Billionaire investor Warren Buffett has said “For most people, the best thing to do is to own the S&P 500 index.” So, what is the S&P 500 and how do you invest?
Key takeaways
The S&P 500 is an index that lists 500 leading US companies on the Nasdaq, NYSE and Cboe.
S&P 500 stocks have collectively yielded positive long-term returns.
You can buy stock in S&P 500 companies or invest in funds that track S&P 500 companies.
How to invest in the S&P 500 in Canada
Choose a trading platform. Compare things like fees and tradable assets of trading platforms that offer access to the S&P 500. For example, if you want to invest in an S&P 500 mutual fund, make sure the broker you choose offers mutual fund investing.
Open and fund an account. Complete an application with your personal details and link a bank account for funding.
Research investment options. Find the stock, ETF or mutual fund by name or ticker symbol and research it before deciding if it’s a good investment for you.
Purchase the security. Buy your desired number of shares with a market order or use a limit order to delay your purchase until the stock reaches a desired price.
Monitor your investment. Periodically check on your investment to make sure it’s aligned with your objectives.
What is the S&P 500?
The S&P 500 is a market capitalization-weighted stock market index of 500 leading US companies in the most prominent industries of the US economy, traded on either the New York Stock Exchange (NYSE), Nasdaq or Cboe.
The index was first introduced in 1957. Today, the S&P 500 covers approximately 90% of available market cap and is widely regarded as the best single measure of US stock market performance.
What stocks are in the S&P 500?
The S&P 500 includes some of the most recognizable and popular stocks in the world. The top ten constituents make up over 37% of the entire S&P 500, with Nvidia alone representing over 7% of the total index. This is why, when Nvidia is down, the entire index feels it. The top constituents of the S&P 500 by index weight include:
The companies in the S&P 500 are hand-picked by the Index Committee. Contrary to popular belief, it’s not just the 500 biggest US stocks. Eligible companies must:
Be a US-based corporation with common stock
Have a market capitalization of at least $22.7 billion USD
Satisfy the SEC’s periodic reporting obligations
Have a primary stock listing on a major US exchange like the NYSE, Nasdaq or Cboe
Ineligible companies and share types include OTC Market (“pink sheets”) stocks, ETFs, preferred shares, convertible bonds, American Depositary Receipts (ADRs), closed-end funds, investment trusts, limited partnerships (LPs), limited liability companies (LLCs) and special purpose acquisition companies (SPACs).
Closing prices are in USD
Expert insight: What is the best way to invest in the S&P 500?
"The most effective way to invest in the S&P 500 is through a cost-effective passive index fund. Options like the Vanguard S&P 500 ETF (VOO) and SPDR S&P 500 ETF Trust (SPY) are popular options for exposure to the index and offer relatively low expense ratios, which help to ensure that you’ll see more returns as the S&P 500 grows.
One of the best reasons to invest in the S&P 500 is that the index offers instant diversification as opposed to picking a handful of stocks to build your portfolio. As an index that tracks the performance of the 500 best-performing companies in the United States, adding exposure in your portfolio means that you’re supported by the very best of US businesses."
You can’t invest directly in the S&P 500, as it’s just an index that tracks stock performance. It’s not a fund that holds stocks for investors. But there are a couple of ways you can invest in S&P 500 companies.
1. Buy shares of an S&P 500 ETF or mutual fund
The easiest way to invest in the S&P 500 is to invest in either an exchange-traded fund (ETF) or mutual fund that consists of stocks listed in the S&P 500. Funds that track an index like the S&P 500 are known as index funds.
S&P 500 index funds offer exposure to the index’s top constituents—Nvidia, Apple, Microsoft etc.—and provide a great, low-cost way to diversify your portfolio. Since most funds should (in theory) achieve similar returns, performance may not be the most important factor when deciding where to invest. Pay close attention to expenses, which vary between funds.
Examples of low-cost S&P 500 ETFs and mutual funds
Fund
Ticker
Type
Expense ratio
Fidelity 500 Index Fund
FXAIX
Mutual fund
0.015%
Schwab S&P 500 Index Fund
SWPPX
Mutual fund
0.02%
iShares Core S&P 500 ETF
IVV
ETF
0.03%
State Street SPDR Portfolio S&P 500 ETF
SPLG
ETF
0.02%
Vanguard S&P 500 ETF
VOO
ETF
0.03%
Vanguard S&P 500 Index ETF
VFV
ETF
0.09%
2. Buy S&P 500 stocks individually
An alternative way of investing in the S&P 500 is to buy individual stocks in companies listed in the index. This would mean buying and owning individual shares of the Magnificent Seven or FAANG companies like Meta (Facebook), Apple, Amazon and so on. How to buy stocks online
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May 5, 2026: The S&P 500 reached a new all-time high of just over $7,259 USD amidst a US-Iran ceasefire and recent corporate earnings announcements that have boosted investors’ faith in tech stocks.
April 6, 2026: The S&P 500 rose 2.5% and oil prices dropped upon news that the US and Iran agreed to a two-week ceasefire. The ceasefire could reopen the Strait of Hormuz, through which about 20% of the global supply of oil and liquefied natural gas is transported.
March 6, 2026: The S&P 500 dipped 1.3% amidst rising oil prices and a concerning February US jobs report, which revealed rising unemployment and, contrary to economists’ expectations, job cuts.
January 21, 2026: The S&P 500, Nasdaq and Dow all climbed on Trump’s announcement at the World Economic Forum that the use of force to gain control of Greenland was off the table.
Is now a good time to invest in the S&P 500 in Canada?
Historically, over the past 10 years, the S&P 500 has seen an average annual growth rate of 13.48%. Since 2009, the index has been profitable every year except for 2011, 2015, 2018 and 2022.
However, with inflation, interest rates and economic instability concerning investors, the S&P 500 will mimic what the overall market is doing. Remember that the S&P 500 tracks large cap US companies, so if the overall US (and global) economy is down, indices that track the market will be as well.
Economic dips are temporary, and S&P 500 ETFs are focused on the long game. So far, the index has bounced back from every crash, bear market and recession in history. While no investments are immune to market downturns, many experts view the S&P 500 ETFs as likely to eventually bounce back.
Why should I invest in the S&P 500 index from Canada?
Access. The S&P 500 features some of the largest and most successful companies in the world and has historically given investors a decent return on their investment. For a stock to be considered for the S&P 500 it must have a market cap of at least $22.7 billion USD.
Diversification. Investing in the S&P 500 allows you to gain exposure to 500 different companies at once, which diversifies your portfolio. Diversification is important because if one stock in the index drops, your entire portfolio doesn’t necessarily drop too.
Convenience. The index itself aims to track the market, which makes it a convenient way to diversify your portfolio without having to buy and sell a number of individual stocks.
Keep in mind that the stocks in the index are all large, household name companies, which opens you up to the potential gains offered by large US stocks. However, since the index is comprised of entirely US companies, your portfolio will take a hit if the US economy (and likely the global economy) suffers.
Pros and cons of investing in the S&P 500
Pros
Exposure to America's leading companies. Gain exposure to America's most influential companies, including Apple, Microsoft, Amazon and Google (Alphabet) with a single purchase.
Instant diversification. Buying a single share of an S&P 500 index fund will give you exposure to 500 companies, immediately diversifying your portfolio.
Competitive long-term performance. The S&P 500's net total annualized return over the past decade is 13.48% (as of May 2026).
Ease of investing. Unless you're buying individual stocks, buying shares of an S&P 500 index fund limits the amount of time needed for research and gets you in the market quicker.
Cons
Only includes US companies. The S&P 500 includes only stocks of US companies and excludes companies in other parts of the world.
Only includes large-cap companies. The S&P 500 includes only large-cap stocks, so you won't gain any exposure to small-cap or mid-cap stocks, which tend to grow at faster rates than their large-cap counterparts.
FX fees. Foreign exchange fees might apply when you buy and sell S&P 500 stocks.
No control over S&P 500 funds. You can't tailor S&P 500 ETF or mutual fund investments to match your individual goals, as these funds are typically managed by professionals.
Expert insight
"The S&P 500 is not without risk and increasingly so as it has become more concentrated on the companies with the highest market capitalization. Seven companies (what are commonly called the “Mag 7”) account for around 35% of the index—a staggering portion. That means the average contribution of these seven stocks is 38x larger than the average contribution of the other 493. That is hugely disproportionate.
And these are mostly technology stocks like Apple, Microsoft, and Nvidia. So, if that sector stumbles or any of these highly weighted stocks fall, the entire index can underperform. It’s really dangerous because it’s essentially undoing, to a degree, the diversification protection it used to offer more of."
Investment growth is top of mind for 1 in 5 Canadians
In the Finder: Consumer Sentiment Survey March 2026, we asked Canadians which financial issues occupy their minds the most. Growing investments has become less of a concern to Canadians, falling from the second-highest position in 2025 (35%) to the fifth-highest position in 2026 (22%).
This year, the top-rated answer was affording everyday expenses (39%), followed by managing debt (32%) and increasing income (31%). Last year, cost of living was also the highest concern (43%), according to the Finder: Consumer Sentiment Survey January 2025, followed by investment growth (35%) and making more money (31%).
Bottom line
Investing in the S&P 500, specifically an S&P 500 index fund, is a great way to diversify your portfolio and grow steady wealth over time.
Investing in the S&P 500 is a great option for individual investors of any experience level.
The S&P/TSX Composite Index is often regarded as the Canadian version of the S&P 500 in the US. It tracks over 200 of the largest companies listed on the Toronto Stock Exchange (TSX) and represents the majority of the Canadian equities market.
Some companies listed in the S&P 500, such as Verizon (VZ), Dow Inc. (DOW) and Crown Castle (CCI), issue dividend-paying stocks, which you can buy if you want to earn a stream of investment revenue.
Some ETFs and mutual funds that hold shares in S&P 500 companies may also pay dividends, including the Fidelity 500 Index Fund (FXAIX) and the State Street SPDR Portfolio S&P 500 High Dividend ETF (SPYD). You may be able to choose between having dividends paid out to you (as a "distribution") or having dividends rolled back in to your fund (known as "accumulation").
One of the best ways for beginners to invest in the S&P 500 in Canada is by buying shares of a cheap, passive ETF or index fund that tracks the index's performance. This is affordable and simple and saves you the trouble of hand-picking the best S&P 500 stocks to buy.
Sources
Important information: Powered by Finder.com. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.
Matt Miczulski is an investments editor and market analyst at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions.
Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on Yahoo Finance, CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University.
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Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family.
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