose Vanguard. If we
go over to iShares, you can see that their expense ratio is also 0.03. So, very competitive. They're exactly the same. And if Vanguard drop their fees, I'm sure iShares would drop their fees as well, right? The competition um would
obviously keep them very close. Now, if we scroll down, you can see all This is very important as well. So, if you're in the US, you'll be buying US funds, no problem. If you're outside of the US, there are a few different things
example, which currency is the fund trading in? For US users, all of your funds are going to be US denominated, no problem. If you're in Europe or the UK actually denominated in your own currency? Well, there is a different
funds, so you can go and find them as well if you want. You can buy US domiciled funds, US traded funds, but you might want a pound sterling fund, for example. So, in the UK, iShares will have an S&P 500 ETF
better for you. Also, if you're outside of the US, you might want to buy a fund that is domiciled outside of the US, and that's because of tax reasons. I'll go over tax and different fund structures in the next section of this video. It's
fund, make sure that you know that. We can come down and see exactly what this fund is and everything else. So, this is an index fund. This is the ticker. So, our brokerage account, all we have to do is just search for this in our brokerage
easily. You can see the price, minimum We can buy that in our brokerage account, and dollar obviously means it's denominated fund. You can see the fees over time, quarterly, annually, whatever
you want. You can see how the fund has actually performed. Now, comparing one comparing the exact same fund, the performance is going to be almost identical over time. If we come down to the trading uh price
and everything, so the price of this fund per share is $681. However, in the vast majority of brokerage accounts now, you can buy fractional shares. So, you can buy $10 of it, it's not going to be an issue. So, that is something that you
matter, cuz in your brokerage account, you can buy any amount here. If you come down to the bottom, what you can see is the portfolio construction and what the fund holds. So, you can see these stocks here.
Nvidia, Apple, Microsoft. These are the 500 leading companies in the US, so it's going to be the 500 leading companies and the top companies have a larger percentage of the fund. And what happens is over time, as some companies win and
the fund will change as their prices with the BlackRock version. This is going to be exactly the same, right? You can see the uh different constituents here. This is tracking the exact same
fund, so they should be absolutely the same. And will give you pretty much want to look at the expense ratio of these funds. The expense ratio has to be very low and has to be consistent there. And if it
another provider. You'll also notice that the expense ratios for non-US domiciled funds are typically higher for exactly the same thing. So, I'm now on the UK version of iShares, and we're going to look at the S&P 500 ETF. In the
going to look at the S&P 500 ETF. In the US, iShares and Vanguard had 0.03 expense ratios. For the non-US ETF, for exactly the same thing, we'll look at the key facts here. You can see that the expense ratio is
0.07%, so more than double, but the domicile is in Ireland. difference here. If you're a US citizen and you live in the US, just buy the US funds, no problem. You know your own tax brackets already. If you're outside of
the US, then there are going to be different tax treatment treatments, depending where you live. And if you're buying US funds domiciled in the US, buying US funds domiciled in the US, that is uh acknowledged as US property.
certain taxes you have to pay. For example, if you live in a country without a tax treaty with the US, then dividends and distributions from the fund will have a withholding tax of 30%.
So, if you get paid a dividend of $100, the US will keep $30 of it, and you can't get that back. So, that's the withholding tax. Also, if you live outside of the US and you own US property, which these funds
held in the US, and you pass away, your estate will be subject to a hefty estate tax in the US as well because that will be deemed as US property. We don't want this. So, what we do is we
buy a UCITS fund, which is a fund domiciled for the most part in Ireland. Germany and others, but without a doubt, Ireland is where most of these funds are. Ireland doesn't have these taxes.
fund, they get taxed not at not at 30%, but at they get taxed not at not at 30%, but at 15%. So, distributions, dividends, etc., the US will withhold 15% instead of 30%,
and that's it. Now, when those distributions get paid to you, you may have to pay in your country. You can sort that out yourself, but the Also, there will be no estate tax that you pay if you pass away because the
is domiciled in Ireland. Even though it's the same companies, these are US companies, the property of this fund is domiciled property. Therefore, you won't pay any estate taxes if you pass away. So, for
the US, you'll be looking at these UCITS funds. They simply just have better tax treatment. Now, if you have a tax treaty with the US in your country, you may pay no further tax. You may get better tax treatment, and it may actually uh be
well. You'll have to talk about that with your tax advisor to know exactly different tax treaties with the US. If you have no tax treaty at all, you island funds because you're simply just going to be paying less withholding tax
you how to navigate a brokerage account and buy these, what we need to do is want to set up. Now, if you just open a brokerage account, that would be a taxable account, which means that any gains that you make in that account, for
between buying and selling, you'll have to pay capital gains tax. Any dividends ETFs, you may have to pay income tax on those as well. We want to reduce taxes as much as possible because it's going to make a
huge difference over time to the amount that we make. So, in the US, for the most part, for self-directed funds, you'll have either an IRA or a Roth IRA. that's to do with your employer. These are slightly different in how the
tax treatment is given to you. So, with traditional IRA contributions, they may be tax deductible for the year they are made, which means that you can make a contribution to an IRA account, and those contributions will reduce your tax
liability for that year. With a Roth IRA, you pay tax on your income and everything. So, you pay you pay your tax, and then that money you can put in, and that will be tax-free on withdrawals. Now, the choice is up to
because this depends on when you're looking to take the funds out. So, for example, if you're reducing tax now, that may be better if you're a high be better later down the line. So, you're going to have to figure out which
one is best for you, IRA or Roth IRA. If you're in the UK, a very similar type of account is given to us known as an ISA, a stocks and shares ISA. No capital gains tax. There's a limit on how much you can put in per year, and but there
are some benefits. So, definitely max out these accounts first before just buying and selling in a taxable account. Also, you'll want to find a brokerage that offers these accounts. Interactive Brokers, Schwab, Fidelity, many others.
Go towards those. Make sure you get these tax tax deducted or tax deferred accounts, and then you want to max those out first. Put your investments in have to go to the normal taxable account. Because these funds are
means that we can buy them through any brokerage account. We just find the fund that we want, and that's it. So, Schwab, Robinhood, Revolut, anything else, find the fund you want and buy it. So, I'll show you exactly how to search for them.
Now, let's say that I want to buy the S&P 500 ETF. The ticker is VOO. So, we go over to my app, and you'll notice that for me, VOO isn't an option. That's because this is a UK account, and I need the non-US version, right? If you're in
the US, just search for VOO, or better, just read what the fund is. So, what we'll do is come out here. We'll go to ETFs, exchange-traded funds. You can see them all here. So, number one is the Vanguard S&P 500 UCITS ETF.
So, for UK users, they're buying more of the UCITS ETF for that tax treatment. Again, that's just stocks from around the world. If we scroll down, we have the iShares S&P Information Technology Index, and so on.
throughout the world. If you go to a different brokerage account, you can just find the exact same fund. It's going to be the same price, traded in else. You can click on it. You can see if it's good for you.
Check the the currency that it's traded in. Check if it's UCITS or not. And then if you want to buy it, you just go down, press get started, put your money in, buy it, $1, $10, it doesn't matter. Most brokerages allow you to buy
any amount of a stock these days. So, if you want to know exactly how to use Revolut or the other apps that I use, you can check the tutorial videos down sign up, put money in there, actually buy the stock, sell the stock, and
providers' pages down in the description, too, as well as some other the other helpful videos that you may want to look at will all be listed down GG, cheers for watching and I'll see you in the next one.