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.
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?
How to invest in the S&P 500 in Canada
Choose a trading platform. Compare things like fees and tradable assets. 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 80% 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 around 35% of the entire S&P 500, with Apple alone representing over 7% of the total index. This is why when Apple is down, the entire index feels it. The top 10 constituents of the S&P 500 by index weight as of December 4, 2024 are:
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 $18 billion
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, preferred shares, convertible bonds, American Depositary Receipts (ADRs), ETFs, closed-end funds, investment trusts, limited partnerships (LPs), limited liability companies (LLCs) and special purpose acquisition companies (SPACs).
Our top picks for platforms to invest in the S&P 500 in Canada
Our selection of top picks is based on the same criteria as our annual Stock Trading Platform Awards. This is updated yearly to reflect changes in the market.
"Best for" picks are those we've evaluated to be best for specific product features or categories – you can read our full methodology here. If we show a "Promoted" pick, it's been chosen from among our commercial partners and is based on factors that include special features or offers, and the commission we receive.
This isn't an exhaustive list of all the trading platforms out there. What's best for you depends on your own investing strategy, budget and financial goals.
Closing prices are in USD
Two ways to invest in the S&P 500
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—Apple, Microsoft, Amazon 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%
SPDR Portfolio S&P 500 ETF
SPLG
ETF
0.02%
Vanguard S&P 500 ETF
VOO
ETF
0.03%
Vanguard 500 Index Fund Admiral Shares
VFIAX
Mutual fund
0.04%
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 FAANG companies like Meta (Facebook), Apple, Amazon and so on.
Compare trading platforms to invest in the S&P 500
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S&P 500 Market Update
Nov 15, 2024: US stock futures fell on Friday morning as the postelection rally wavered and the US Federal Reserve signaled it was in no hurry to keep cutting interest rates. S&P 500 futures slipped about 0.59%, according to CNBC.
Oct 29, 2024: US stocks traded mixed on Tuesday as investors digested new data on job openings and absorbed a fresh wave of earnings ahead of Alphabet’s results. The benchmark S&P 500 rose roughly 0.1% after initially opening the day lower, according to Yahoo Finance.
Oct 21, 2024: The S&P 500 closed lower on Monday, retreating from Friday’s record high closes and six straight weekly gains as Treasury yields rose and investors wary of high valuations awaited earnings from major companies, according to Reuters.
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 11.30%. Since 2009, the index has been profitable every year except for 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. While no investments are immune to market downturns, S&P 500 ETFs are more likely to bounce back from these temporary downturns. The index has bounced back from every crash, bear market and recession in history. So, you can feel confident that investments tracking the index will eventually recover.
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 $18 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 U.S. stocks. However, since the index is comprised of entirely U.S. companies, your portfolio will take a hit if the U.S. 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 11.30% (as of Dec 4, 2024).
Ease of investing. Unless you’re buying up individual stocks, buying shares of an S&P 500 index fund limits the amount of time you need to spend researching and gets you in the market quicker.
Cons
It includes only US companies. The S&P 500 includes only stocks of US companies and excludes companies in other parts of the world.
It includes only 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.
Finder survey: Are men or women more likely to have invested in the US stock market?
Response
Male
Female
US
53.04%
45.36%
Source: Finder survey by Pollfish of 1001 Canadians, January 2024
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 SPDR Portfolio S&P 500 High Dividend ETF (SPYD). You can choose to have dividends paid out to you (as a "distribution") or have 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.
Disclaimer: 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 all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
Matt Miczulski is an investments editor 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 CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. See full bio
Matt's expertise
Matt has written 6 Finder guides across topics including:
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. See full bio
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