How to Invest in S&P 500 Index Funds in 2024

Learn how to invest in the S&P 500, what the best options are, and which S&P 500 index funds & ETFs are available to you.
By:  & 
Updated: Jun 11, 2024
Listen

The S&P 500 index is one of the most followed stock market benchmarks, comprised of 500 of the largest U.S. companies by market capitalisation.

Investing in Standard & Poor’s 500 index funds, ETFs, or mutual funds can provide market-matching returns from a diversified portfolio of the biggest publicly traded companies at a low cost.

The S&P 500 index generally produces consistent, long-term returns that closely align with the large-cap U.S. stock market. Investing in the S&P 500 offers beginners and experienced investors an easy way to gain broad exposure to the overall health of the U.S. economy.

This page provides a step-by-step guide on how to invest in the S&P 500 index using index funds, ETFs, or direct stock purchases, what it costs, and expert projections from Wall Street Analysts on the future index performance.

What is the S&P 500?

Copy link to section

The S&P 500 is a stock market index that tracks the stocks of 500 large-cap companies and broadly represents the American economy’s largest sectors and industries. To be included in the Standard & Poor’s 500 index, companies must have a market capitalisation of at least $14.6 billion, be U.S-based, and meet minimum liquidity requirements based on trading volume and public float.

These strict minimum requirements mean the S&P 500 stock index contains iconic U.S. companies like Apple, Microsoft, Amazon, Tesla, Johnson & Johnson, and Berkshire Hathaway. It covers 11 main sectors: information technology, healthcare, financials, communication services, and consumer discretionary.

Although it’s not as widely known as the 30-stock Dow Jones Industrial Average, the S&P 500 is considered one of the best benchmarks for the overall U.S. stock market. The S&P 500 holds over 80% of the U.S. equity market capitalisation compared to just 20% for Dow Jones indicies and 10% for the technology-heavy Nasdaq Composite.

How has the S&P 500 performed?

Copy link to section

It has only really moved in one direction for the past 25 years, up! While there have been some bumps along the way, such as the financial crisis in 2008 and the Coronavirus pandemic, the S&P 500 has consistently risen in value for years.

More recently, in 2022, the index dropped by 25% after reaching an all-time high. However, like previous years, it recovered its losses by 2024.

Use the interactive tool below to learn more about the S&P 500, what companies it includes, and the performance of its individual stocks.

How much does it cost to invest in the S&P 500 index?

Copy link to section

From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the trading fees and expense ratios.

InstrumentTrading feeExpense ratio
Exchange traded funds$0-$5.990-0.2%
Index fund / mutual funds$0-$5.990.1-2%
Individual stocks$0-$3None
CFDs$0None

*A fee comparison of 3 leading brokers for example purposes

ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees or expense ratios but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.

All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars. 

Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.

Where can I invest in the S&P 500 index?

Copy link to section

According to our expert research, Plus500 is the best ETF broker to invest in S&P 500 index funds. 

Both S&P 500 ETFs and S&P 500 CFDs are available to invest in through Plus500 .

Here are three more places to buy the S&P 500, ranked according to their cost, security, and features.

Sort by:

1
Min. Deposit
100 €
Best offer
User Score
9.9
Trade +2000 CFDs on Shares, Options, Commodities & more
Unlimited risk-free Demo Account
0 commissions & attractive spreads with up to 1:5 leverage
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Visa, Mastercard, American Express, Trustly, Apple Pay, Google Pay, Discover, Bank Transfer: SEPA, Bank Transfer: FPS, skrill
Full Regulations:
ASIC, FCA, FSA, MAS, CySEC #250/14

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

2
Min. Deposit
0 €
Best offer
User Score
9.9
TastyTrade allows you to buy and sell U.S. stocks without paying any commission fees.
Whether you’re a short-term trader or a long-term investor, TastyTrade accommodates various investment horizons.
Explore over 8,000 U.S. stocks and consider exchange-traded funds (ETFs) for broader exposure to the market.
Start Trading
Payment Methods:
Wire Transfer, Check, ACH
Full Regulations:
3
Min. Deposit
0 €
Best offer
User Score
9.9
Allows commission-free trading of individual stocks and over 2,000 ETFs.
TradeStation’s platform supports options, futures, and futures options trading.
Traders benefit from award-winning software with advanced analysis capabilities and customization options.
Start Trading
Payment Methods:
Wire Transfer, Check, ACH
Full Regulations:

Investing in the S&P 500 in 4 steps

Copy link to section

The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an S&P 500 ETF or CFD. This guide explains how to do it:

Step 1. Sign up to an investing platform

Copy link to section

We recommend using Plus500 to invest in S&P 500. If you want to see a selection of options, we’ve provided other perfectly fine choices further down the page.

 

Once chosen, sign up for a brokerage account and verify your identity by supplying a form of photo ID. After that, you need to deposit some money into your account to invest with, e.g $100, usually with a debit card, credit card, or bank transfer.

1
Min. Deposit
100 €
Best offer
User Score
9.9
Trade +2000 CFDs on Shares, Options, Commodities & more
Unlimited risk-free Demo Account
0 commissions & attractive spreads with up to 1:5 leverage
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Visa, Mastercard, American Express, Trustly, Apple Pay, Google Pay, Discover, Bank Transfer: SEPA, Bank Transfer: FPS, skrill
Full Regulations:
ASIC, FCA, FSA, MAS, CySEC #250/14

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Step 2. Decide how to buy S&P 500

Copy link to section

This boils down personal preference and research, you’ll need to choose how to invest in the S&P 500 index, which you can learn about below. Most people opt for an S&P 500 ETF because its simple, low-cost, and easy to execute.

 

ETFs are generally better suited to long-term investors with a longer time horizon because ETFs simply mirror the [index]’s price performance. Whereas CFDs are better for those looking to trade regularly since they offer a greater range of trading options; you can use leverage, short the index, or buy and sell it outside of trading hours.

Step 3. Invest in the S&P 500

Copy link to section

Within your trading account, navigate to Indices, ETFs, or search for the S&P 500 stock market index.

Once found, you’ll be presented with the S&P 500 page which contains a chart, price history, and other useful data. Hit the ‘buy’ or ‘trade’ button to enter the details of your purchase, such as how much you want to invest.

Press the button to complete your trade! If you opened the trade during market hours, you’ll see it immediately within your portfolio. If you’ve invested outside of market hours, you’re trade will execute the following day when the market opens.

That’s it, you’re now an S&P 500 investor! Not such a big deal, right?

Step 4. Monitor your investment

Copy link to section

Your trading account will show the price change in the S&P 500 since you bought it, so you’ll always be able to see your profit & loss at a glance.

 

With any investment, the hard part is not investing itself – it’s knowing when to take profit, or cut your losses! Depending on your goals, you’ll need to keep tabs on your investment, follow the markets, and know when to invest more or take the money out. Some people leave investments for years, others aim to capitalise more regularly – so this is for you to figure out. More on this below.

What ways can I invest in the S&P 500?

Copy link to section

As we mentioned above, there are numerous ways to put your money into the S&P 500 stock market index. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.

S&P 500 ETFs

Copy link to section

An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.

An S&P 500 ETF is one way of investing in the S&P 500. It’s simply an investment fund that mirrors the performance of the S&P 500. When you buy shares in the fund, the value of your investment will rise or fall with the S&P 500 itself. 

ETFs are ideal for new investors because they have a very low minimum investment and low annual fee. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the S&P 500 index, because you can buy or sell shares in the fund throughout the day.

S&P 500 index funds

Copy link to section

An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the S&P 500. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.

However, there are a couple of differences. S&P 500 funds are only priced at the end of each trading day, so you can buy or sell shares in the index mutual fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in S&P 500 index funds.

That means an S&P 500 mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue. When you buy S&P 500 mutual funds, you’ll also benefit from a dividend yield as many stocks share profits with shareholders.

S&P 500 CFDs

Copy link to section

CFDs (contracts for difference) are a way to speculate on S&P 500 price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the S&P 500 – but it’s separate from it.

As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.

All of this means S&P 500 CFDs offer the potential to outperform a fund that is passively managed and tracks the S&P 500’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.

S&P 500 futures

Copy link to section

Futures contracts are agreements to buy or sell the SPX at an agreed price on a set date in the future. S&P 500 futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.

Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.

Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the S&P 500 then you might want to short the S&P 500 so that you still make some money if the price falls.

S&P 500 stocks

Copy link to section

Another way to invest in the S&P 500 is to buy stocks in the individual companies that the index tracks. It isn’t practical to pick stocks for every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the S&P 500 in order to get broad exposure to its performance.

The most heavily weighted stocks in the S&P 500 tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.

One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.

The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.

Which companies are in the S&P 500?

Copy link to section

For the S&P 500 index, the largest and best performing stocks include:

CompanyIndex weight
Apple Inc. (AAPL)7.02%
Microsoft Corp. (MSFT)6.20%
Amazon Inc. (AMZN)2.67%
NVIDIA Corp. (NVDA)1.91%
Alphabet Inc. Class A (GOOGL)1.86%
Berkshire Hathaway Inc. Class B (BRK.B)1.64%
Alphabet Inc. Class C (GOOG)1.61%
Tesla Inc. (TSLA)1.49%
Meta Platforms Inc. Class A (META)1.38%
UnitedHealth Group Incorporated (UNH)1.32%
Copy link to section
  • Vanguard S&P 500 UCITS ETF (VOO)
  • iShares Core S&P 500 UCITS ETF (IVV)
  • Lyxor S&P 500 UCITS ETF (LSPU)
Copy link to section
  • Fidelity 500 Index Fund (FXAIX)
  • Schwab S&P 500 Index Fund (SWPPX)
  • Vanguard 500 Index Fund (VFIAX)

Should I buy the S&P 500 index?

Copy link to section

Yes, S&P 500 investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.

The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The S&P 500 is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.

What are the advantages of investing in the S&P 500 index?

Copy link to section

An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the S&P 500 index:

  • Get instant access to all the top publicly traded companies in the US market. The S&P 500 index includes hundreds of leading US stocks. Big technology companies like Apple and Microsoft are there, but so are the likes of Nike, Disney, Johnson & Johnson, and Exxon. It provides a diverse portfolio packed with big brand names, and blue-chip stocks, with market capitalization often in the billions.
  • Investing in an index means no difficult decisions over which stocks to choose. Putting money into the S&P 500 index is extremely easy, and requires little expertise. It’s a great way to start investing, with few fees or management costs, and you can build on it by picking individual stocks later on if you like.
  • S&P 500 exchange traded funds are cheaper to invest in than buying individual stocks in companies like Apple, Google, or Microsoft. It’s perfectly possible to invest small amounts, like $10-$100, into an S&P 500 index ETF or fund. That’s less than the cost of one share in a large, popular company. An index is more affordable if you’re looking for a low cost investment strategy. 
  • The S&P 500 trends up over long periods of time. The long term trend is up, if you’re willing to ride out short term peaks and troughs. The S&P 500 has bounced back even after the worst financial crises to eventually reach new highs.
  • The performance of the S&P 500 is used as a benchmark to rate active fund managers. A fund manager or an index that outperforms the S&P 500 is generally considered to have done a good job, and the index represents a performance to aim for. By investing in the S&P 500 directly, you’re likely to outperform most investors and funds.
  • A balanced index offers more protection against downturns than individual investments. One of the biggest virtues of investing in the S&P 500 index is that the range of 500 leading companies means one failure is less likely to harm the overall portfolio. This is even more true when it includes companies from different sectors, which are less likely to be impacted by contagion if one business fails.

What are the disadvantages of investing in the S&P 500 index?

Copy link to section

The main risk of investing in the S&P 500 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of S&P 500 investing.

  • The S&P 500 is heavily weighted towards the technology sector. All of the top weighted holdings in the S&P 500 are technology companies. Apple, Microsoft, Amazon, and Google have an outsized impact on the index’s performance. This is fine in the good times, but a broad based sell-off or volatility in technology stocks can have a large impact on the index’s performance.
  • US-specific issues can affect all the stocks in the index. As every company on the S&P 500 is based in the United States, any economic, government, or political issue that affects the US may impact every company in some form. While you’re diversified against some sector risk, you aren’t protected against geographical risk.
  • You can’t avoid investing in companies in the index. Even if you don’t like some companies on the S&P 500 index, such as those in oil, alcohol, or gambling, you have to invest in all of them when you put money into an index. Whether your aversion is ethical or economic, you don’t have a choice but to accept those companies as part of the investment.

S&P 500 predictions from expert analysts

Copy link to section

Insights from stock market analysts can give you an idea of the overall sentiment towards the S&P 500. It may help you see things from a different perspective, or pick up things you may have missed. Here are some S&P 500 forecasts and insights from leading experts:

At 4,009, the average projection for the S&P 500 calls for a decline of more than 1% by the end of 2023.

Bloomberg Research

The S&P 500 was expected to end 2023 at 4,200 points, which would amount to a 9.4% increase for the calendar year, according to the median forecast of 42 strategists.

Reuters

The S&P 500 Index is forecast to turn out flat returns and no growth in earnings in 2023 after declining about 17% this year.

Goldman Sachs Research

Bottom line

Copy link to section

Investing in the S&P 500 index is an excellent way to gain exposure to many of the biggest and best companies in the United States. To get started, you’ll need to use a trusted online trading platform where you can access a range of S&P 500 ETFs, funds, and stocks. You may not get market-beating returns, but you will have the opportunity for consistent growth by investing in the S&P 500 index.

Invest in the S&P 500

FAQs

Copy link to section
Should I invest in the S&P 500 through an index fund or ETF?
How should a beginner invest in the S&P 500?
Can I invest in the S&P 500 from the UK?
Does the S&P 500 pay dividends?
Which S&P 500 fund is best?
Does Warren Buffet invest in the S&P 500?

Risk disclaimer
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.
Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.