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How to invest in the S&P 500 in 2024

Your straightforward guide to investing in the 500 largest US-listed companies, with pros and cons.

The S&P 500 is a stock market index comprising 500 leading US companies. The performance of this index is usually a good reflection of the entire market. You can’t invest directly in the index but you can buy securities designed to mirror its performance or, if so inclined, buy the individual stocks of companies in the S&P 500.

How to invest in the S&P 500

You can invest in the S&P 500 in two ways: buy individual stocks that make up the S&P 500 or buy exchange-traded funds (ETFs) or mutual funds that track the S&P 500 index.

1. Buy individual S&P 500 stocks

You can buy individual stocks in companies listed in the index. This means you’re buying and owning the individual stocks of the index.

How to invest in S&P 500 in 5 easy steps

  1. Choose an online stock trading platform. Choose from our top picks below or jump straight to the best stock trading apps of 2024.
  2. Sign up for an account. Provide your personal information and sign up.
  3. Set up a funding method to pay for the transaction. Deposit funds into your account by linking your banking information.
  4. Choose the stocks you want to buy. Search for the stock by name or ticker symbol.
  5. Place your order. Buy the stock. It’s that simple.

Our top picks for trading platforms to invest in the S&P 500

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2. Buy an S&P 500 index fund

The easiest way to invest in the S&P 500 is to invest in either an ETF or mutual fund that tracks the S&P 500. Funds that track an index like the S&P 500 are known as index funds.

Index funds are designed to track the performance of and achieve approximately the same return as an underlying index. S&P 500 index funds will at the least have exposure to the top constituents — Apple, Microsoft, Amazon, etc. These funds are a great way to add instant diversification to your portfolio at a low cost because a single share purchase gives you exposure to all the underlying stocks.

Since most S&P 500 index funds should, in theory, achieve nearly similar returns, a fund’s performance may not be the most important factor when deciding which to invest in. Investors may want to pay closer attention to expenses, which will likely vary the most between funds.

Best S&P 500 ETFs

IconFund5-year performanceLink to invest
Vanguard iconVanguard S&P 500 (VUSA)86.77%

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iShares iconiShares Core S&P 500 (CSP1)88.47%

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Invesco iconInvesco S&P 500 (SPXP)88.91%

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HSBC iconHSBC S&P 500 (HSPX)87.01%

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SPDR iconSPDR S&P 500 ETF (SPY)86.50%

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DWS Xtrackers iconXtrackers S&P 500 Equal Weight UCITS ETF (XDWE)69.22%

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A photo of Bob Haegele

What Bob says about simplifying things with an ETF:

While DIY is a venerable approach when it comes to projects like home improvement, it's often unnecessary when investing. Picking and choosing individual stocks can get you better results in theory, but it's time-consuming and quite difficult to do consistently. On the other hand, ETFs can provide excellent results for the average investor, and the fees today are often quite low.

Bob Haegele, Personal finance writer and expert

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) or Nasdaq.

The index was first introduced in 1957. Today, the S&P 500 covers approximately 80% of the available market cap and is widely regarded as the best single measure of US stock market performance.(1)

Though known officially as the S&P 500, the index actually contains just over 500 stocks as of the last quarter of 2023. The index includes two share classes of stock from News Corp (NWS), Fox Corp (FOX) and Alphabet (GOOGL).(2)

What companies 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 28% of the entire S&P 500, with Apple alone representing 7.5% of the total index.(3) 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 October 31 2023 are:

CompanyTicker symbol
Microsoft Corp.MSFT

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Apple Inc.AAPL

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Amazon.com IncAMZN

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NVIDIA CorpNVDA

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Alphabet Inc AGOOGL

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Meta Platforms, Inc Class AMETA

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Alphabet Inc CGOOG
Berkshire Hathaway BBRK-B

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Tesla IncTSLA

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UnitedHealth GroupUNH

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Latest S&P 500 updates

March 15, 2024: The S&P 500 fell on Friday and notched its second-straight weekly loss, with technology stocks under pressure as inflation concerns remain front and center ahead of the Federal Reserve’s policy meeting next week, according to CNBC.

March 12, 2024: US stocks added to gains on Tuesday after key inflation data came in hotter than expected to help set expectations for the timing of a Federal Reserve interest-rate cut. By mid-afternoon trading, the S&P 500 rose about 0.8%, according to Yahoo Finance.

March 8, 2024: US stocks rose on Thursday as the S&P 500 hit a new record high, staying upbeat amid a second day of closely tracked testimony from Federal Reserve Chair Jerome Powell and ahead of Friday’s release of the February jobs report, according to Yahoo Finance.

March 1, 2024: March arrived with a bang on Wall Street as stocks set new records. The S&P 500 gained 0.8%, setting a new high. The S&P 500 has risen 16 out of 18 weeks, chugging along after passing 5,000 for the first time last month, according to Yahoo Finance.

February 23, 2024: The S&P 500 stabilized Friday to close at 5,088.80 after hitting another record as investors wrapped the week on a high note. Earlier Friday, the broad market index broke above 5,100 for the first time, according to CNBC.

February 20, 2024: Following the S&P 500 surpassed 5,000 for the first time earlier this month, Goldman Sachs has raised its year-end forecast for the index to 5,200, citing an improved earnings outlook, according to Yahoo Finance.

How is the S&P 500 doing?

Take a look at the 10-year historical performance of the S&P 500.

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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 Tesla, with a single purchase.
  • Instant diversification. Buying a single share of an S&P 500 index fund will give you exposure to the stocks of all its underlying companies, immediately diversifying your portfolio.
  • Competitive long-term performance. Over the past 25 years, the S&P 500 has produced total returns of 9% — or 6.8% when adjusted for inflation.(4)
  • Ease of investing. Buying shares of an S&P 500 index fund limits the 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.

Frequently asked questions about investing in the S&P 500

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