Gen Zers Need Stocks to Get Rich. 6 Low-Cost Funds to Do Just That.

Young investors win by staying the course when it comes to stocks.

For millennial and Gen Z investors with decades until retirement, investing early in the stock market and staying invested are key to building wealth. But with constant headlines about which stocks are soaring and plunging, or how news such as tariffs announcements impact the markets, it can be difficult to know what to invest in.

If you are using headlines to determine how to build your portfolio, you are overthinking what could be a simple process. Most people should be regularly buying shares of low-cost funds from well-known asset managers and holding on to them for the long term. That’s it.

“The more you switch up, the more you watch the market and switch into value or growth or back and forth, the more you’re going to end up eroding into your long-term returns,” says Brendan McCann, an associate manager research analyst for Morningstar.

Here are several types of funds to choose from that can make up an overall investment portfolio for decades.

Total market index fund

One way to get broad exposure to all U.S. stocks at once—everything from well-known behemoths such as Amazon.com and Coca-Cola to little-known smaller industrial, healthcare and financial businesses—is with a total market index fund. “You’re covered for your stock allocation if that’s the route you want to go down,” McCann says.

The Fidelity Total Market Index fund, iShares Core S&P Total US Stock Market ETF, Schwab Total Stock Market Index Fund, and Vanguard Total Market Index Fund ETF are all on Morningstar’s list of the best total market funds and come with annual expense ratios of 0.03% or less.

“I would just buy the stock index fund then keep buying that stock index fund,” says Catherine Valega, financial advisor and founder of Green Bee Advisory in the Greater Boston area. “You buy an initial position and then you set up your accounts so that every month, week, two weeks or whatever your cash flow permits, you’re buying more shares of that same fund.”

Global market index fund

If you are looking for an even broader reach, consider a global market index fund. These funds offer exposure to the entire global market of stocks, not just those in the U.S. International stocks tend to perform differently from U.S. stocks, so having both represented in your portfolio can give you an edge during market turmoil.

The Vanguard Total World Stock ETF —which tracks the FTSE Global All Cap Index covering both well-established and still-developing markets around the world—is a good option. It invests in both U.S. and foreign stocks, so you have truly covered all the bases.

U.S. short- to medium-term Treasury fund

If you are more conservative—say you are planning to buy a house in a few years or plan other expenditures to support a growing family—consider a short-term bond fund in the mix.

“If you want cash equivalents, like if you have a short-term goal, you could buy an index of short-maturity treasuries,” McCann says. The Vanguard Short-Term Treasury Index Fund ETF, Schwab Short Term U.S. Treasury ETF, and Pimco Enhanced Short Maturity Active ETF could be good options, he adds.

Total market bond funds

Short- and medium-term bond funds make sense for investors seeking more liquidity due to their short-term goals, but they typically don’t offer as high returns as long-term bond funds often holding instruments with durations of 10 years or more. The longer you have to wait for a bond’s maturity date, the more you investment will drop in value as interest rates rise. To make up for that, bond issuers tend to offer higher yields to attract investors.

So, while an all-stock portfolio may make sense for many younger investors, adding some fixed-income exposure can be a good move for people looking for steady income with less risk than stocks. Not only do bond funds offer stability, but they also allow for diversification in your portfolio: Stocks and bonds often move in different directions.

Morningstar lists a mix of the best, including the Fidelity US Bond Index, IShares Core Total USD Bond Market ETF, Nuveen Bond Index, and Vanguard Total Bond Market ETF.

Money-market fund

Looking for a super low-risk fund to include in your portfolio that will net you more than a savings account? You could tap into money-market funds.

Many brokerage firms will offer these funds as “sweep” accounts, meaning they will automatically invest your uninvested cash. You’ll find several offers from each of the main asset managers, including the Fidelity Money Market Fund and Vanguard Federal Money Market Fund.

Target-date fund

If choosing a few of the above funds still has you overwhelmed, there’s another, simpler option: putting your money in a single target-date fund. These funds are pegged to your retirement year so the fund automatically adjusts to be more conservative the closer you are in retirement. You can essentially take an invest-and-forget approach since they hold a mix of stocks and bonds.

“This is a great approach for someone who wants to invest but isn’t sure where to start,” says Anjali Jariwala, a financial advisor and founder of FIT Advisors in Redondo Beach, Calif. “These funds provide diversification which is really important, especially in volatile markets like we are currently in. Diversified portfolios smooth out volatility and are great for long term investing.”

Morningstar says the following target-date strategies are among the best: American Funds Target Date Retirement, BlackRock LifePath Index, Fidelity Freedom Index, Vanguard Target Retirement CIT, and T. Rowe Price Retirement Blend*.*

If you held one of these for long-term investments, and a money-market account, high-yield savings account or short-term bond fund for emergencies and near-term expenses, you would be covered.

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