Fri Nov 21 2025, by Tyler Gardner

Four Funds to Buy in Your 40s and Where to Put Them

Here are four funds I would buy in my 40s and exactly where I'd put them. I'm Tyler, a former financial advisor and portfolio manager. Now I make financial content for free so you don't have to pay for it.

1. 50% to FXAIX

I would allocate 50% to FXAIX, Fidelity's S&P 500 index fund, in my traditional 401k. This allows me to get a tax deduction now while I'm in peak earning years, and it will compound tax-free until retirement.

2. 30% to VXUS

Next, I'd invest 30% in VXUS, Vanguard's international fund, into my Roth IRA. Since international stocks are slightly less tax-efficient due to potential foreign tax credits, this is perfect for my Roth, where it will grow tax-free forever. I'll be diversified outside the U.S. to never kick myself when Asia goes on a bull run.

3. 15% to VSIAX

I'd allocate 15% to VSIAX, Vanguard's U.S. small cap index, into my Roth IRA. This is my high-risk, high-reward play. Small cap value has historically outperformed, and while it can be a wild, volatile ride, it's perfect for my Roth where I won't be tempted to sell during downturns. If it 4Xs over the next 20 years, that's 100% tax-free, all mine.

4. 5% to VTI

Finally, I'd put 5% into VTI, Vanguard's total stock fund, in my taxable brokerage account. This keeps it tax-efficient, flexible, and highly liquid. This serves as my "maybe I want to retire early or take a sabbatical" fund. It's available when I need it and grows tax-efficiently when I don't.

Conclusion

To sum it all up: tax-inefficient investments go in tax-advantaged accounts, while tax-efficient investments go in taxable accounts. If any of this is helpful, sign up for my free weekly newsletter by clicking the link in my bio. Each week, I'll send you over another money playbook that actually works.

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