The fastest way to buy an S&P 500 fund on Fidelity

To buy an S&P 500 index fund on Fidelity, log into your account, search for a fund ticker symbol like FXAIX or VOO, click "Buy", enter the dollar amount or number of shares, and confirm the order. The whole process takes about five minutes. The fund you choose matters less than starting — all S&P 500 funds track the same 500 large companies and charge similar fees.

You need a Fidelity brokerage account (not just a retirement account) to make this purchase. If you have a 401(k) or IRA with Fidelity, you may already have access. If not, you can open a standard brokerage account online in about 10 minutes with your Social Security number and a bank account to fund it.

The order executes during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). If you place an order after hours or on a weekend, it waits until the market opens the next trading day.

Key Takeaways

  • Fidelity offers three S&P 500 index funds with low fees: FXAIX (0.03% annual cost), FUSEX (0.06%), and SWTSX (0.04%), and all track the same 500 companies.
  • You can buy in a regular brokerage account, an IRA, a 401(k), or a taxable account — the account type determines tax treatment, not the fund itself.
  • Orders placed during market hours (9:30 a.m. to 4 p.m. Eastern, weekdays) execute the same day at the closing price.
  • You can invest a lump sum or set up automatic monthly purchases through Fidelity's dollar-cost averaging feature.
  • Fidelity charges no commission on any S&P 500 index fund purchase, and you can sell anytime without penalty.

Which S&P 500 fund to choose on Fidelity

Fidelity offers three S&P 500 index funds. FXAIX (Fidelity S&P 500 Index Fund) is the most popular and costs 0.03% per year — meaning you pay $3 annually for every $10,000 invested. FUSEX (Fidelity U.S. Stock Index Fund) costs 0.06% and is nearly identical. SWTSX (Schwab U.S. Stock Market Index Fund) costs 0.04% and is available through Fidelity but managed by Schwab.

All three hold the same 500 companies in the same proportions. The difference in cost is so small that it does not matter which you pick — a $10,000 investment in FXAIX costs $3 per year versus $6 in FUSEX. Pick FXAIX if you want the simplest choice.

You may also see VFIAX (Vanguard S&P 500 ETF) listed on Fidelity. It is an exchange-traded fund (ETF) rather than a mutual fund, meaning it trades like a stock. For a beginner, FXAIX is simpler because you can buy any dollar amount. With VFIAX, you must buy whole shares, so a $100 investment might buy 0.3 shares if the price is $350 per share.

Step-by-step: placing your first order

Step 1: Log in and navigate to the trade screen. Go to Fidelity.com, sign in, and click "Trade" in the top menu. Select "Stocks, ETFs, Mutual Funds" from the dropdown.

Step 2: Search for the fund. Type "FXAIX" in the search box. The full name "Fidelity S&P 500 Index Fund" appears. Click it to open the fund page.

Step 3: Click "Buy". On the fund page, a blue "Buy" button appears on the right side. Click it to open the order form.

Step 4: Choose your order type. Select "Mutual Fund" (not "Brokerage Link" or other options). This ensures you buy the fund directly from Fidelity at the daily closing price.

Step 5: Enter the amount. Type the dollar amount you want to invest (for example, $500 or $5,000). Fidelity will show you the estimated number of shares. You can also enter a share count instead if you prefer.

Step 6: Choose the account. Select which account to buy in — a taxable brokerage account, an IRA, a 401(k), or another account you hold at Fidelity. The account must have cash available or be linked to a bank account for the purchase to go through.

Step 7: Review and confirm. Check the fund name, amount, and account one more time. Click "Place Order" or "Preview Order" (Fidelity may ask you to review before confirming). The order is now placed.

Understanding mutual fund vs. ETF purchases on Fidelity

Fidelity sells S&P 500 funds in two formats: mutual funds (like FXAIX) and exchange-traded funds (like VFIAX). The difference matters for how and when you buy.

Mutual funds like FXAIX execute once per day at the closing price (4 p.m. Eastern). You place an order anytime, and Fidelity fills it at that day's closing price. You do not know the exact price until the order settles. This is simpler for dollar-amount purchases — you can invest exactly $500 no matter what the price is.

ETFs like VFIAX trade throughout the day like stocks. You see the price in real time and can buy at any moment the market is open. However, you must buy whole shares or fractional shares in increments. If VFIAX costs $400 per share and you have $500, you can buy 1 share and have $100 left over, or use Fidelity's fractional share feature to buy 1.25 shares.

For most beginners, mutual funds are easier. You do not have to time the market or worry about price fluctuations during the day. Set it and forget it.

Setting up automatic monthly investments

Instead of buying once, you can set Fidelity to invest the same amount every month automatically. This is called dollar-cost averaging and removes the pressure to time the market perfectly.

To set this up, go to "Accounts & Trade" in the top menu, select "Automatic Investments", and click "Create Plan". Choose the fund (FXAIX), the account, the monthly dollar amount, and the day of the month you want the purchase to happen. Fidelity will deduct that amount from your linked bank account and buy the fund on the date you choose.

You can pause, change the amount, or cancel the plan anytime. There is no penalty for stopping, and Fidelity charges no fee for this service.

Tax considerations for different account types

The S&P 500 fund itself is the same no matter which account you buy it in, but the account type determines how you pay taxes on gains.

In a taxable brokerage account, you pay taxes on dividends and capital gains every year, even if you do not sell. In a traditional IRA, you pay no taxes until you withdraw money in retirement. In a Roth IRA, you pay no taxes ever on gains if you follow the withdrawal rules. In a 401(k), taxes are deferred until withdrawal (or never, if it is a Roth 401(k)).

For most people starting out, a Roth IRA is the best place to buy an S&P 500 fund because gains grow tax-free forever. Fidelity lets you open a Roth IRA and buy FXAIX inside it in the same session. The 2024 contribution limit is $7,000 per year if you are under 50.

What happens after you buy

Once your order settles (usually the next business day), the shares appear in your account. You own them. Fidelity sends you a confirmation email with the purchase price, number of shares, and total cost.

The fund pays dividends (usually quarterly) directly into your account. You can reinvest them automatically by turning on "Dividend Reinvestment" in your account settings, which buys more shares with the dividend money. Most investors turn this on and leave it alone.

You can sell anytime by clicking "Sell" on the fund page, entering the number of shares or dollar amount, and confirming. There is no fee. The sale settles the next business day, and the cash lands in your account.

Frequently Asked Questions

Can I buy S&P 500 funds in my Fidelity 401(k)?

Yes, if your employer plan offers it. Log into your 401(k) account on Fidelity, go to "Invest", and search for S&P 500 index funds. Your plan may offer FXAIX or a similar fund. You cannot buy outside the plan's menu of options, so check what is available first.

What is the minimum amount I need to invest?

Fidelity has no minimum for mutual funds like FXAIX. You can buy $1 worth if you want. For ETFs, you need enough to buy at least one share, which varies by price. Most people start with $100 to $500.

Do I pay a commission when I buy or sell?

No. Fidelity charges zero commission on all S&P 500 index funds, whether you buy or sell. The only cost is the fund's annual fee (0.03% for FXAIX), which is deducted automatically from your balance.

What if I place an order after the market closes?

For mutual funds, the order waits until the next market open and executes at that day's closing price. For ETFs, the order sits as a pending order and executes the next time the market is open and the price matches your limit (if you set one). Always check the order status the next morning to confirm it went through.

Can I change my mind after I place an order?

If the order has not yet settled (usually within one business day), you can cancel it through your account. Once it settles and the shares appear in your account, you own them — you would have to sell them to get your money back, and you may have a gain or loss depending on the price.