S&P 500 Index Fund: Everything Beginners Need to Know
The S&P 500 index fund is the most popular investment in the world. Here is how it works.
The S&P 500 index fund is the most popular investment in the world. Here is how it works.
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500 — Companies in the S&P 500 index — large-cap US companies only 3,700+ — Companies in the total US stock market index including small and mid-cap 82% — Percentage of total US market value represented by the S&P 500 0.1% — Annual performance difference over 30 years — S&P 500 leads by just 0.1%/yr…
$20,484 — Value of $100/month after 10 years at 10% average annual return $76,570 — Value of $100/month after 20 years at 10% average annual return $197,393 — Value of $100/month after 30 years — you only contributed $36,000 of this 10.5% — Historical average annual S&P 500 return over 30 years through 2024 $1…
0.03% — Annual expense ratio of Vanguard VOO — just $3/year per $10,000 invested 92% — Actively managed funds underperforming S&P 500 over 15 years (SPIVA 2023) 10.5% — Historical average annual S&P 500 return over the past 30 years through 2024 $1 — Minimum to start investing in Fidelity FZROX with fractional shares $0…
Index funds and ETFs both track indexes. Here is a plain English explanation of when to use each.
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