S&P 500 (billion casino royal:SNPINDEX:^GSPC) index funds are passive investments that allow investors to match the performance of the S&P 500, an index featuring the 500 largest publicly traded companies in the U.S. They're ideal for investors who want to earn returns in🥀 line with the broader market b൲ut don't want to own individual stocks. Read on to learn more about these popular funds.
3 best SP 500 index funds for 2024
3 best S&P 500 index funds for 2024
These three major S&P 500 billion casino royal:index funds are extremely similarౠ in composition since each tracks the performance of the same index:
- Fidelity 500 Index Fund (billion casino royal:NASDAQMUTUALFUND:FXAI.X)
- Schwab S&P 500 Index Fund (billion casino royal:NASDAQMUTUALFUND:SWPP.X)
- Vanguard 500 Index Fund Admiral Shares (billion casino royal:NASDAQMUTUALFUND:VFIA.X)
billion casino royal: Expense Ratio
Fidelity and Schwab offer their index funds with no minimum investment, making them very accessible to billion casino royal:beginning investors. Vanguard hꦛas a relatively low minimum investment of $3,000.
Vanguard also offers an billion casino royal:exchange-traded fund (ETF) focused on investing in the 500 companies that comprise the S&P 500 index. The Vanguard S&P 500 ETF (VOO 1.22%) has a low minimum investment of one share (around $440 as of Jan. 22, 2024) and a low expense ratio of 0.03%. This index-fund-like product trades on a major billion casino royal:stock exchange, all♓owing investors to buy and sel🎃l as they would a stock.
Index or Fund | 1-Year Total Return | 3-Year Annualized Return | 5-Year Annualized Return |
---|---|---|---|
S&P 500 Index | 26.29% | 10.00% | 15.69% |
Vanguard 500 Index Admiral Shares | 26.24% | 9.96% | 15.65% |
Schwab S&P 500 Index Fund | 26.25% | 9.97% | 15.66% |
Fidelity 500 Index Fund | 26.29% | 9.99% | 15.68% |
At the S&P 500's rate of return, a billion casino royal:$10,000 investment made five years ago 🧸would have grown to $15,690 by the end of 2023. For comparison, a $10,000 investment in the Fidelity 500 Index Fund would have grown to $15,680 over the same five-year period,🐲 the slight variation due to fees.
Why are they popular?
Why are they popular?
An index fund is designed to mirror the performance of a stock index. An S&P 500 index fund invests in each of the 500 companies in the S&P 500. It doesn't try to outperform the index. Instead, it uses the index as its benchmark and aims to replicate its performance as closely as possible.S&P 500 funds are, by far, the most popular type of index fund. But index funds can be based on practically any financial market, investing strategy, or billion casino royal:stock market sector. Index funds are popular with investors for a number of reasons. They offer easy billion casino royal:portfolio diversification, withꦡ some funds providing broad exposure to hundreds or even thousands of stocks and bonds.
Bonds
Index funds are billion casino royal:passively managed, meaning you're not paying someone to actively pick and choose investments. Passively managed funds res🍃ult in a lower expense ratio due to having lower investment management fees than actively managed funds.
Your money will track the market's performance
Historically, the S&P 500's billion casino royal:annual returns have been in the range of 9% to 10%. In some years, the index will lose value. For example, during the billion casino royal:Great Recession, the S&P 500 lost about half its value. Meanwhile, the index experienced a billion casino royal:bear market starting in early 2022 and🌜, by the fall, had declined by more than 20% from its peak.
However, the index rallied by 24% in 2023. On Jan. 19, 2024, it soared past the previous record set in January 2022.The S&P 500 index has a solid history of such rebounds. Over the long term, the index has always recovered. A 20-year investment has never resulted in a loss in the billion casino royal:S&P 500's history.
You will keep more of your investment profits in your pocket
S&P 500 index funds are low-cost investments. While active managers are likely to match or even beat the market's performance over time, their fees eat away at your returns. Because they're passive investments with low fees, S&P 500 index funds deliver returns that mirror the index's returns over the long term.You'll be investing in 500 of the most profitable companies in the U.S.
The corporations represented in the S&P 500 are subject to stringent listing criteria. To join the index, a company must have a $15.8 billion billion casino royal:market capitalization, and the sum of i♎ts past four quarꦇters' earnings must be positive.
Each company must also get approval from an index committee. The S&P 500's largest holdings include billion casino royal:Apple (AAPL 1.22%), billion casino royal:Amazon (AMZN -0.58%), billion casino royal:Microsoft (MSFT 1.75%), billion casino royal:Nvidia (NVDA 3.58%), and billion casino royal:Google parent company, Alphabet (GOOGL 1.27%)(GOOG 1.13%).
You can put your investment decisions on autopilot
The S&P 500 has a flawless track record of delivering profits over long holding periods, allowing you to invest without worrying as much about stock market fluctuations. You also don't have to research or follow individual companies.You can simply budget a certain amount and automatically invest it on a regular schedule. This practice is known as billion casino royal:dollar-cost averaging. Even if you pick individual stocks, S&P 500 funds are a good foundation for your billion casino royal:investment portfolio since you're guaranteed the re⛎turns of the stoc🔴k market.
Beware of leveraged funds
Beware of leveraged S&P 500 index funds
Be wary of leveraged funds advertised as S&P 500 ETFs. billion casino royal:Leveraged ETFs use borrowed money and/or billion casino royal:derivative securities to amplify investment returns or to bet against the index. For example, a 2x-leveraged S&P 500 ETF is intended to return twice the🧔 index's daily performance. So, if the index rises by 2%, the ETF's value rises by 4%. If the index falls by 3%, the ETF loses 6%.
Related investing topics
These leveraged products are intended to be billion casino royal:day-trading instruments and have an inherent downside bias over the long ter🧸m. In other wor🐷ds, a 2x-leveraged S&P 500 ETF will not return twice the index's performance over the long term.
Investing in S&P 500 index funds is one of the safest ways to billion casino royal:build wealth over time. But leveraged ETFs -- even those tracking the S&P 500 -- are highly risky and don't belong in a billion casino royal:long-term portfolio.