How to Invest in the S & P 500 Index

The S & P 500 Index is a U.S. based index for tracking the general stock market. In this article, you'll learn how to invest your money in several ways which track the S & P 500 index.

1. Buy a S & P 500 Index

Buying an S & P 500 index fund is probably the best and cheapest way to track the S & P 500. Index funds have very low costs and are sound investment for long term accounts like IRAs or custodial accounts. Here's a few good ones depending on which broker you use:

2. Buy a S & P 500 ETF

ETFs are exchange traded funds that track like regular stocks on major stock exchanges. ETFs make it easy for investors to buy and sell index-like investments quickly. Here's a list of the best S & P 500 ETFs:

  • SPDR S&P 500 (SPY)
  • Vanguard S&P 500 ETF (VOO)

3. Build Your Own S & P 500 Fund

The last but most difficult method is to simply research the largest S & P 500 holdings then buy the stocks yourself. This will take a lot longer to do but some investors don't mind holding hundreds of stocks. I recommend against this method because buying an index fund or ETF is a lot easier and saves you precious time.

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