What is the best S&P 500 index fund to buy?
Our recommendation for the best overall S&P 500 index fund is the Fidelity 500 Index Fund. With a 0.015% expense ratio, it's the cheapest on our list. And it doesn't have a minimum initial investment requirement, sales loads or trading fees. Over the last 10 years, FXAIX has returned an annualized 12.02%.
Our recommendation for the best overall S&P 500 index fund is the Fidelity 500 Index Fund. With a 0.015% expense ratio, it's the cheapest on our list. And it doesn't have a minimum initial investment requirement, sales loads or trading fees. Over the last 10 years, FXAIX has returned an annualized 12.02%.
Consider looking for S&P 500 index funds with low expense ratios, several years of operation and a healthy amount of assets under management (AUM). The longer a fund has existed, the more information you have about its performance history.
ICICI Prudential Nifty 50 Index Fund-Growth is among India's top 10 index funds. It falls within the Large Cap Index category. Over the past year, ICICI Prudential Nifty 50 Index Fund-Growth has returned 15.09 percent. Since its inception, it has delivered an average annual return of 14.74 percent.
The Vanguard S&P 500 ETF (VOO 1.26%) is a top choice for most index fund investors. Even Warren Buffett recommends it above any other investment. There's a good reason for that. Its low expense ratio and tight index tracking make it a top choice for anyone looking to match the returns of the S&P 500.
The Bottom Line. Both index mutual funds and ETFs can provide investors with broad, diversified exposure to the stock market, making them good long-term investments suitable for most investors. ETFs may be more accessible and easier to trade for retail investors because they trade like shares of stock on exchanges.
SPY, VOO and IVV are among the most popular S&P 500 ETFs. These three S&P 500 ETFs are quite similar, but may sometimes diverge in terms of costs or daily returns.
For new investors, the best way is through an ETF or mutual fund. While there are some differences between the two that we'll explain below, funds are a low-cost way to gain exposure to the S&P 500 and provide instant diversification to your portfolio.
Investing in an S&P 500 fund can instantly diversify your portfolio and is generally considered less risky. S&P 500 index funds or ETFs will track the performance of the S&P 500, which means when the S&P 500 does well, your investment will, too. (The opposite is also true, of course.)
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
What are the big 3 index funds?
Within the world of corporate governance, there has hardly been a more important recent development than the rise of the 'Big Three' asset managers—Vanguard, State Street Global Advisors, and BlackRock.
Index fund | Minimum investment | Expense ratio |
---|---|---|
Vanguard 500 Index Fund - Admiral Shares (VFIAX) | $3,000. | 0.04%. |
Schwab S&P 500 Index Fund (SWPPX) | No minimum. | 0.02%. |
Fidelity 500 Index Fund (FXAIX) | No minimum. | 0.015%. |
Fidelity Zero Large Cap Index (FNILX) | No minimum. | 0.0%. |
Index funds tend to be low-cost, passive options that are well-suited for hands-off, long-term investors. Actively-managed mutual funds can be riskier and more expensive, but they have the potential for higher returns over time.
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500, then you would be sitting on a cool $1.2 million today.
The main drawback to the S&P 500 is that the index gives higher weights to companies with more market capitalization. The stock prices for Apple and Microsoft have a much greater influence on the index than a company with a lower market cap.
Fund literature
An investment in the fund could lose money over short or even long periods. You should expect the fund's share price and total return to fluctuate within a wide range, like the fluctuations of the overall stock market.
ETFs and index mutual funds tend to be generally more tax efficient than actively managed funds. And, in general, ETFs tend to be more tax efficient than index mutual funds. You want niche exposure. Specific ETFs focused on particular industries or commodities can give you exposure to market niches.
The biggest difference between them is that ETFs trade intraday at various prices during exchange hours and index mutual funds can be bought or sold only after the market closes each day, at a fund's net asset value. CNBC. “In One of the Most Volatile Markets in Decades, Active Fund Managers Underperformed Again.”
ETFs are more tax-efficient than index funds by nature, thanks to the way they're structured. When you sell an ETF, you're typically selling it to another investor who's buying it, and the cash is coming directly from them. Capital gains taxes on that sale are yours and yours alone to pay.
- SPDR S&P 500 ETF Trust (SPY).
- iShares Core S&P 500 ETF (IVV).
- Vanguard S&P 500 ETF (VOO).
- SPDR Portfolio S&P 500 ETF (SPLG).
- Invesco S&P 500 Equal Weight ETF (RSP).
What is the difference between an ETF and an index fund?
One of the most significant differences between an index fund and an ETFs is how they trade. Shares of ETFs trade like stocks; they're bought and sold whenever markets are open. While you can order index fund shares whenever you wish, share purchases only happen once a day, after the markets close.
Stock | Trailing annual dividend yield* |
---|---|
Pfizer Inc. (PFE) | 5.9% |
Boston Properties Inc. (BXP) | 6.2% |
Kinder Morgan Inc. (KMI) | 6.2% |
AT&T Inc. (T) | 6.3% |
If the S&P 500 outperforms its historical average and generates, say, a 12% annual return, you would reach $1 million in 26 years by investing $500 a month.
Assuming an average annual return rate of about 10% (a typical historical average), a $10,000 investment in the S&P 500 could potentially grow to approximately $25,937 over 10 years.
If you want an inexpensive way to invest in S&P 500 ETFs, you can gain exposure through discount brokers. These financial professionals offer commission-free trading on all passive ETF products. But keep in mind that some brokers may impose minimum investment requirements.
References
- https://www.composer.trade/learn/what-is-a-90-10-portfolio-strategy
- https://www.fool.com/investing/2023/08/30/warren-buffett-turns-93-best-investing-advice-ever/
- https://money.usnews.com/investing/articles/best-etfs-to-buy
- https://www.nerdwallet.com/article/investing/how-to-invest-in-sp500
- https://investor.vanguard.com/investment-products/mutual-funds/profile/vfiax
- https://finhabits.com/what-is-the-10-5-3-rule-of-investment/
- https://portfolioslab.com/tools/stock-comparison/VGT/QQQ
- https://www.investopedia.com/ask/answers/033015/whats-difference-between-index-fund-and-etf.asp
- https://www.afr.com/work-and-careers/management/inside-warren-buffetts-daily-work-routine-from-645am-to-1045pm-20170906-gybn7t
- https://www.investopedia.com/stock-analysis/2012/7-of-the-highest-stock-prices-in-history-brk-b-aapl-seb-nvr1114.aspx
- https://coinpriceforecast.com/qqq-stock
- https://uk.finance.yahoo.com/news/no-savings-30-d-warren-085000330.html
- https://finance.yahoo.com/news/12-best-performing-p-500-133513930.html
- https://finance.yahoo.com/news/11-ways-warren-buffett-lives-143051871.html
- https://www.tipranks.com/etf/voo/forecast
- https://www.marketwatch.com/picks/this-is-warren-buffetts-first-rule-about-investing-heres-what-to-do-if-your-financial-adviser-breaks-that-rule-01635799738
- https://www.investopedia.com/ask/answers/061715/what-qqq-etf.asp
- https://www.nerdwallet.com/article/investing/sp-500-etfs
- https://www.fool.com/investing/2024/03/01/berkshire-hathaway-is-hoarding-168-billion-in-cash/
- https://www.etmoney.com/blog/how-long-can-we-invest-in-index-funds/
- https://finance.yahoo.com/news/buffett-favors-vanguard-p-500-155700933.html
- https://www.fool.com/investing/2024/02/07/warren-buffett-investments-recommends-most/
- https://apnews.com/buyline-personal-finance/article/what-to-do-when-the-stock-market-crashes
- https://www.nasdaq.com/articles/earnings-could-be-strong-in-2024.-consider-qqq-qqqm
- https://finance.yahoo.com/news/skyrocketing-615-why-does-warren-173000847.html
- https://www.investing.com/academy/trading/warren-buffett-investment-strategy-rules-fortune/
- https://www.fool.com/investing/how-to-invest/famous-investors/warren-buffett-investments/
- https://www.quora.com/What-percentage-of-your-portfolio-is-index-funds
- https://www.stash.com/learn/how-to-invest-in-sp500-2/
- https://www.bankrate.com/investing/warren-buffett-top-investment-advice/
- https://finance.yahoo.com/news/more-money-investing-10-000-220010726.html
- https://www.fool.com/the-ascent/buying-stocks/articles/what-are-warren-buffetts-5-rules-of-investing-and-how-can-you-use-them-to-your-benefit/
- https://finance.yahoo.com/news/1-warren-buffett-etf-could-100000820.html
- https://www.usatoday.com/money/blueprint/investing/best-sp-500-index-funds/
- https://money.usnews.com/investing/articles/high-paying-dividend-stocks-in-the-s-p-500
- https://pepperstone.com/en-af/market-analysis/trading-guides/one-percent-rule-in-day-trading/
- https://www.nerdwallet.com/article/investing/sp-500-index-fund
- https://www.schwab.com/learn/story/etf-vs-mutual-fund-it-depends-on-your-strategy
- https://modelthinkers.com/mental-model/buffetts-two-lists
- https://beatmarket.com/blog/qqq-vs-spy/
- https://www.investopedia.com/articles/mutualfund/05/etfindexfund.asp
- https://www.linkedin.com/pulse/what-makes-warren-buffett-successful-simon-crawford-welch-ph-d-rrp
- https://www.nasdaq.com/articles/warren-buffett%3A-12-things-poor-people-squander-money-on
- https://stockanalysis.com/article/voo-vs-vti/
- https://money.usnews.com/investing/articles/best-vanguard-funds-for-beginner-investors
- https://www.nasdaq.com/articles/warren-buffett-says-make-money-while-you-sleep:-here-are-5-forever-assets-to-buy-now
- https://portfolioslab.com/tools/stock-comparison/QQQ/VOO
- https://www.newtraderu.com/2024/01/09/current-warren-buffett-car-2024-what-car-does-this-billionaire-own/
- https://www.nasdaq.com/articles/heres-how-much-youd-have-if-you-invested-%2410000-in-apple-stock-when-warren-buffett-first
- https://www.thestreet.com/etffocus/trade-ideas/buy-this-not-that-etf-alternatives-to-qqq-qqqm
- https://portfolioslab.com/tools/stock-comparison/QQQ/VGT
- https://www.investopedia.com/articles/personal-finance/121815/buffetts-9010-asset-allocation-sound.asp
- https://ptmwealth.com/articles/warren-buffetts-best-quotes
- https://www.cnbc.com/2023/11/11/5-must-read-books-from-warren-buffet-that-are-now-free-on-spotify.html
- https://finance.yahoo.com/news/vanguard-p-500-etf-voo-112006029.html
- https://www.fool.com/investing/2022/02/12/should-index-funds-be-your-only-investment/
- https://medium.com/@blakejwise/in-short-setting-priorities-with-warren-buffets-5-25-rule-fe1daf41da95
- https://www.lazyportfolioetf.com/comparison/warren-buffett-vs-us-stocks/
- https://www.nerdwallet.com/article/investing/best-etfs
- https://www.screener.in/screens/355766/highest-return-in-1-year/
- https://moneywise.com/life/lifestyle/hybrid-its-not-taxed-at-all?throw=C3DM1
- https://www.investopedia.com/ask/answers/how-can-i-buy-sp-500-fund/
- https://finance.yahoo.com/news/warren-buffett-reveals-instructions-invest-163624653.html
- https://www.forbes.com/advisor/investing/etf-vs-index-fund/
- https://www.fool.com/investing/2024/02/22/1-warren-buffett-index-fund-can-turn-450-to-983800/
- https://www.nasdaq.com/articles/5-best-nasdaq-etfs-to-invest-in
- https://www.physicianonfire.com/voo-vs-qqq-which-index-etf/
- https://www.forbes.com/advisor/in/investing/index-funds-vs-mutual-funds/
- https://finance.yahoo.com/news/warren-buffett-sitting-record-167-182900063.html
- https://www.investopedia.com/world-s-11-greatest-investors-4773356
- https://www.fool.com/investing/2024/03/31/is-invesco-qqq-trust-a-buy/
- https://www.fool.com/investing/2024/01/24/billionaires-cant-get-enough-of-this-etf-in-2024/
- https://www.fool.com/investing/general/2013/09/21/the-best-performing-stock-on-the-sp-500-since-1980.aspx
- https://www.thrivent.com/insights/investing/how-to-invest-during-inflation
- https://www.invesco.com/qqq-etf/en/performance.html
- https://www.nasdaq.com/articles/qqq-etf:-still-attractive-after-dazzling-2023-gains
- https://www.trackinsight.com/en/fund/QQQ
- https://www.nerdwallet.com/article/investing/etf-vs-index-fund-compare
- https://www.forbes.com/advisor/investing/best-warren-buffett-stocks/
- https://www.usatoday.com/money/blueprint/investing/best-sp-500-etfs/
- https://www.nasdaq.com/articles/got-%24500-a-month-to-invest-heres-how-the-sp-500-could-make-you-a-millionaire
- https://www.oxfordreference.com/display/10.1093/acref/9780191866692.001.0001/q-oro-ed6-00012078
- https://www.businessinsider.com/warren-buffett-indicator-stock-market-outlook-bubble-crash-ai-tech-2024-3
- https://www.thestreet.com/investing/warren-buffett-berkshire-stock-investor
- https://www.investopedia.com/articles/financial-theory/08/buffetts-road-to-riches.asp
- https://blogs.law.ox.ac.uk/oblb/blog-post/2023/04/giant-asset-managers-big-three-and-index-investing
- https://seekingalpha.com/article/4669862-voo-at-all-time-highs-is-still-a-buy
- https://stockanalysis.com/etf/compare/qqq-vs-voo/
- https://www.nasdaq.com/articles/if-you-invested-in-apple-when-warren-buffett-did-heres-how-much-you-would-have-made
- https://finance.yahoo.com/news/warren-buffetts-no-1-investing-132715262.html
- https://moneywise.com/a/ch-aol/hybrid-its-not-taxed-at-all?throw=C3DM1
- https://www.fool.com/investing/2024/03/17/before-you-buy-the-vanguards-sp-500-etf-here-are-3/
- https://www.paladinregistry.com/blog/retirement/warren-buffetts-saving-and-investing-tips-for-retirees/
- https://homework.study.com/explanation/what-are-the-things-that-don-t-depreciate-in-value.html
- https://www.nasdaq.com/articles/here-are-the-2-warren-buffett-investments-he-recommends-the-most
- https://financhill.com/blog/investing/which-bank-stocks-does-warren-buffett-own
- https://home.csulb.edu/~pammerma/fin382/screener/buffett4.htm
- https://finance.yahoo.com/quote/VOO/performance/
- https://www.investopedia.com/articles/investing/011316/pros-and-cons-indexes.asp
- https://www.newtraderu.com/2023/10/17/warren-buffett-i-read-5-6-hours-a-day/
- https://finance.yahoo.com/news/5-things-warren-buffett-says-193334180.html
- https://www.forbesindia.com/article/explainers/top-10-index-funds-in-india/90271/1
- https://www.investors.com/etfs-and-funds/etfs/sp500-cheap-etf-pays-off-more-than-everything-else-long-term/
- https://www.nerdwallet.com/article/investing/best-index-funds
- https://www.forbes.com/sites/jimosman/2023/12/26/buffetts-longer-term-slump-time-to-rethink-value-investing/
- https://money.com/warren-buffett-stock-market-casino/