S&P 500 Index Funds: 5 Best-Performing (2024)

FAQs

What is the 5 year performance of the S&P 500 Index Fund? ›

You only need one S&P 500 ETF

You could be tempted to buy all three ETFs, but just one will do the trick. You won't get any additional diversification benefits (meaning the mix of various assets) because all three funds track the same 500 companies.

History shows us that investing in an S&P 500 index fund -- a fund that tracks the S&P 500's performance as closely as possible -- is remarkably safe, regardless of timing. The S&P 500 has never produced a loss over a 20-year holding period.

How long has it historically taken a stock investment to double? NYU business professor Aswath Damodaran has done the math. According to his math, since 1949 S&P 500 investments have doubled ten times, or an average of about seven years each time.

Basic Info. S&P 500 1 Year Return is at 0.91%, compared to -9.29% last month and -1.18% last year. This is lower than the long term average of 6.31%. The S&P 500 1 Year Return is the investment return received for a 1 year period, excluding dividends, when holding the S&P 500 index.

Basic Info. S&P 500 10 Year Return is at 161.0%, compared to 161.9% last month and 195.6% last year. This is higher than the long term average of 112.5%.

You can't directly invest in the index itself, but you can buy individual stocks of S&P 500 companies, or buy an S&P 500 index fund or ETF. The latter is ideal for beginner investors since they provide broad market exposure and diversification at a low cost.

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.

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

“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.

As you can see from the chart, investing $5,000 annually in the S&P 500 would make you a millionaire in a little over 30 years, assuming average 10.25% annual returns.

The S&P 500 is a great core holding, however, it lacks several dimensions of an optimally diversified portfolio i.e. the sector, geographic, currency and cap size. While 38% of S&P 500 earnings come from outside of the U.S., that is not the same as owning a portfolio that has 38% international stocks.

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.

Key Points. S&P 500 ETFs are a relatively safe investment. However, they can still earn substantial returns over time. By investing consistently, it's possible to build a million-dollar portfolio.

The S&P 500 was expected to end 2023 at 4,200 points, which would amount to a 9.4% increase for the calendar year, according to the median forecast of 42 strategists polled by Reuters. This forecast target is unchanged from a November 2022 poll.

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).

ETFs are more tax-efficient than index funds by nature, thanks to the way they're structured. When you sell an ETF, you're typically selling it to another investor who's buying it, and the cash is coming directly from them.

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.

How often does the S&P 500 drop 5%? ›

5% or greater pullbacks occur about every 7 months. 10% or greater pullbacks occur about every 2 years.

Assuming long-term market returns stay more or less the same, the Rule of 72 tells us that you should be able to double your money every 7.2 years. So, after 7.2 years have passed, you'll have $200,000; after 14.4 years, $400,000; after 21.6 years, $800,000; and after 28.8 years, $1.6 million.

Stock Market Average Yearly Return for the Last 20 Years

The historical average yearly return of the S&P 500 is 10.326% over the last 20 years, as of the end of February 2023. This assumes dividends are reinvested. Adjusted for inflation, the 20-year average stock market return (including dividends) is 7.606%.

Whether you're nervous about market volatility or simply want an investment you can count on to keep your money safe, an S&P 500 ETF or index fund is a fantastic choice. This type of investment tracks the S&P 500 itself, meaning it includes the same stocks as the index and aims to mirror its performance.

The index acts as a benchmark of the performance of the U.S. stock market overall, dating back to the 1920s. The index has returned a historic annualized average return of around 11.88% since its 1957 inception through the end of 2021.

S&P 500 3 Year Return is at 43.16%, compared to 58.99% last month and 40.26% last year.

Basic Info. S&P 500 Dividend Yield is at 1.66%, compared to 1.74% last month and 1.37% last year.

However in 2021, the average equity fund investor finished the year with a return of 18.39% versus an S&P 500 return of 28.71%; an investor return gap of 10.32%. This gap was the third largest annual gap since 1985, when the Quantitative Analysis of Investor Behavior (QAIB) analysis began.

Basic Info. S&P 500 Monthly Return is at 3.51%, compared to -2.61% last month and 3.58% last year.

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.

What is the cheapest way to buy 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.

S&P 500: $100 in 2000 → $448.08 in 2023

This lump-sum investment beats inflation during this period for an inflation-adjusted return of about 154.34% cumulatively, or 4.13% per year. If you used dollar-cost averaging (monthly) instead of a lump-sum investment, you'd have $486.89.

The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31^st 2022, had an annual compounded rate of return of 12.6%, including reinvestment of dividends.

Some index funds provide exposure to thousands of securities in a single fund, which helps lower your overall risk through broad diversification. By investing in several index funds tracking different indexes you can built a portfolio that matches your desired asset allocation.

But the 5% rule can be broken if the investor is not aware of the fund's holdings. For example, a mutual fund investor can easily pass the 5% rule by investing in one of the best S&P 500 Index funds, because the total number of holdings is at least 500 stocks, each representing 1% or less of the fund's portfolio.

The S&P 500 is a stock market index that measures the performance of about 500 companies in the U.S. It includes companies across 11 sectors to offer a picture of the health of the U.S. stock market and the broader economy.

Sometimes It's Just Luck

Yes, you may be able to beat the market, but with investment fees, taxes, and human emotion working against you, you're more likely to do so through luck than skill. If you can merely match the S&P 500, minus a small fee, you'll be doing better than most investors.

However, there is a way to improve the odds tremendously. Almost every institutional investor would like to find an investment manager with a high probability of outperforming the S&P 500. It is widely acknowledged to be one of the most efficient markets and most difficult benchmarks to beat.

Consider investing in rental properties or real estate investment trusts (REIT). The real estate market is a fertile setting for a $100k investment to yield $1 million. And it's possible for this to happen between 5 to 10 years. You can achieve this if you continue to add new properties to your portfolio.

Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.

How to be a millionaire in 5 years? ›

History shows us that investing in an S&P 500 index fund -- a fund that tracks the S&P 500's performance as closely as possible -- is remarkably safe, regardless of timing. The S&P 500 has never produced a loss over a 20-year holding period.

The fact that the S&P 500 will continue to grow in the long term is treated like a natural law — the cosmological constant of finance. The speed of light is 299,792,458 m/s, and the S&P 500 has an average annual return of 10%. I wanted to know: Why does the S&P 500 always grow?

That said, investing in a broad-based index such as the S&P 500 is lower-risk than investing in individual companies. The S&P 500 has steadily increased in value since its inception and, according to McKinsey, has delivered an average annual return of 9% over the last 25 years.

Wine , gold , crude oil, and platinum all were moderately correlated with the S&P 500. Bonds and fine art were shown to be negatively correlated to the S&P 500.

S&P 500 annual returns

Over the past 30 years, the S&P 500 index has delivered a compound average annual growth rate of 10.7% per year. Data source: Slickcharts.com.

The largest S&P 500 ETF is State Street Global Advisors' SPDR S&P 500 ETF (SPY), which has $372.29 billion in assets under management (AUM) as of April 4, 2023. SPY was launched in January 1993 and was the very first ETF listed in the U.S.10.

Why S&P 500 funds are a popular investment. S&P 500 funds are a popular investment primarily due to their low cost, strong historical performance and simplicity. With a single ticker, investors can access 500 of the leading U.S. companies for a small fee.

Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.

December 29, 2021: The S&P 500 index closed at a record high of 4793.06. As of April 19th, 2023 this record all time high still stands.

Which S&P 500 index fund has the lowest fees? ›

Fidelity has the lowest costs, with a 0.015% expense ratio. Schwab's is only slightly higher at 0.02%, while the Vanguard 500 Index Fund Admiral Shares has a 0.04% expense ratio. Fidelity and Schwab offer their index funds with no minimum investment, making them very accessible to beginning investors.

Fund description

The Invesco S&P 500® Downside Hedged ETF (Fund) is an actively managed exchange-traded fund (ETF) that seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed-income market returns.

While you can't directly invest in the index itself, choosing to buy an S&P 500 index mutual fund or exchange-traded fund (ETF) gives you exposure to the index's underlying stocks. Financial experts generally consider these types of funds less risky than owning individual shares.

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.

Basic Info. S&P 500 1 Year Return is at 0.91%, compared to -9.29% last month and -1.18% last year. This is lower than the long term average of 6.31%.

High-quality bonds and fixed-indexed annuities are often considered the safest investments with the highest returns. However, there are many different types of bond funds and annuities, each with risks and rewards. For example, government bonds are generally more stable than corporate bonds based on past performance.

Average Market Return for the Last 10 Years

Looking at the S&P 500 from 2012 to 2021, the average S&P 500 return for the last 10 years is 14.83% (12.37% when adjusted for inflation), which is also higher the annual average return of 10%.

The average yearly return of the S&P 500 is 9.749% over the last 30 years, as of the end of February 2023. This assumes dividends are reinvested. Adjusted for inflation, the 30-year average stock market return (including dividends) is 7.054%.