Best S&P 500 Index Funds to Buy in 2026

An index fund holds all roughly 500 stocks in the S&P 500 in the same proportions as the index, so it goes up and down right along with it. Because every official S&P 500 fund holds the same stocks, choosing the best S&P 500 ETF for beginners really comes down to two things: the expense ratio (the yearly fee, shown as a percentage of what you’ve invested) and where you can buy it. These are the most popular low-cost choices:

Bottom line: For most beginners, VOO or FXAIX is the simplest low-cost choice. All of these official S&P 500 funds track the same index and perform nearly identically — so cost and which broker you use are the real deciders, not “which one performs best.”

• ~10%/yr average historical return with dividends reinvested (not guaranteed)
• $1 minimum to start with fractional shares
• ~500 companies, about 80% of the U.S. market
• 0.015–0.04% typical yearly fee on the funds above

How to Buy an S&P 500 Index Fund: 5 Steps

Yes — you can absolutely do this yourself, online, in a few minutes. No advisor required.

1. Open an account. Choose a Roth IRA if you’re saving for retirement (your gains come out tax-free later) or a regular taxable brokerage account if you want flexible access to the money. Most people should fund a tax-advantaged account first. See our guides to the best online stock brokers for 2026 and the best Roth IRA accounts, plus Roth vs. traditional IRA compared.
2. Pick one fund. You only need a single S&P 500 fund. Match it to your broker: VOO or IVV at almost any broker, FXAIX at Fidelity, SWPPX at Schwab. Use the quick-pick table above to choose.
3. Decide how much. There’s no “right” amount — start with whatever you can. Thanks to fractional shares (buying a slice of a share), you can invest as little as $1, even if one full share costs hundreds of dollars.
4. Place the order. In your account, search the ticker (for example, VOO) and enter a dollar amount — this is usually called “dollar-based investing.” Your order fills at (or very close to) the current market price during regular trading hours (9:30 a.m.–4:00 p.m. ET). A few brokers let you pick between a market or limit order even for fractional purchases; others fill dollar-based orders automatically without asking. Either way, you don’t need to understand order types beyond this — the platform handles it.
5. Automate it and reinvest dividends. Set up an automatic monthly purchase and turn on dividend reinvestment so the payouts buy more shares for you. This “set it and forget it” habit is what does the heavy lifting over time.

Here is roughly what your broker’s order screen will look like when you place your first trade:

Example: Buying VOO on Fidelity, Screen by Screen

Exact menus vary by broker, but here’s roughly how the steps above look on a typical platform like Fidelity — useful if you want a mental map before you log in:

1. Log in and tap Trade (or “Buy/Sell”).
2. Type the ticker VOO in the symbol search box and select it.
3. Choose Buy, then select the account (e.g., your Roth IRA).
4. Switch the quantity type from “Shares” to Dollar Amount (this is what enables fractional/dollar-based investing).
5. Enter the dollar amount you want to invest, review the order preview, and submit.
6. Separately, look for an “Automatic Investments” or “Recurring Transfers” section in account settings to schedule step 5 (your monthly auto-buy).

Mutual funds like FXAIX and SWPPX are typically easier to automate than ETFs like VOO, since most brokers built recurring, exact-dollar-amount purchases specifically for mutual funds. Many major brokers (including Fidelity, Schwab, and Vanguard) now also support recurring purchases for their own ETFs, but it’s worth double-checking your broker’s automatic-investing feature before assuming it applies to every ticker.

What Is the S&P 500 (and Why You Can’t Buy It Directly)

The S&P 500 is a list — an index — of about 500 of the largest U.S. companies, from Apple and Microsoft to Coca-Cola and JPMorgan. Together they make up roughly 80% of the entire U.S. stock market’s value, which is why “the S&P 500” is often used as shorthand for “the U.S. stock market.”

An index is just a measurement, like a thermometer reading. You can’t put your money directly into a number. Instead, fund companies build funds that buy all the stocks in the index for you, so your investment rises and falls with it.

S&P 500 Mutual Funds vs. ETFs: Which Should You Pick?

You have two formats to choose from:

For long-term beginners, the difference barely matters. Want to set up automatic monthly buys inside Fidelity or Schwab? A mutual fund is effortless. Want something you can hold at any broker and trade instantly? An ETF fits. For a deeper look, read index funds vs. ETFs: which wins for long-term wealth.

The Rebalancing Myth: Do You Need to Rebalance Your S&P 500 Fund?

No — and this trips up a lot of beginners who are used to hearing “rebalance your portfolio” everywhere. The index itself does the rebalancing for you. A committee at S&P Dow Jones Indices reviews the index’s membership and each company’s weighting on a regular quarterly schedule, adding, removing, and reweighting companies as their market values change. Your fund is built to track the index automatically, so as the index adjusts, your fund adjusts right along with it — no action, no trading, and no extra fees on your end.

The “rebalancing” you do need to think about is across your overall portfolio — for example, if you hold the S&P 500 alongside bonds or international funds and want to keep a target mix between them. That’s a different, occasional task, and it’s optional for someone whose entire portfolio is just one S&P 500 fund.

Which S&P 500 Fund Is Best for You?

Here’s the reassuring truth: every official S&P 500 fund holds the same stocks and performs almost identically. The fee differences above are real but tiny in dollar terms. On $10,000 invested, the gap between a 0.015% fund and a 0.04% fund is about $2.50 a year. So the “best” fund is mostly about convenience and your broker.

Match the fund to your broker

• Fidelity → FXAIX (0.015%, no minimum, lets you invest exact dollar amounts).
• Schwab → SWPPX (0.02%, no minimum).
• Vanguard → VOO (the ETF, 0.03%) or VFIAX (the mutual fund, 0.04%, $3,000 minimum).
• Any broker → VOO, IVV, or SPLG — all ETFs you can buy almost anywhere.

Why SPY costs more

SPY was the very first S&P 500 ETF and is wildly popular with professional traders because of its huge trading volume. But at 0.0945%, it’s roughly three times the cost of VOO or IVV. For a buy-and-hold beginner, that extra fee buys you nothing — pick a cheaper fund.

A common mix-up: VOO vs. VTI

VTI is not an S&P 500 fund. Vanguard’s VTI is a total U.S. market fund — it owns the S&P 500’s large companies plus thousands of smaller and mid-sized ones. It’s a great fund, just a broader one. If you specifically want the S&P 500, choose VOO. If you want to own essentially the whole U.S. market in one fund, VTI is worth a look. (Comparing dividend strategies instead? See SCHD vs. VOO.)

What about “zero-fee” funds like FNILX?

Fidelity’s ZERO funds (like FNILX) advertise a 0.00% expense ratio, which sounds unbeatable. The trade-off: they technically track Fidelity’s own proprietary index, not the official S&P 500. In practice, though, that distinction matters less than it sounds — FNILX has historically moved in near-lockstep with true S&P 500 funds, with a correlation around 0.99–1.00 and annual returns typically within a fraction of a percentage point. For most beginners, FNILX is a perfectly reasonable, genuinely free way to get essentially the same exposure; just know it’s a very close cousin rather than the S&P 500 by name.

How Much Money Do You Need to Start?

Less than you think — often $1. With fractional shares, you don’t need the full price of a share to begin. The bigger lever isn’t how much you start with; it’s investing consistently and giving it time. That habit has a name: dollar-cost averaging — investing a fixed amount on a regular schedule, no matter what the market is doing. It removes the guesswork and the temptation to “time” the market.

What a monthly habit could grow into

Here’s the magic of compounding (your gains earning their own gains). The table below shows what regular monthly investing could become at the index’s long-run average of about 10% a year, assuming dividends are reinvested.

And the longest runway wins. Investing $500 a month from age 25 to 65 (40 years) at that same ~10% average would mean putting in about $240,000 of your own money — and potentially ending near $3.1 million. The rest is compounding doing the work.

Important: these are illustrations, not guarantees. Real returns are bumpy — some years are up 25%, others are down 20% — and 10% is a long-run average, not a yearly promise. Still wondering if small amounts matter? Yes. $100 a month, started early and left alone, is genuinely worth it. For more on building the habit, see our beginner’s guide to investing in stocks, mutual funds for beginners, and how much to invest to make $1,000 a month in dividends.

Where to invest first

Most planners suggest filling tax-advantaged accounts before a regular taxable one: a workplace 401(k) (especially up to any employer match) and a Roth IRA come first, then a taxable brokerage. For 2026, you can contribute up to $7,500 to a Roth IRA ($8,600 if you’re 50 or older), subject to income limits (the full-contribution phase-out begins at $153,000 MAGI for single filers and $242,000 for joint filers). In a taxable account, selling at a profit can trigger capital gains tax — another reason to use retirement accounts when you can.

Is the S&P 500 a Good Investment in 2026? (And Will It Crash?)

For long-term investors, the S&P 500 has been one of the most reliable wealth-builders in history, averaging roughly 10% a year over the long run (about 9–10.5% depending on the period). The last decade actually ran hotter — closer to 13–15% a year — but that’s above the long-term average and shouldn’t be expected to continue indefinitely. Warren Buffett has repeatedly said that a low-cost S&P 500 index fund is the best investment for most people, and has instructed that the bulk of his own wife’s inheritance be put into exactly that.

S&P 500 Historical Returns With Dividends Reinvested

One easy way to underestimate the S&P 500 is to look only at the “price” of the index going up. The commonly quoted ~10% long-run average already assumes you reinvested every dividend along the way (this is called total return). If you only counted the index’s price change and ignored dividends, the long-run figure would be meaningfully lower — closer to the 7–8% range historically. That’s why turning on dividend reinvestment (step 5 above) isn’t a minor detail; over decades it’s a significant chunk of your total return.

That’s the case for it. Now the honest caveats, as of August 2026:

Where things stand right now

The index has spent much of August 2026 setting fresh all-time highs, closing above 7,800 for the first time and touching an intraday record near 7,815 — a rally helped along by cooler-than-expected inflation readings (both CPI and PPI came in below forecasts), easing oil prices, and strong earnings from AI and technology companies, alongside a Federal Reserve seen as holding a steady policy course. That said, the run hasn’t been risk-free: softer retail sales and mixed employment data have been cited as reminders that the broader economy still faces headwinds, and valuations remain on the expensive side by historical standards. Wall Street’s published year-end 2026 targets are generally higher than today’s level — but forecasts are guesses, not facts, and no one can reliably predict short-term moves.

Should You Wait for a Dip? Investing During Record Highs in 2026

It feels intuitive to wait for a pullback before buying — but “record highs” happen far more often than most people expect, precisely because a healthy market tends to make new highs on its way to even higher highs. Historically, buying right at a new all-time high has performed about as well, on average, as buying on a random day — because markets that reach new highs frequently keep climbing over the following years. Trying to time a dip means sitting in cash while you wait, which has its own cost. This is the core argument for dollar-cost averaging regardless of where the index sits today: investing a fixed amount on a set schedule means you’ll buy some shares at highs and some at lows, without needing to guess which is which.

The “500 companies” is less diverse than it sounds

Here’s the most important honest point for 2026: a small group of mega-cap technology giants — the so-called “Magnificent Seven” (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, and Tesla) — now drive a huge share of the index. The ten largest holdings make up roughly 39–40% of the entire fund’s value. So while you technically own ~500 companies, your returns lean heavily on a handful of them. That’s great when tech soars and painful when it slumps.

Will it crash?

Nobody knows — and anyone who claims certainty is guessing. What history does tell us: the S&P 500 has fallen many times, including drops of 20%, 30%, even 50%, and it has gone on to recover and reach new highs every single time so far. Pullbacks are normal; the average year sees a temporary drop of around 14% along the way. That’s exactly why a long time horizon (5+ years) and dollar-cost averaging matter — they let you ride out the dips and even buy more shares while prices are low, instead of trying to dodge a crash you can’t predict.

The Risks & Downsides (Let’s Be Honest)

The S&P 500 is a strong long-term bet, not a risk-free one. Before you invest, know the real downsides:

• It can and does lose money. Short-term declines are normal and sometimes steep. Only invest money you won’t need for at least 3–5 years.
• It’s 100% large-cap U.S. stocks. No bonds, no international companies, no small caps. It is not a fully diversified, all-in-one portfolio on its own.
• Concentration risk. As noted above, a few giant tech stocks carry an outsized share of the index, so it’s more top-heavy than “500 companies” implies.
• Sequence risk. If you’ll need the money soon (a near-term down year can hurt), it’s the wrong place for it. It shines over decades, not months.

Will it “go to zero”? Practically speaking, for the entire index to hit zero, 500 of America’s largest companies would all have to fail at once — an event that would mean far bigger problems than your portfolio. The realistic risk isn’t going to zero; it’s volatility you have to be willing to sit through. If you want broader diversification, pairing it with bonds or international stocks — or using an all-in-one option like a target-date fund (see our VFORX review) — can smooth the ride.

Frequently Asked Questions

How do I invest in the S&P 500 as a beginner?

Open a brokerage account or Roth IRA, pick one low-cost S&P 500 index fund (such as VOO, FXAIX, or IVV), search its ticker, and buy shares — ideally an automatic, fixed amount each month. No stock-picking needed.

Which S&P 500 fund is best to buy?

For most beginners, VOO (any broker) or FXAIX (at Fidelity) is the simplest low-cost pick. All official S&P 500 funds hold the same stocks and perform nearly identically, so choose based on cost and your broker.

Can I invest $100 (or less) in the S&P 500?

Yes. With fractional shares you can start with as little as $1. $100 — or even $100 a month — is absolutely worth it; consistency and time matter far more than your starting amount.

How much money do I need to start?

Often just $1 with fractional shares, or the price of a single share. Funds like FXAIX and SWPPX have no minimum. The exception is VFIAX, which requires $3,000.

What is the average return of the S&P 500?

Roughly 10% per year over the long run with dividends reinvested (about 9–10.5% depending on the period). The most recent decade ran higher, around 13–15%, but that’s above the long-term average and isn’t guaranteed to last.

Do S&P 500 index funds pay dividends monthly or quarterly?

Quarterly, for the funds discussed here. VOO, IVV, FXAIX, and SWPPX all typically distribute dividends four times a year, usually with the largest payout at year-end. Turning on automatic dividend reinvestment lets those payouts buy you more shares immediately instead of sitting as cash.

Can you lose all your money in an S&P 500 index fund?

Realistically, no — that would require roughly 500 of America’s largest companies to fail simultaneously, an outcome that would come with far bigger problems than a single portfolio. You absolutely can lose a significant chunk of your money temporarily (drops of 20–50% have happened before), especially if you sell during a downturn, but a total wipeout of the index itself is not a realistic scenario the way it can be for a single stock.

What did Warren Buffett say about the S&P 500?

Buffett has repeatedly recommended a low-cost S&P 500 index fund as the best investment for most people. He has even directed that most of the money left to his wife be placed in one.

Is the S&P 500 a good investment right now?

For long-term investors, historically yes. As of August 2026 it’s trading at fresh record highs with somewhat elevated valuations and heavy concentration in a few tech giants, so expect bumps. A long horizon and steady monthly investing are the standard way to handle that.

Will the S&P 500 crash in 2026?

No one can reliably predict short-term moves, and anyone claiming certainty is guessing. Downturns are a normal, recurring feature of the market — historically the index has always recovered to new highs over time, which is why long-term investors keep investing through them.

Is it a bad idea to invest in the S&P 500 while it’s at record highs?

Not necessarily. Markets hit new highs frequently in healthy bull runs, and waiting for a dip means sitting in cash in the meantime, which has its own opportunity cost. Dollar-cost averaging on a fixed schedule sidesteps the guessing game entirely.

What’s the minimum age to invest in the S&P 500?

You generally need to be 18 (the age of legal majority in most states) to open a brokerage account or Roth IRA in your own name. Parents or guardians can invest on a minor’s behalf through a custodial account (a UTMA or UGMA account), which the child gains control of once they reach the age of majority in their state (typically 18–21).

Do I need a Social Security number to invest?

U.S. citizens and residents generally need a Social Security number (or, for certain non-citizens, an ITIN) to open a brokerage account, since brokers must report account activity to the IRS. Rules for non-U.S. residents vary significantly by broker and country, so check your specific platform’s policy before assuming you’re eligible.

What time of day is best to buy an S&P 500 ETF?

Regular market hours are roughly 9:30 a.m. to 4:00 p.m. Eastern Time. Many experienced traders avoid the first and last 15–30 minutes, when prices can be more volatile, but for a long-term, buy-and-hold beginner, the exact time of day matters very little — consistency matters far more than precision timing.

Is the S&P 500 safe for short-term goals (under 3 years)?

No. It can and does drop sharply over short periods, and there’s no guarantee it will have recovered by the time you need the money. Money you’ll need within the next few years generally belongs in more stable places, like a high-yield savings account or short-term Treasuries, not stocks.

How do I set up automatic investing for VOO?

Link a bank account to your brokerage, then look for an “automatic investments” or “recurring transfers” feature in your account settings. Support for recurring purchases of a specific ETF like VOO varies by broker — Fidelity, Schwab, and Vanguard generally support it — so confirm the ticker is eligible before relying on it.

What’s the difference between VOO, SPY, and FXAIX?

All three track the S&P 500. VOO is a Vanguard ETF (0.03%), SPY is the original ETF but pricier (0.0945%), and FXAIX is a Fidelity mutual fund with the lowest fee (0.015%) available within Fidelity accounts.

Is VOO or VTI better?

Neither is strictly “better” — they’re different. VOO tracks the S&P 500 (large U.S. companies). VTI tracks the total U.S. market, adding thousands of mid- and small-cap stocks. Choose VOO for the S&P 500 specifically; VTI for broader U.S. exposure.

Should I put my whole 401(k) in the S&P 500?

Many young, long-horizon investors do, and it’s a reasonable core holding. But it’s all U.S. large-cap stocks, so as you approach retirement, most planners suggest adding diversification (bonds, international) to reduce risk. This is a personal decision — consider your age and timeline.

Sources & further reading

• S&P Dow Jones Indices — official S&P 500 index page
• Vanguard — VOO fund page (verify current expense ratio)
• IRS — 2026 IRA and 401(k) contribution limits
• SEC Investor.gov — index funds & how to start investing
• Berkshire Hathaway — Warren Buffett’s shareholder letters