How to Buy an S&P 500 Index Fund

You need a brokerage account, then you search for an S&P 500 fund and buy shares

To buy an S&P 500 index fund, you open an account with a brokerage firm (the company that lets you buy and sell investments), deposit money, search for the fund by name or ticker symbol, and place a buy order. The whole process takes about 15 minutes once your account is open. The account opening itself takes a few days because the brokerage has to verify your identity and link your bank account.

You do not need a financial advisor, special permission, or a large amount of money to start. Most brokerages let you buy a single share of a fund, which might cost anywhere from $50 to $400 depending on which fund you choose. The fund itself does the work of owning all 500 stocks in the index — you just own a piece of the fund.

Key Takeaways

You must open a brokerage account with a company like Fidelity, Vanguard, Charles Schwab, or Robinhood before you can buy any fund.
The account opening process requires your Social Security number, address, and a bank account to link for deposits, and takes two to five business days.
Once your account is funded, you search for the fund by its ticker symbol (VOO, IVV, or SPY are common S&P 500 funds) and place a buy order just like buying a stock.
You can buy as little as one share, and most brokerages charge no commission on fund purchases.
Your fund shares sit in your account and grow as the S&P 500 index grows; you do not have to do anything else unless you want to buy more or sell.

Choose a brokerage and open an account

A brokerage is a company that holds your money and lets you buy and sell investments. The major ones are Fidelity, Vanguard, Charles Schwab, E-Trade, TD Ameritrade, and Robinhood. Each one has a website and a mobile app where you can open an account for free. There is no monthly fee just for having an account, and they do not charge commission when you buy index funds.

To open an account, you will need your Social Security number, your address, your date of birth, and a bank account (checking or savings) to link for deposits. The brokerage will ask you basic questions about your income and investment experience — these are regulatory questions, not a test you can fail. The whole process takes about 10 minutes online. The brokerage then verifies your identity (usually within a few hours) and your bank account (usually within one to two business days). Once both are verified, you can deposit money and start buying.

If you already have a retirement account like a 401(k) or IRA, you can open a regular taxable brokerage account in addition to that. They are separate accounts with separate rules. A regular brokerage account has no contribution limits and no age restrictions on withdrawals, but you pay taxes on any gains when you sell.

Deposit money into your account

Once your brokerage account is open and verified, you link your bank account and transfer money in. You can do this through the brokerage's website or app — look for a button that says "Deposit" or "Transfer Funds." You choose how much to send and which bank account to send it from. The transfer usually takes one to three business days to appear in your brokerage account.

You do not have to deposit a large amount. You can start with $100, $500, or whatever you have available. The fund will let you buy fractional shares, meaning if one share costs $150 and you have $100, you can buy 0.67 shares. You own that fraction just like you own whole shares.

Some brokerages also let you set up automatic transfers — for example, $200 from your checking account every month. This is useful if you want to invest regularly without having to remember to transfer money each time.

Find the S&P 500 fund and check its ticker symbol

Once money is in your account, you search for an S&P 500 index fund. Most brokerages have a search box on their trading page. You can search by the fund's name or by its ticker symbol — a short code that identifies the fund. Common S&P 500 funds and their ticker symbols are:

VOO — Vanguard S&P 500 ETF
IVV — iShares Core S&P 500 ETF
SPY — SPDR S&P 500 ETF
VFIAX — Vanguard S&P 500 Index Fund (mutual fund version)
FXAIX — Fidelity S&P 500 Index Fund

These are all legitimate S&P 500 funds. The differences between them are small — they all track the same 500 companies, and their fees (called expense ratios) are all very low, usually between 0.03% and 0.10% per year. That means if you own $10,000 of the fund, you pay $3 to $10 per year in fees. You do not pay these fees separately; they are taken from the fund's returns automatically.

Pick whichever fund your brokerage offers. If your brokerage offers more than one, any of them will work fine. The differences in performance over time are negligible.

Place a buy order

Once you have found the fund, click on it to open its detail page. You will see a button that says "Buy" or "Trade." Click it, and you will see a form asking how many shares you want to buy. Enter the number of shares or the dollar amount you want to spend. For example, you can say "buy 10 shares" or "spend $1,000." The brokerage will show you the current price per share and calculate how many shares you will get.

You will also see options for the type of order. For a straightforward purchase, use a market order, which buys the fund at the current market price right away. This is the standard choice for index funds. Do not worry about the other order types (limit orders, stop orders) — you do not need them for buying an index fund.

Review the order one more time to make sure the dollar amount or share count is correct, then click "Confirm" or "Place Order." The order goes through when ready during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). If you place an order after market hours or on a weekend, it will go through at the market open the next trading day.

Monitor your investment and decide on next steps

After you buy, your shares appear in your account. You will see them listed with the fund name, the number of shares you own, the price you paid per share, and the current value. The value changes every trading day as the S&P 500 index moves up and down. You do not have to do anything — the fund holds the 500 stocks and rebalances itself automatically.

Many people buy once and then add to their position over time by making regular deposits and buying more shares. Others set up automatic monthly investments. You can also just buy once and leave it alone. There is no right answer — it depends on your situation and how much money you have available.

If you ever want to sell, you go back to your brokerage account, find the fund, click "Sell," enter how many shares you want to sell, and place the order. The money goes back into your brokerage account, and you can withdraw it to your bank account or use it to buy something else.

Understand the difference between ETFs and mutual funds

You may notice that some S&P 500 funds are labeled ETF (exchange-traded fund) and others are labeled mutual fund. Both track the same index and both work the same way from your perspective — you buy shares, you own a piece of all 500 stocks, and the value goes up and down with the market. The main difference is technical: ETFs trade throughout the day like stocks, while mutual funds are priced once per day at market close.

For someone buying and holding an S&P 500 fund, this difference does not matter. Both are cheap, both are straightforward, and both do the job. VOO, IVV, and SPY are ETFs. VFIAX and FXAIX are mutual funds. Pick whichever your brokerage recommends or whichever has the lowest expense ratio.

Frequently Asked Questions

Do I need a lot of money to start?

No. Most brokerages let you buy fractional shares, so you can start with $50, $100, or whatever you have. You do not need $1,000 or $10,000 to begin. The fund will own a proportional piece of all 500 stocks no matter how much you invest.

Will I owe taxes on my investment right away?

No. You only owe taxes when you sell the fund and realize a gain. If you buy and hold, you do not owe anything until you sell. If you hold the fund in a retirement account like an IRA or 401(k), you may not owe taxes even when you sell, depending on the account type.

What if I want to buy more shares later?

You can buy more anytime. Just log into your brokerage account, search for the same fund, and place another buy order. You can do this once a year, once a month, or whenever you have money to invest. All your shares sit in the same account and are added together.

Can I lose all my money in an S&P 500 index fund?

Theoretically, the S&P 500 could drop to zero, but that would mean all 500 of the largest U.S. companies failed at the same time, which has never happened. The index has recovered from every major crash in history. You can lose money in the short term if you buy and sell during a downturn, but if you hold for years, the historical trend is upward.

What is the difference between buying through a regular brokerage and buying through my bank?

Many banks offer brokerage services, but they often charge higher fees and have fewer fund options. A dedicated brokerage like Fidelity or Vanguard usually has lower fees and more choices. If your bank offers S&P 500 funds with low fees (under 0.20% per year), it is fine to use them. Otherwise, opening a separate brokerage account is usually the better choice.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.