Want $1 Million in Retirement? 3 Simple Index Funds to Buy and Hold for Decades
By James Brumley | September 18, 2025
Are you dreaming of a $1 million retirement fund? While it may seem like a lofty goal, it’s completely achievable with a bit of planning and consistency. The secret isn’t chasing after hot stocks; it’s about building a solid, diversified portfolio over time. Here’s how you can make that dream a reality with three simple index funds to consider.
1. SPDR S&P MidCap 400 ETF Trust (MDY)
If you’re looking for a solid building block in your investment portfolio, the SPDR S&P MidCap 400 ETF Trust is a great place to start. This ETF mirrors the S&P 400 Mid Cap index, focusing on companies with market caps between $2 billion and $10 billion. These are typically companies that have survived their startup phase and are poised for growth.
Why is this important? Historically, mid-cap stocks have outperformed large-cap stocks. In fact, over the past 30 years, the S&P 400 has returned about 0.5% more annually than the S&P 500 when reinvesting dividends. That may seem small, but those gains can pile up significantly over time as shown in the chart below.
Investing in mid-caps can mean witnessing a bit more volatility, but for those whose investment horizon is long-term, the increased potential rewards could be well worth it.
2. Vanguard Information Technology ETF (VGT)
Technology has led the charge in market returns over the last three decades, and the Vanguard Information Technology ETF is an ideal way to get your slice of this booming sector. Unlike the Invesco QQQ Trust, which also invests in the tech space but includes stocks from other sectors, VGT is entirely focused on technology companies.
It focuses on 315 different tech stocks, encompassing large, mid, and small caps. Its expense ratio is super low at just 0.09%, making it a cost-effective option for tech exposure. Plus, don't forget about NYSE-listed tech firms, often overlooked in other funds. VGT ensures you don’t miss out on big players like Taiwan Semiconductor Manufacturing.
3. Schwab International Dividend Equity ETF (SCHY)
Don’t just put all your eggs in the U.S. basket! The Schwab International Dividend Equity ETF adds a whole new dimension to your investments. Launched in 2021, this fund mirrors the Dow Jones International Dividend 100 index and offers a current yield over 4%. With companies from around the globe, it exposes you to stocks that U.S. investors may not typically see, like Japanese drugmaker Ono Pharmaceutical or Australian conglomerate Wesfarmers.
Even if dividend payouts aren’t your priority right now, you can reinvest them into more shares for compound growth. This ETF provides a healthy hedge against volatility in the U.S. economy, especially given recent economic uncertainties.
Bringing It All Together
Investing isn’t just about picking stocks; it's about creating a balanced approach that allows you to build wealth gradually. With these three index funds—MDY for robust mid-cap growth, VGT for focused tech exposure, and SCHY for international diversification—you can carve out a pathway towards that $1 million nest egg.
Remember, the key to growing your retirement savings is consistency and patience. Regular contributions and letting the magic of compound growth work for you will serve you well in the long run.
About the Author
James Brumley is a stock market analyst for The Motley Fool, specializing in consumer stocks. With a background as a licensed stockbroker and registered investment adviser, James holds a degree in business management and finance from Transylvania University.
Feel ready to step up your investment game? Check out these funds and consider how they can fit into your retirement strategy!
Disclaimer: This information is for educational purposes only and should not be considered as investment advice. Always do your research or consult a financial advisor before making investment decisions.
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