How to Buy S&P 500 Index Funds Through Fidelity

How to buy an S&P 500 fund at Fidelity

You can buy S&P 500 index funds through Fidelity in three main ways: open a brokerage account online and buy through their website or mobile app, call Fidelity's phone line and place an order with a representative, or visit a Fidelity branch in person. The online route is fastest — you can fund an account and place your first trade the same day. Most people use Fidelity's website or app because there are no phone wait times and you can see your holdings update in real time.

Fidelity offers three S&P 500 index funds you can choose from: FXAIX (Fidelity S&P 500 Index Fund), FUSEX (Fidelity S&P 500 Index Fund — Class K), and VFIAX (Vanguard S&P 500 ETF, available through Fidelity). FXAIX is the most common choice for individual investors because it has no minimum investment and a very low expense ratio. All three track the same 500 large-cap stocks, so the main difference is cost and account type.

Key Takeaways

You need a Fidelity brokerage account before you can buy any S&P 500 fund; opening one takes about 10 minutes online and requires your Social Security number, address, and bank details.
FXAIX is Fidelity's own S&P 500 index fund with no minimum investment and costs 0.035% per year, meaning you pay $3.50 annually for every $10,000 invested.
You can buy S&P 500 funds through a regular taxable brokerage account, a retirement account (IRA or 401k), or an education savings account (529), each with different tax rules.
Your first purchase can be as small as $1 if you buy individual shares, or you can invest a lump sum; Fidelity also lets you set up automatic monthly investments.

Opening a Fidelity brokerage account

Go to Fidelity.com and click "Open an Account." You will choose between a taxable brokerage account (for general investing), an IRA (for retirement), a 401k (if your employer offers one), or a 529 (for education savings). Most people starting out choose a taxable brokerage account. The form asks for your name, date of birth, Social Security number, address, and employment status. You do not need to have a job to open an account, but Fidelity will ask whether you are employed.

After you submit the form, Fidelity verifies your identity — this usually takes a few minutes but can take up to 24 hours. Once approved, you link a bank account to fund your Fidelity account. You can transfer money by ACH (which takes 1 to 3 business days) or wire it same-day for a $15 fee. You do not need to fund the account immediately; you can open it and fund it later.

Choosing between FXAIX, FUSEX, and other S&P 500 options

FXAIX (Fidelity S&P 500 Index Fund) is the standard choice. It has no minimum investment, costs 0.035% per year, and you can buy as little as one share. If you invest $10,000, you pay $3.50 per year in fees. FUSEX (Fidelity S&P 500 Index Fund — Class K) is identical to FXAIX but requires a $25,000 minimum investment and costs slightly less at 0.03% per year. Unless you are starting with $25,000 or more, FXAIX is the better option.

Fidelity also sells VFIAX, which is Vanguard's S&P 500 ETF. It costs 0.03% per year but trades like a stock — you buy it in whole shares only, and the price changes throughout the day. FXAIX is a mutual fund, so you can buy fractional shares and the price is set once per day after the market closes. For most investors, FXAIX is simpler because you can invest any dollar amount, not just whole shares.

Placing your first S&P 500 purchase

Log into your Fidelity account and click "Trade" or "Invest." Search for "FXAIX" in the symbol box. Select the fund, then enter the dollar amount you want to invest or the number of shares you want to buy. If you enter a dollar amount, Fidelity calculates how many fractional shares you get. If you enter a share count, you can buy 0.001 shares or more. Click "Preview Order," review the details, and click "Place Order."

Your order is placed after the market closes that day, usually between 4 p.m. and 6 p.m. Eastern time. The price you pay is the fund's closing price on that day, not the price shown on your screen when you placed the order. The next morning, you will see the shares in your account. You can check your holdings anytime by logging in and viewing your portfolio.

Setting up automatic monthly investments

Fidelity lets you set up a recurring investment so money moves from your bank account to FXAIX automatically each month. Log into your account, go to "Accounts & Trade," then "Recurring Investments." Select your brokerage account, choose FXAIX, enter the dollar amount, and pick the day of the month you want the investment to happen. Fidelity will pull the money from your linked bank account and buy FXAIX on that day every month.

You can change or stop a recurring investment anytime without penalty. Many investors use this method because it removes the need to remember to invest and spreads your purchases across different market prices over time. If you want to invest a large lump sum instead, you can do that once and skip the recurring setup.

Understanding fees and costs

FXAIX costs 0.035% per year, which is called the expense ratio. This fee is deducted automatically from your fund balance and is already included in the price you see — you do not pay it separately. On a $10,000 investment, you pay $3.50 per year. On $100,000, you pay $35 per year. This is one of the lowest costs available for S&P 500 index funds.

Fidelity does not charge a commission to buy or sell FXAIX. Some brokers charge $5 to $10 per trade, but Fidelity charges zero. You also do not pay a fee to open a brokerage account or to set up automatic investments. The only other cost you might encounter is a wire transfer fee ($15) if you fund your account by wire instead of ACH transfer.

Tax considerations for different account types

If you buy FXAIX in a regular taxable brokerage account, you owe taxes on any dividends the fund pays and on any gains when you sell. S&P 500 funds pay dividends roughly once per quarter, and those are taxed as ordinary income in the year you receive them. When you sell shares for more than you paid, the gain is taxed as a capital gain — long-term if you held the shares over a year, short-term if under a year.

If you buy FXAIX in an IRA or 401k, you do not pay taxes on dividends or gains while the money is in the account. You only pay taxes when you withdraw money in retirement. A 529 account is for education expenses and has similar tax benefits if the money is used for may have access to education costs. Most people starting out use a taxable account because there are no contribution limits and no restrictions on when you can withdraw money.

Frequently Asked Questions

Can I buy S&P 500 funds with just $100?

Yes. FXAIX has no minimum investment, so you can buy fractional shares with any amount. If you invest $100, you own a portion of a share. You can also set up automatic monthly investments of $50, $25, or any amount you choose.

What is the difference between FXAIX and an S&P 500 ETF?

FXAIX is a mutual fund that you can buy in any dollar amount and fractional shares. ETFs trade like stocks and require you to buy whole shares at a price that changes throughout the day. For most investors, FXAIX is simpler because you can invest exactly the amount you want without waiting for the market to close.

Do I have to pay taxes on S&P 500 dividends every year?

Only if you hold the fund in a taxable brokerage account. In a taxable account, you owe taxes on dividends in the year you receive them, even if you reinvest them. In an IRA or 401k, dividends are not taxed until you withdraw money in retirement.

How long does it take to see my S&P 500 shares after I buy them?

Your order is placed after the market closes the same day you submit it, and the shares appear in your account the next morning. The price you pay is the fund's closing price on the day you placed the order, not the price shown on your screen.

Can I sell my S&P 500 shares anytime I want?

Yes. You can sell FXAIX anytime the market is open by logging into your account, selecting the fund, and clicking "Sell." The order is placed after the market closes that day. There is no fee to sell, but you may owe taxes on any gains if you hold the shares in a taxable account.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.