How to Invest in the S&P 500 in 2024 - NerdWallet (2024)

The S&P 500 is a well-known stock market index, and an index is really just a list of companies. You can't directly invest in a stock market index (considering it's just a list), but you can invest in index funds and exchange-traded funds (ETFs) that contain the same companies listed in the S&P 500. Here's how to do it.

The easiest way to invest in the S&P 500

The simplest way to invest in the index is through or ETFs that replicate the index. You can purchase these in a taxable brokerage account, or if you're investing for retirement, in a 401(k) or IRA, which come with added tax benefits. You can also invest in the individual companies found in the S&P 500.

Whether you want to buy an index fund, ETF or individual stocks, the first step is to open an investment account.

Opening an investment account

If you don't already have a brokerage account, you'll need to open one to buy investments. You can use the money you deposit into the brokerage account to purchase S&P 500 stocks or funds, which will then be held within that account.

» Learn more: What is a brokerage account and how to open one

If your ultimate goal is investing for retirement, consider investing in the S&P 500 through a 401(k) or IRA, rather than a taxable brokerage account.

» Learn more: 401(k) vs. IRA: How to Choose

Choosing your investments

Once you've opened an investment account, you'll need to decide: Do you want to invest in individual stocks included in the S&P 500 or a fund that is representative of most of the index? 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.)

Once you've decided, you can simply follow the instructions within your brokerage account to purchase the S&P 500 investment(s) you've decided to buy.

» Learn more about some of the

S&P 500 index (SPX) today

This chart shows the performance of the S&P 500 index (SPX) today compared to the previous trading day's close.

What does it mean to invest in the S&P 500?

The is made up of about 500 large public U.S. companies. It is one of the stock market indexes often considered a proxy for the overall health of the U.S. stock market.

Contrary to popular belief, the stocks forming the index are not the 500 biggest U.S. companies, but they are arguably some of the most important U.S. companies: These stocks represent about 80% of the total U.S. stock market’s value.

The S&P 500 weights the stocks by market capitalization, or total market value (the number of outstanding shares multiplied by the stock's current market price). The larger the company, the greater its influence on the index.


How to Invest in the S&P 500 in 2024 - NerdWallet (1)


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Should I buy stocks when markets are at all-time highs?

Three major stock market indexes set new records in 2024. And after several years of market volatility, a pandemic and geopolitical instability, it can feel like a scary time to invest, whether at the top or bottom of the market.

Tracey Dean, a certified financial planner in Salt Lake City, Utah, reminds clients not to worry about investing timing and whether they're entering the market at the top or bottom. Instead, Dean helps clients invest long-term and learn more about diversification, or spreading your dollars across a range of investments to reduce the risk you’re exposed to.

If you’ve got a long time until you need the money you’re investing (say, 20 or 30 years), “don't worry that we're at the top of the market right now,” Dean says. “They'll be another top or there'll be a bottom. That's the ebb and flow of and volatility of the markets."

No matter what’s happening in the market, now is a good time to invest if you’re investing for the long term.

» Learn more about whether to buy stocks amid uncertainty

If you want to invest in the S&P 500, there are a few costs to consider.

If you are investing in an S&P 500 index fund:

  • If your index fund has no minimum, you can usually purchase in any dollar amount. If your index fund has a minimum, then you have to purchase at least the minimum amount.

  • If your index fund has an expense ratio, you'll be charged that as a fee. An expense ratio is an annual fee expressed as a percentage of your investment. For example, if you invest $100, and your fund has an expense ratio of 0.04%, you'll pay an annual fee of $0.04.

If you are investing in an S&P 500 ETF:

  • ETFs trade similarly to stocks and have a share price. Depending on your broker, you will either need to pay the full share price or you can buy fractional shares for any dollar amount.

  • Similarly to index funds, ETFs often have expense ratios, so make sure you see how much you'd be paying in fees to invest in a given ETF.

If you are investing in a stock within the S&P 500 index:

  • Stock costs vary significantly. Some stocks in the S&P 500 cost under $100, and others cost $500 a share or more. Be sure to look at each stock's share price before you make a decision to buy.

Top 20 performers in the S&P 500 index

This chart shows the top-performing stocks in the S&P 500, based on YTD returns.

Data is from Google Finance and may be delayed. For informational purposes only.

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Should I invest in an S&P 500 index fund or S&P 500 ETF?

While all S&P 500 funds track the holdings of this index, an investor must consider whether using an index mutual fund (a passively managed mutual fund) or an ETF makes the most sense for them. There are several differences to consider — for example, ETFs can be bought and sold whenever the stock market is open, while mutual funds can only be bought and sold at a set price point at the end of each trading day.

The good news is that there are solid S&P 500 options in each category, and all of these products leverage the diversity of the index itself. Compare index funds versus ETFs to decide which one is right for you.

» Ready to start investing? See our picks of best brokerages for fund investors

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How to Invest in the S&P 500 in 2024 - NerdWallet (5)

Are there drawbacks to investing in the S&P 500?

While an S&P 500 ETF or index fund may be a worthwhile investment, there are caveats to consider.

Overall diversification

The S&P 500 consists of only large-cap U.S. stocks. Portfolio diversification encompasses buying mid- and small-cap companies along with large caps; allocating funds to international companies along with domestic ones; and including bonds, cash and potentially other asset classes with stocks.

Kevin Koehler, a chartered financial analyst based in Los Angeles, also notes drawbacks in the S&P 500 related to its market-cap weighting.

“As passive investing increases, investors are continually investing in S&P 500 funds, which has contributed to a ‘rich get richer’ problem, where the largest stocks are getting larger due to S&P 500 investing, rather than individual stock investing,” Koehler says. “This can lead to higher volatility, as active managers sell an individual stock on top of index funds selling a portion. The market could continuously be overvalued compared to its underlying value.”

But relative to the downsides of many investment types, the flaws of S&P 500 funds seem relatively minor, especially when used as a part of your overall portfolio and held for the longer term.

» Learn more about investment diversification

Neither the author nor editor held positions in the aforementioned investments at the time of publication.

How to Invest in the S&P 500 in 2024 - NerdWallet (2024)


How to Invest in the S&P 500 in 2024 - NerdWallet? ›

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

Which index fund is best in 2024? ›

List of Best Index Funds in India sorted by ET Money Ranking
  • Motilal Oswal Nasdaq 100 FOF Scheme. EQUITY International. ...
  • Bandhan Nifty 50 Index Fund. ...
  • UTI Nifty 50 Index Fund. ...
  • ICICI Prudential Nifty 50 Index Fund. ...
  • HDFC Index Fund Nifty 50 Plan. ...
  • Nippon India Index Nifty 50. ...
  • SBI Nifty Index Fund. ...
  • Tata Nifty 50 Index Fund.

What will the S&P be at the end of 2024? ›

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

How to invest in S&P 500 for beginners? ›

How to invest in an S&P 500 index fund
  1. Find your S&P 500 index fund. It's actually easy to find an S&P 500 index fund, even if you're just starting to invest. ...
  2. Go to your investing account or open a new one. ...
  3. Determine how much you can afford to invest. ...
  4. Buy the index fund.
Apr 3, 2024

What is the return of the S&P 500 after 5 years? ›

S&P 500 5 Year Return is at 70.94%, compared to 85.38% last month and 57.45% last year. This is higher than the long term average of 45.28%. The S&P 500 5 Year Return is the investment return received for a 5 year period, excluding dividends, when holding the S&P 500 index.

What stock will boom in 2024? ›

10 Best Growth Stocks to Buy for 2024
StockImplied upside from April 25 close*
Alphabet Inc. (GOOG, GOOGL)12.2%
Meta Platforms Inc. (META)22.3%
JPMorgan Chase & Co. (JPM)11.2%
Tesla Inc. (TSLA)23.4%
6 more rows
Apr 26, 2024

Is now a good time to invest in the S&P 500? ›

The S&P 500 has hit 20 intraday highs in 2024. As stocks climb higher many stock valuations may be stretched beyond their intrinsic value. But it's still possible to find great investment opportunities as the stock market hits new all-time highs.

How much will the S&P 500 be worth in 2025? ›

According to Luxembourg-based ISABELNET, a firm that has been doing private research on the U.S. stock market since 1998, consensus analyst estimates for the S&P 500 are $242 for 2024 earnings and $278 for 2025.

Is 2024 a good time to invest? ›

Analysts project 11.5% earnings growth and 5.5% revenue growth for S&P 500 companies in 2024. Fortunately, analysts see positive earnings and revenue growth for all eleven market sectors this year.

Are we in a bull market in 2024? ›

With stock indexes at all-time highs, it seems we are in the midst of a new bull market. While much of the market's recent gains have come from a handful of stocks, the rally has begun to broaden in recent months. Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher.

Should I invest $10,000 in S&P 500? ›

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.

What is the minimum deposit for S&P 500? ›

What is the minimum investment for the S&P 500? For an S&P 500 index fund, many come with no minimum investment. For an S&P 500 ETF, you might need to pay the full price of a single share, which is generally upwards of $100—but some robo-advisors like Stash offer fractional shares for as little as $5.

Can I buy S&P 500 with $100? ›

Some stocks in the S&P 500 cost under $100, and others cost $500 a share or more.

What is the 10 year return on the S&P 500? ›

The historical average yearly return of the S&P 500 is 12.58% over the last 10 years, as of the end of April 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.52%.

Does the S&P 500 pay dividends? ›

Does the S&P 500 Pay Dividends? The S&P 500 is an index, so it does not pay dividends; however, there are mutual funds and exchange-traded funds (ETFs) that track the index, which you can invest in. If the companies in these funds pay dividends, you'll receive yours based on how many shares of the funds you hold.

What is the lowest 10 year return on the stock market? ›

The worst 10 year annual return was a loss of almost 5% per year ending in the summer of 1939. That was bad enough for a 10 year total return of -40%.

What is the best ETF to invest in 2024? ›

5 Best ETFs by 5-year return as of May 2024
TickerFund name5-year return
SMHVanEck Semiconductor ETF31.19%
SOXXiShares Semiconductor ETF26.35%
XLKTechnology Select Sector SPDR Fund21.30%
IYWiShares U.S. Technology ETF20.70%
1 more row

Which index fund gives the highest return? ›

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.

What index fund has the highest return rate? ›

Top S&P 500 index funds in 2024
Fund (ticker)5-year annual returnsExpense ratio
Source: Morningstar, as of April 4, 2024
Fidelity ZERO Large Cap Index (FNILX)14.6%0%
Vanguard S&P 500 ETF (VOO)14.5%0.03%
SPDR S&P 500 ETF Trust (SPY)14.5%0.095%
4 more rows
Apr 5, 2024

Is it a good time to buy index funds? ›

Any time is good for investing in index funds when you plan to hold the fund for the long term. The market tends to rise over time, but not without some downturns along the way, thanks to short-term volatility.


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