How to Invest in a Vanguard S&P 500 Fund (2024)

FAQs

How to Invest in a Vanguard S&P 500 Fund? ›

From the Vanguard homepage, search "Buy funds" or go to the Buy funds page. After you log in, you'll see the page below. Scroll to find the account that you'd like to use for your purchase and then select that account.

From the Vanguard homepage, search "Buy funds" or go to the Buy funds page. After you log in, you'll see the page below. Scroll to find the account that you'd like to use for your purchase and then select that account.

Investing in the Vanguard S&P 500 ETF is a passive investment strategy in which the fund tracks the performance of the S&P 500. In other words, the fund's management team is not actively trading by buying and selling stocks, which helps maintain the lower expense ratio.

How do you buy Vanguard Index fund shares? Besides investing through your 401(k) provider, there are two ways to purchase index fund shares: directly from Vanguard or by opening a brokerage account. You'll need to choose the type of account you'd like to open, such as a traditional or Roth IRA, or a taxable account.

The fund's expense ratio is 0.14 percent, which Morningstar classifies as low. The minimum initial investment is $3,000.

Vanguard S&P 500 ETF seeks to track the investment performance of the S&P 500 Index, a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. Vanguard S&P 500 ETF is an exchange-traded share class of Vanguard 500 Index Fund.

“By far the easiest way to invest in the S&P 500 is an index ETF,” said David J. Haas, a financial advisor at Cereus Financial. When investing in an ETF or fund of any kind, understand how different sectors are weighted so you can fit your investment into the overall goals of your portfolio.

Dividend Summary

There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.0.

What is the cheapest way to invest in the S&P 500? ›

Buying an S&P 500 Fund or ETF. If you want an inexpensive way to invest in S&P 500 ETFs, you can gain exposure through discount brokers. These financial professionals offer commission-free trading on all passive ETF products. But keep in mind that some brokers may impose minimum investment requirements.

In fact, Fidelity is our overall pick for the best online broker in 2022, so it is very hard to beat. All that said, Vanguard still offers some of the lowest-cost funds in the industry and will appeal to buy-and-hold investors, retirement savers, and investors who want access to professional advice.

In the last 30 Years, the Vanguard S&P 500 (VOO) ETF obtained a 9.80% compound annual return, with a 14.96% standard deviation. In 2022, the ETF granted a 1.37% dividend yield. If you are interested in getting periodic income, please refer to the Vanguard S&P 500 (VOO) ETF: Dividend Yield page.

Some say the best time to buy the S&P 500 is during price dips. This seems alluring at first – catching a cheap price and benefitting from the rebound. However, timing dips is notoriously tricky and fraught with risk.

Vanguard High-Yield Corporate Fund (VWEAX)

The Vanguard High-Yield Corporate Fund is the company's top performing bond fund over the past decade, featuring a high-yield, intermediate-term fixed income portfolio.

That said, you shouldn't necessarily invest exclusively in the S&P 500. There are other indices, sectors, and groups of stocks you can invest in through mutual funds and ETFs, and there are some excellent individual stocks you can invest in.

Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at. Rather, you should consider the number of different sources of risk you are getting with those ETFs.

The difference between a total stock market index fund and an S&P 500 index fund is that the S&P 500 Index includes only large-cap stocks. The total stock index includes small-, mid-, and large-cap stocks. However, both indexes represent only U.S. stocks.

In bull markets, index funds that track the S&P 500 tend to outperform target-date funds. However, during times of high volatility, equity index funds will generally lose more in value than target-date funds, which are more conservative.

But it's important to note that the S&P 500 index itself does not pay dividends—the companies in the index do. An investor has to buy shares of the companies themselves or of index funds in order to receive dividends. “The S&P itself does not pay a dividend,” explains Titan investment manager Christopher Seifel.

Why investing in the S&P 500 is a better investment? ›

Is Investing in the S&P 500 Less Risky Than Buying a Single Stock? Generally, yes. The S&P 500 is considered well-diversified by sector, which means it includes stocks in all major areas, including technology and consumer discretionary—meaning declines in some sectors may be offset by gains in other sectors.

Stock Market Average Yearly Return for the Last 10 Years

The historical average yearly return of the S&P 500 is 12.475% over the last 10 years, as of the end of February 2023. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.569%.

For advanced investors, high financing rates on margin trading could be a drawback. “I recommend Vanguard as long as you are focusing on stocks and ETFs on the US market. It is a renowned provider that could be a great choice for beginners but also for more sophisticated investors.

The Vanguard 500 Index Fund Admiral Class (VFIAX) and the SPDR S&P 500 ETF (SPY) are similar investment products. Both track the S&P 500, a U.S. stock index comprising 500 companies with the largest market capitalizations.

The nominal return on investment of $100 is $24,831.97, or 24,831.97%. This means by 2023 you would have $24,931.97 in your pocket. However, it's important to take into account the effect of inflation when considering an investment and especially a long-term investment.

If you are purchasing an S&P 500 index fund:

If your index fund has no minimum (more common), then you can usually purchase in any dollar amount. If your index fund has a minimum (less common), then you have to purchase at least the minimum amount.

The S&P 500 also has an attractive long-term return, averaging about 10 percent annually over long periods. That means that, on average, you'll be able to double your money in just over seven years. That said, the return in any single year is likely to be much different – higher or lower – than the average.

Vanguard S&P 500 (VOO): Dividend Yield. The Vanguard S&P 500 (VOO) ETF granted a 1.37% dividend yield in 2022.

S&P 500 Monthly Return is at 1.46%, compared to 3.51% last month and -8.80% last year. This is higher than the long term average of 0.50%. The S&P 500 Monthly Return is the investment return received each month, excluding dividends, when holding the S&P 500 index.

Why not put all your money in S&P 500? ›

You can further diversify your holdings by investing in a variety of asset classes. Investing only in the S&P 500 limits your portfolio to stocks, which can be a risky decision during major market crashes. Holding bonds, cash, real estate, and other assets can help to limit your risk during these periods.

The main drawback to the S&P 500 is that the index gives higher weights to companies with more market capitalization. The stock prices for Apple and Microsoft have a much greater influence on the index than a company with a lower market cap.

Vanguard charges $0 for withdrawal. The withdrawal process is usually executed within 2 days. Vanguard is a reliable broker, regulated by at least one top-tier regulator. You can only withdraw funds to accounts in your name.

Fidelity is best for:

Beginner investors.

As a broker, Vanguard is best suited for long-term or retirement savers, investors who prefer low-cost investment vehicles, and investors who prefer investing in index funds via mutual funds or exchange-traded funds (ETFs).

Vanguard S&P 500 ETF quote is equal to 377.900 USD at 2023-05-16. Based on our forecasts, a long-term increase is expected, the "VOO" fund price prognosis for 2028-05-10 is 513.787 USD. With a 5-year investment, the revenue is expected to be around +35.96%. Your current $100 investment may be up to $135.96 in 2028.

Average Market Return for the Last 30 Years

Looking at the S&P 500 for the years 1992 to 2021, the average stock market return for the last 30 years is 9.89% (7.31% when adjusted for inflation).

10% Return for S&P 500 a Real Possibility by End of 2023

Short of a recession — a very real possibility — consensus estimates are for about 5% earnings growth (opens in new tab) for S&P 500 companies in 2023. That's certainly less than what it was in years past, but still respectable.

What is the 12 month prediction for the S&P 500? ›

Industry Analysts Predict a 17% Price Increase for the S&P 500 Over the Next 12 Months.

owning the S&P 500 stock index. In this regard, there's no real competition. Over the long run, the S&P 500 has returned about 10% annually to investors on average vs. just 3% or 4% for real estate.

Of the 3 main asset classes, cash is the safest, followed by bonds and then stocks. Safer investments also have lower average returns.

Most Vanguard mutual funds have a $3,000 minimum, but you can invest in any Vanguard Target Retirement Fund or Vanguard STAR® Fund with as little as $1,000.

The difference between a total stock market index fund and an S&P 500 index fund is that the S&P 500 Index includes only large-cap stocks. The total stock index includes small-, mid-, and large-cap stocks. However, both indexes represent only U.S. stocks.

You can buy or sell our mutual funds through your Vanguard Brokerage Account or your Vanguard mutual fund-only account. If you buy or sell via a bank transfer, your bank account should be debited or credited within 2 business days.

Popular investing platforms like Fidelity and Robinhood will allow you to buy shares of an S&P 500 fund in a traditional taxable brokerage account or an account for a specific goal, like a retirement account. Choose which type of fund you want to invest in.

For investors with small-cap exposure elsewhere in their portfolios, the large- and mid-cap S&P 500 fund may suffice. But for a broader, one-stop-shopping fund, the total market index offers maximum diversification within the U.S. equity universe.

In fact, over the last 90+ years the S&P has the better return. What our studies show is assuming 100% invested in the VTSAX or S&P 500 will compound at 10%. Put 20% in small-cap value and the compound rate of return is more than another .

Who is better Vanguard or Fidelity? ›

In fact, Fidelity is our overall pick for the best online broker in 2022, so it is very hard to beat. All that said, Vanguard still offers some of the lowest-cost funds in the industry and will appeal to buy-and-hold investors, retirement savers, and investors who want access to professional advice.

Minimum initial investment

$1,000 for Vanguard Target Retirement Funds and Vanguard STAR® Fund. $3,000 for most actively managed funds. Most Vanguard index funds no longer offer Investor Shares to new investors. For the few that do, most have $3,000 minimums.