The basic steps to buy an S&P 500 fund on Fidelity

Log into your Fidelity account online or through the mobile app. Click "Trade" or "Invest" (the exact button name varies by platform). Search for an S&P 500 index fund by its ticker symbol — the most common ones are FXAIX (Fidelity's own S&P 500 fund with no expense ratio), VOO (Vanguard's version), or SPY (an exchange-traded fund that tracks the same index). Select the fund, enter the dollar amount or number of shares you want to buy, and confirm the order. The trade will settle in your account within one to two business days.

You do not need to do anything special to own an S&P 500 fund — it is a regular stock market purchase, not a special program or account type. If you already have a Fidelity brokerage account (whether it is a regular taxable account, an IRA, or a 401(k)), you can buy index funds inside it using the same process.

Key Takeaways

  • FXAIX is Fidelity's own S&P 500 index fund and charges no expense ratio, making it one of the cheapest ways to own the index through Fidelity.
  • You can buy S&P 500 funds in any account type you hold at Fidelity — taxable brokerage accounts, IRAs, and 401(k)s all use the same purchase process.
  • The order settles within one to two business days, meaning the shares appear in your account and you own them, but you cannot sell them until settlement is complete.
  • S&P 500 index funds track 500 large U.S. companies and move as a group, so you own a piece of all 500 rather than picking individual stocks.

Which S&P 500 fund to choose on Fidelity

Fidelity offers three main S&P 500 options: FXAIX (mutual fund), FSKAX (mutual fund, same holdings as FXAIX), and SPLG (exchange-traded fund). FXAIX and FSKAX have no expense ratio — you pay nothing annually to own them. SPLG charges 0.03% per year. All three track the same 500 companies and will perform nearly identically over time.

For most people, FXAIX is the simplest choice because it has no cost and you can buy fractional shares (meaning you can invest $100 and own a piece of a share, not wait until you have enough for a whole share). If you are buying through a 401(k) or employer plan, your options may be limited to whichever funds your plan offers — check your plan documents or call Fidelity's plan administrator line to see what is available to you.

How to find the right account type for your purchase

Before you buy, confirm which Fidelity account you are using. A taxable brokerage account is the standard choice — you can buy and sell whenever you want, but you owe taxes on any gains when you sell. An IRA (either Traditional or Roth) lets you buy S&P 500 funds with money set aside for retirement; you cannot withdraw it before age 59½ without penalty, but the account grows tax-free or tax-deferred depending on the type. A 401(k) is an employer retirement plan; S&P 500 funds are usually one of the investment options inside it.

Each account type has different rules about how much you can contribute per year and when you can withdraw money. If you are unsure which account you have, log into Fidelity and look at the account summary page — it will show the account type next to your balance. You can hold S&P 500 funds in all three types at the same time.

Understanding settlement and when you own the shares

When you place an order to buy an S&P 500 fund, the order goes through immediately and you see it in your account as "pending" or "unsettled." The actual transfer of money and shares takes one to two business days — this is called settlement. Until settlement is complete, you own the shares but cannot sell them.

If you place an order on a Monday, it will settle by Wednesday. If you place an order after market close (after 4 p.m. Eastern time) or on a weekend, it will settle the next business day. You do not need to do anything during this time — settlement happens automatically. Once it is complete, you can buy, sell, or hold the shares with no restrictions.

What happens to your money while you wait to invest

If you transfer cash into your Fidelity account but have not yet bought the S&P 500 fund, that cash sits in a money market fund by default. Money market funds pay a small amount of interest (the rate changes daily based on market conditions). You are not earning much, but you are earning something while you decide when to invest.

Some people move cash into their Fidelity account all at once and buy the S&P 500 fund immediately. Others move money in gradually and buy a little at a time — this is called dollar-cost averaging. Both approaches work; the difference is small over long periods. The important thing is that your cash is not sitting idle earning nothing — it is in a money market fund earning a small return until you move it into the S&P 500 fund.

Taxes and what to know before you buy

If you are buying in a taxable brokerage account, you will owe taxes on any profit when you sell. If you hold the fund for more than one year before selling, the profit is taxed as a long-term capital gain (usually 15% or 20% depending on your income). If you sell within one year, it is taxed as ordinary income (your regular tax rate). S&P 500 funds also pay dividends — small cash payments from the companies in the index — and those dividends are taxable in the year you receive them, even if you do not sell the fund.

If you are buying in an IRA or 401(k), none of this matters right now. Those accounts are tax-deferred or tax-free, so you do not owe taxes on gains or dividends while the money is inside the account. You only owe taxes when you withdraw money in retirement (Traditional IRA and 401(k)) or not at all (Roth IRA).

Frequently Asked Questions

Can I set up automatic purchases of the S&P 500 fund?

Yes. Fidelity calls this a "systematic investment plan." Log into your account, go to the fund page, and look for an option to set up automatic monthly or weekly purchases. You choose the dollar amount and the date, and Fidelity buys the fund for you on that schedule. This is useful if you want to invest a fixed amount regularly without thinking about it.

What is the minimum amount I need to invest?

There is no minimum for a single purchase. You can buy $1 worth of FXAIX if you want (because Fidelity allows fractional shares). Some funds have account minimums — usually $2,500 to open — but FXAIX has no minimum. If you are buying through a 401(k), your plan may have its own rules, so check your plan documents.

Do I need to do anything after I buy the S&P 500 fund?

No. Once you own it, the fund tracks the S&P 500 automatically. You do not need to rebalance, pick stocks, or make changes. You can check your balance anytime, and you can buy more shares whenever you want. Many people buy and hold for decades without touching it.

What if I want to sell my S&P 500 fund later?

Log into Fidelity, find the fund in your account, and click "Sell." Enter the number of shares or dollar amount you want to sell, and confirm. The order settles in one to two business days, and the cash appears in your account. If you are selling in a taxable account, you will owe taxes on any profit. If you are selling in an IRA or 401(k) before retirement age, you may face penalties.

Can I buy the S&P 500 fund through my Fidelity 401(k)?

Usually yes, but it depends on your employer's plan. Log into your 401(k) and look at the investment options — most plans offer at least one S&P 500 index fund. If you do not see one, contact your plan administrator or Fidelity's 401(k) support line. Some plans offer limited choices, so you may have to pick a similar large-cap fund instead.