You can invest in the S&P 500 through a brokerage account by buying index funds or exchange-traded funds that track it

The S&P 500 is a collection of 500 large U.S. companies. You do not buy the S&P 500 itself — instead, you buy a fund that holds all 500 stocks for you. The two main types are index mutual funds and exchange-traded funds (ETFs). Both track the same 500 companies and charge low fees. The difference is how you buy them: mutual funds trade once per day at a set price, while ETFs trade throughout the day like individual stocks.

To start, you need a brokerage account — an account at a company that lets you buy and sell investments. Common brokerages include Fidelity, Vanguard, Charles Schwab, and E*TRADE. You fund the account with your own money, then use that money to buy shares of an S&P 500 fund. The whole process takes a few days from start to finish.

Key Takeaways

  • You buy S&P 500 index funds or ETFs through a brokerage account, not directly from the stock exchange.
  • Index funds and ETFs both track the same 500 companies but trade differently — mutual funds once per day, ETFs throughout the trading day.
  • Opening a brokerage account requires your Social Security number, proof of identity, and a funding method like a bank account or wire transfer.
  • Popular low-cost S&P 500 funds include Vanguard VOO, Fidelity FXAIX, and Schwab SWPPX, each charging less than 0.04% per year.

Opening a brokerage account

Start by choosing a brokerage. Fidelity, Vanguard, Charles Schwab, and E*TRADE are the largest and most widely used. Each has a website where you can open an account online in 10 to 15 minutes. You will need your Social Security number, a government-issued ID, your current address, and information about your employment or income source.

After you submit your application, the brokerage verifies your identity — this usually takes one business day. Once approved, you can fund your account by linking a bank account, transferring money by wire, or mailing a check. Most brokerages let you start investing as soon as the money arrives, which is typically one to three business days after you initiate the transfer.

Choosing an S&P 500 fund

Once your account is funded, you search for an S&P 500 fund by its ticker symbol. The most common low-cost options are:

  • Vanguard S&P 500 ETF (VOO) — charges 0.03% per year
  • Fidelity S&P 500 Index Fund (FXAIX) — charges 0.015% per year
  • Schwab U.S. Large-Cap ETF (SWPPX) — charges 0.03% per year
  • iShares Core S&P 500 ETF (IVV) — charges 0.03% per year

The fee difference between these funds is small — on a $10,000 investment, you might pay $1.50 to $3 per year. All of them hold the same 500 stocks. The choice between them often comes down to which brokerage you use, since some brokerages offer their own funds with slightly lower fees or no transaction costs.

Placing your first purchase

In your brokerage account, find the search or trade section and type the fund's ticker symbol. The system will show you the current price per share. You then decide how many shares to buy — for example, if VOO costs $400 per share and you have $5,000 to invest, you can buy 12 shares (costing $4,800) and hold the remaining $200 in cash.

Enter the number of shares you want and review the order. Most brokerages show you the total cost and any fees before you confirm. Click confirm, and the order is placed. If you are buying a mutual fund, the order executes at the end of that trading day. If you are buying an ETF, it executes immediately during market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays).

Index funds versus ETFs: which to choose

Both track the S&P 500 and charge nearly identical fees. The practical difference is trading frequency. Index mutual funds are priced once per day after the market closes, so you cannot time your purchase to a specific moment. ETFs trade throughout the day like stocks, so you can buy at any time the market is open.

For most people starting out, the choice does not matter much. If you plan to invest a lump sum once and hold it for years, either works. If you plan to add money regularly (monthly or quarterly), an ETF gives you more control over when you buy. Some brokerages also offer commission-free trading on certain funds, which can tip the decision — check your brokerage's fee schedule before you choose.

What happens after you buy

Once your shares are purchased, they sit in your account. You own a piece of all 500 companies in the index. As those companies' stock prices change, the value of your shares changes. You do not have to do anything — the fund automatically rebalances to stay aligned with the S&P 500 as companies are added or removed from the index.

You can check your account balance anytime online. Most people leave their money invested for years or decades. If you need to sell, you log into your account, select the fund, enter the number of shares to sell, and confirm. The sale executes the same day (for ETFs) or the next day (for mutual funds), and the cash appears in your account within one to three business days.

Minimum investment amounts and account types

Most brokerages have no minimum to open an account or buy a fund — you can start with $100 or $1,000. Some brokerages offer special account types: a regular taxable brokerage account has no contribution limits but you pay taxes on gains each year, while a Roth IRA or Traditional IRA lets you invest up to $7,000 per year (as of 2024) with tax advantages. A 401(k) through your employer may also offer S&P 500 fund options.

If you are unsure which account type fits your situation, start with a regular taxable brokerage account — it has no rules about when you can withdraw money or how much you can contribute. You can always open an IRA later.

Frequently Asked Questions

Do I need a lot of money to start?

No. Most brokerages let you open an account and buy a single share of an S&P 500 fund with $100 or less. You can add more money whenever you want. Many people start small and increase their contributions over time.

What is the difference between VOO, FXAIX, and SWPPX?

All three track the same 500 companies and charge nearly identical fees (0.015% to 0.03% per year). The choice depends on which brokerage you use — Fidelity customers often prefer FXAIX, Vanguard customers prefer VOO, and Schwab customers prefer SWPPX. The performance difference is negligible.

Can I lose money investing in the S&P 500?

Yes. The S&P 500 goes up and down. If you buy and sell during a market downturn, you could lose money. However, historically the index has recovered from every downturn and reached new highs over time. Most investors hold for at least five to ten years to reduce the impact of short-term drops.

Do I have to pay taxes on my S&P 500 investment?

In a regular taxable brokerage account, yes — you pay taxes on dividends each year and on gains when you sell. In a Roth IRA or Traditional IRA, taxes work differently and may be lower or deferred. Ask your brokerage or a tax professional which account type makes sense for your situation.

Can I set up automatic monthly investments?

Yes. Most brokerages let you set up automatic transfers from your bank account and automatic purchases of a fund on a schedule you choose — weekly, monthly, or quarterly. This is called dollar-cost averaging and is a common way to invest steadily over time.