How to buy into the S&P 500
- You can’t buy the S&P 500® directly, but you can buy funds that track it, like the SPDR® S&P 500® ETF Trust (SPY) or State Street® SPDR® Portfolio S&P 500 ETF (SPYM).
- These funds let you own shares of the 500 largest US companies with one purchase. That’s practical diversification—without all the stock picking.
- You can invest through ETFs, mutual funds, or retirement accounts, typically with low costs and no minimums. It’s a simple way to start building wealth over time.
Michael Jordan. Blue jeans. Hollywood. The S&P 500 Index.
Just like you can’t buy a share of MJ’s hang-time or Hollywood’s red carpet, you can’t buy the S&P 500 outright. That’s because it’s not a stock, it’s an index (or, a performance measurement tool of a certain group of securities that represent a portion or entire segment of the market).
But you can own funds that track an index’s performance.
If you decide to invest in an S&P 500 ETF or index fund, you’ll be buying small slices of America’s biggest and most influential companies—from Apple and Microsoft to Coca-Cola and Costco—in a single trade.
It’s one of the simplest, most time-tested ways to invest. And as it turns out, getting started is easier than most people think.
Why investors want to buy into the S&P 500
If someone were to ask, “how’s the market doing?” they’re usually referring to the S&P 500. It’s been the yardstick for measuring the stock market’s performance for decades.
But beyond its A-lister status, investors flock to the S&P 500 for:
- America’s biggest companies. The index includes household names across tech, healthcare, finance, and consumer goods. Together, those 500 firms represent 87% of the US stock market’s total value.1
- Long history of growth. Despite recessions, wars, and political uncertainty, the S&P 500 has historically produced steady gains over time.
- Diversification in one trade. Buying into an S&P 500 fund spreads your money across hundreds of companies across market sectors, reducing the risk that any single stock will make or break your portfolio.
The S&P 500 is a reliable benchmark many investors use to gauge performance. And countless retirement accounts and funds are tethered to its movements.
Simply put, when you buy into the S&P 500, you’re investing in the future of the world’s largest economy.
Different ways to invest in the S&P 500
So, you want to invest in the S&P 500. But how, exactly, do you do that? There are a few ways to get exposure, depending on what kind of investor you are (and how hands-on you want to be).
- Exchange traded funds (ETFs)
ETFs are one of the easiest ways to buy the S&P 500. They trade on exchanges just like individual stocks, which means you can buy and sell them throughout the day.
Two of the most popular options are:
- SPDR® S&P 500 ETF Trust (SPY): The original S&P 500 ETF was launched in 1993 and is still the world’s most traded ETF.2 Its unmatched liquidity, or the ability to get in and out of markets quickly, makes it a go-to for both institutional and individual investors who value trading flexibility.
Fun fact: SPY’s overall market volume tends to spike during days of elevated stress and trading, meaning its liquidity can especially come in handy during periods of market volatility.
- State Street® SPDR® Portfolio S&P 500 ETF (SPYM): As the lowest-cost S&P 500 ETF on the market, SPYM offers the same exposure as SPY but for a lower price—just 2 basis points. For long-term, buy-and-hold investors, it’s a cost-efficient way to track the index.
ETFs offer built-in diversification, transparency, and low costs, which is why they’re often the preferred vehicle for investors looking for US equities exposure.
Two S&P 500 ETFs to help you reach your goals
As an S&P 500 ETF leader, we offer two S&P 500 ETFs so you have the choice and power to invest your way.
2. Mutual funds
Mutual funds also track the S&P 500, but unlike ETFs, they only trade once per day (after the market closes). They’re common in workplace retirement accounts, like 401(k)s or 403(b)s.
Just keep in mind that if you hold mutual funds in a taxable brokerage account, you may receive annual capital gains distributions, which can trigger surprise tax liabilities.
3. DIY: Building your own S&P 500
In theory, you could buy each stock in the S&P 500 individually. That’s a tall order though. You’d need a lot of patience (and free time) to replicate the index at the correct weights, not to mention rebalancing regularly as prices change.
It’s sort of like building a kit car piece by piece. You could do it, but buying a standard fully assembled vehicle would save you a lot of time and trouble. In the same vein, ETFs and index funds do all that work for you, giving you the same exposure with a single trade.
Steps to buy into the S&P 500
Once you’ve decided how you want to invest, buying into the S&P 500 is pretty straightforward.
Open a brokerage or investment account. If you don’t already have one, you’ll need a brokerage account to buy ETFs or mutual funds. Most providers let you open an account online in minutes. If you’re investing for retirement, a 401(k) or IRA may already give you access to S&P 500 funds.
Fund your account. Decide how much you want to start with. There’s no standard amount—it depends on your goals and comfort level. But most brokers make it easy to transfer cash from your bank account electronically.
Search for a fund that tracks the S&P 500. Use your brokerage’s search bar to look up fund tickers like SPY or SPYM. Both track the S&P 500, but they differ slightly in cost and structure. SPY offers deep liquidity and high trading volume, while SPYM provides the same exposure at a lower expense ratio.
Decide how much to invest. You can buy a single share, a fixed dollar amount, or even fractional shares (depending on your broker). Some investors prefer to start small and build their position over time, while others invest a lump sum and let compounding take it from there.
Place your order. Select “buy,” enter the ticker, and choose your order type (market or limit). Market orders execute right away at the current price; limit orders only execute if the fund hits a price you specify. Either way, you’ll officially own a piece of the world’s largest economy.
Consider recurring contributions. If you plan to invest regularly—and most investors should—automating your purchases can help smooth out market ups and downs. It’s like setting your portfolio on cruise control toward your goals.
Benefits of long-term investing in the S&P 500
The S&P 500 is synonymous with the US stock market, the world’s largest economy. So, naturally, there’s appeal. But what exactly are the benefits of parking your hard-earned wealth in the S&P 500?
The magic of compounding
When you stay invested and contribute monthly, your returns start earning returns—this simple idea of compound interest can create exponential growth over decades. For example, if you had invested $10,000 in the S&P 500 in 1994 and left it untouched for 30 years, it would have grown to about $197,950.3 That’s the payoff of committing to your long-term goals.
Explore the magic of S&P 500 compounding for yourself
Initial Investment
Monthly Investment
Years Invested
years
Projected ending amount
Source: Bloomberg Finance, L.P., as of December 31, 2024. S&P 500 Index performance shown is based on historical data only. Past performance is not a reliable indicator of future performance. The S&P 500 is a market-capitalization weighted index of large-cap US stocks and does not reflect the performance of any individual investment. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. All the index performance results referred to are provided exclusively for comparison purposes only. It should not be assumed that they represent the performance of any particular investment.
Resilience through rough patches
The world is full of uncertainty and unknowns. Debt bubbles. Political strife. Inflation. Waldo’s whereabouts.
Yet, the S&P 500 has managed to bounce back from everything mankind has thrown at it to date, from the dot-com crash and the 2008 financial crisis to the 2020 pandemic plunge. In short, time in the market has historically beaten timing the market.
Figure 1: The S&P 500 has bounced back time and time again
| 1970s | - 1973 Arab Oil Embargo |
| 1980s | - Energy Crisis Recession - Black Monday Crash of 1987 |
| 1990s | - Dot-com Bubble Burst |
| 2000s | - 9/11 Terrorist Attacks - 2008 Great Financial Crisis (GFC) |
| 2010s | - The Flash Crash of 2010 - The US Sovereign Downgrade in 2011 - Volmageddon in 2018 - The December 2018 Drawdown |
| 2020s | - COVID-19 Pandemic - 2023 Regional Banking Crisis - Liberation Day 2025 |
Source: State Street Investment Management Americas ETF Research, as of June 20, 2025.
Broad diversification
It’s notoriously hard to pick individual stock winners. Even professionals often struggle to do it. The index, on the other hand, holds both the high-flyers and the underperformers, letting the market’s winners pull the average higher over time.
That’s the beauty of diversification: you don’t have to guess which companies will lead the next rally—you would already own them.
You can’t buy America, but S&P 500 funds come close
You don’t have to predict the next big stock or spend hours watching the market. Investing in an S&P 500 fund gives you exposure to the country’s most influential companies.
Whether you prefer the flexibility of SPY, the cost-efficiency of SPYM, or the simplicity of a retirement plan that already includes an S&P 500 fund, the steps to wealth-building are the same: consistency, patience, and time.
No matter where you want your portfolio to go, we’re here to help you find the way forward.
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