How do I invest in the S&P 500?
The S&P 500 is a stock market index, which is a list of 500 stocks from the largest companies in America. You could open a brokerage account with a broker and buy shares in each of these companies, but the easiest, least expensive way to invest in all these stocks is to invest in an S&P 500 index mutual fund. Inside an index mutual fund, your money will be pooled together with everyone else in the fund to purchase all the stocks in the index.  These types of funds are very low expense compared to managed mutual funds.  Most mutual fund companies have an S&P 500 index fund; two examples are Vanguard and Fidelity.  The minimum investment in most of these mutual funds is low enough that you will be able to open an account with your $4000. Something you need to keep in mind, however: investing in any stock mutual fund is not non-risk.  It's not even low-risk, really.  It is very possible to lose money by investing in the stock market.  An S&P 500 index fund is diversified in the sense that you have money in lots of different stocks, but it is also not diversified, in a sense, because it is all in large cap American stocks.  Before investing in the stock market, you should have a goal for the money you are investing.  If you are investing for something several years away, an index fund can be a good place to invest, but if you will need this money within the next few years, the stock market might be too risky for you. "Buy the ETF with ticker ""SPY"".  This will give you exposure to exactly the S&P 500 stocks,  This is similar to the mutual fund suggestion by Ben Miller, except that the ETF has several advantages over mutual funds, especially as regards taxes.  You can find information on the difference between ETF and mutual fund in other questions on this site or by searching the web."
"I actually love this question, and have hashed this out with a friend of mine where my premise was that at some volume of money it must be advantageous to simply track the index yourself. There some obvious touch-points: Most people don't have anywhere near the volume of money required for even a $5 commission outweigh the large index fund expense ratios. There are logistical issues that are massively reduced by holding a fund when it comes to winding down your investment(s) as you get near retirement age. Index funds are not touted as categorically ""the best"" investment, they are being touted as the best place for the average person to invest. There is still a management component to an index like the S&P500.  The index doesn't simply buy a share of Apple and watch it over time.  The S&P 500 isn't simply a single share of each of the 500 larges US companies it's market cap weighted with frequent rebalancing and constituent changes.  VOO makes a lot of trades every day to track the S&P index, ""passive index investing"" is almost an oxymoron. The most obvious part of this is that if index funds were ""the best"" way to invest money Berkshire Hathaway would be 100% invested in VOO.  The argument for ""passive index investing"" is simplified for public consumption.  The reality is that over time large actively managed funds have under-performed the large index funds net of fees.  In part, the thrust of the advice is that the average person is, or should be, more concerned with their own endeavors than they are managing their savings.  Investment professionals generally want to avoid ""How come I my money only returned 4% when the market index returned 7%?  If you track the index, you won't do worse than the index; this helps people sleep better at night. In my opinion the dirty little secret of index funds is that they are able to charge so much less because they spend $0 making investment decisions and $0 on researching the quality of the securities they hold.  They simply track an index; XYZ company is 0.07% of the index, then the fund carries 0.07% of XYZ even if the manager thinks something shady is going on there. The argument for a majority of your funds residing in Mutual Funds/ETFs is simple, When you're of retirement age do you really want to make decisions like should I sell a share of Amazon or a share of Exxon?  Wouldn't you rather just sell 2 units of SRQ Index fund and completely maintain your investment diversification and not pay commission?  For this simplicity you give up three basis points?  It seems pretty reasonable to me." Like an S&amp;P 500 ETF?  So you're getting in some cash inflow each day, cash outflows each day.  And you have to buy and sell 500 different stocks, at the same time, in order for your total fund assets to match the S&amp;P 500 index proportions, as much as possible.  At any given time, the prices you get from the purchase/sale of stock is probably going to be somewhat different than the theoretical amounts you are supposed to get to match, so it's quite a tangle.  This is my understanding of things.  Some funds are simpler - a Dow 30 fund only has 30 stocks to balance out.  Maybe that's easier, or maybe it's harder because one wonky trade makes a bigger difference?  I'm not sure this is how it really operates.  The closest I've gotten is a team that has submitted products for indexing, and attempted to develop funds from those indexes.  Turns out finding the $25-50 million of initial investments isn't as easy as anyone would think. "Split your contributions evenly across the funds on that list with the word ""core"" or ""S&P"" in the name.  Maybe add ""International Large Cap Index"".  Leave it & rebalance occasionally.  Read a book on Modern Portfolio Theory sometime in the next 5 years." I would read any and all of the John Bogle books.  Essentially:  We know the market will rise and fall.  We just don't know when specifically.   For the most part it is impossible to time the market. He would advocate an asset allocation approach to investing.  So much to bonds, tbills, S&P500 index, NASDAQ index.  In your case you could start out with 10% of your portfolio each in S&P500 and NASDAQ.  Had you done that, you would have achieved growth of 17% and 27% respectively.  The growth on either one of those funds would have probably dwarfed the growth on the entire rest of your portfolio.  BTW 2013 and 2014 were also very good years, with 2015 being mostly flat. In the past you have avoided risk in the market to achieve the detrimental effects of inflation and stagnant money.  Don't make the same mistakes going forward. "At the bottom of Yahoo! Finance's S & P 500 quote Quotes are real-time for NASDAQ, NYSE, and NYSE MKT. See also delay   times for other exchanges. All information provided ""as is"" for   informational purposes only, not intended for trading purposes or   advice. Neither Yahoo! nor any of independent providers is liable for   any informational errors, incompleteness, or delays, or for any   actions taken in reliance on information contained herein. By   accessing the Yahoo! site, you agree not to redistribute the   information found therein. Fundamental company data provided by Capital IQ. Historical chart data   and daily updates provided by Commodity Systems, Inc. (CSI).   International historical chart data, daily updates, fund summary, fund   performance, dividend data and Morningstar Index data provided by   Morningstar, Inc. Orderbook quotes are provided by BATS Exchange. US   Financials data provided by Edgar Online and all other Financials   provided by Capital IQ. International historical chart data, daily   updates, fundAnalyst estimates data provided by Thomson Financial   Network. All data povided by Thomson Financial Network is based solely   upon research information provided by third party analysts. Yahoo! has   not reviewed, and in no way endorses the validity of such data. Yahoo!   and ThomsonFN shall not be liable for any actions taken in reliance   thereon. Thus, yes there is a DB being accessed that there is likely an agreement between Yahoo! and the providers." You asked some direct questions, here are some direct answers: 10% of your salary is a popular rule of thumb. An IRA account is something to consider, you can open one with any of the major discount brokers and select an S&P 500 index fund for your investment. You can let it sit. That's the beauty of an index fund, it simply matches the market and you don't have to worry about trying to beat the market because you ARE the market! The average annual return for the S&P 500 Index has been around 10% (since inception). That's no guarantee, and some years are more or less and up or down. Over the long run, it goes up. "The S&P 500 index is maintained by S&P Dow Jones Indices, a division of McGraw Hill Financial. Changes to the index are made periodically, as needed.  For Facebook, you'll find it mentioned in this December 11, 2013 press release (PDF).  Quote: New York, NY, December 11 , 2013 – S&P Dow Jones Indices will make the following changes to the S&P 100, S&P 500, MidCap 400   and S&P SmallCap 600 indices after the close of trading on Friday,   December 20: You can find out more about the S&P 500 index eligibility criteria from the S&P U.S. Indices methodology document (PDF).  See pages 5 and 6: Market Capitalization - [...] Liquidity - [...] Domicile - [...] Public Float - [...] Sector Classification - [...] Financial Viability - Usually measured as four consecutive quarters of positive as   reported earnings. [...] Treatment of IPOs - Initial public offerings should be seasoned for 6 to 12 months   before being considered for addition to an index. Eligible Securities - [...]   [...]   Changes to the U.S. indices other than the TMIX are made as needed,   with no annual or  semi-annual reconstitution. [...] LabCorp may have a smaller market cap than Facebook, but Facebook didn't meet all of the eligibility criteria – for instance, see the above note about ""Treatment of IPOs"" – until recently. Note also that ""Initial public offerings should be seasoned for 6 to 12 months"" implies somebody at S&P makes a decision as to the exact when. As such, I would say, no, there is no ""simple rule or formula"", just the methodology above as applied by the decision-makers at S&P." "Very simple. You open an account with a broker who will do the trades for you. Then you give the broker orders to buy and sell (and the money to pay for the purchases). That's it. In the old days, you would call on the phone (remember, in all the movies, ""Sell, sell!!!!""? That's how), now every decent broker has an online trading platform. If you don't want to have ""additional value"" and just trade - there are many online discount brokers (ETrade, ScotTrade, TD Ameritrade, and others) who offer pretty cheap trades and provide decent services and access to information. For more fees, you can also get advices and professional management where an investment manager will make the decisions for you (if you have several millions to invest, that is). After you open an account and login, you'll find a big green (usually) button which says ""BUY"". Stocks are traded on exchanges. For example the NYSE and the NASDAQ are the most common US exchanges (there's another one called ""pink sheets"", but its a different kind of animal), there are also stock exchanges in Europe (notably London, Frankfurt, Paris, Moscow) and Asia (notably Hong Kong, Shanghai, Tokyo). Many trading platforms (ETrade, that I use, for example) allow investing on some of those as well." "In practice, most (maybe all) stock indices are constructed by taking a weighted average of stock prices denominated in a single currency, and so the index implicitly does have that currency - as you suggest, US dollars for the S&P 500. In principle you can buy one ""unit"" of the S&P 500 for $2,132.98 or whatever by buying an appropriate quantity of each of its constituent stocks. Also, in a more realistic scenario where you buy an index via a tracker fund, you would typically need to buy using the underlying currency of the index and your returns will be relative to that currency - if the index goes up by 10%, your original investment in dollars is up by 10%." Well i dont know of any calculator but you can do the following 1) Google S&P 500 chart 2) Find out whats the S&P index points (P1) on the first date 3) Find out whats the S&P index points (P2) on the second date 4) P1 - P2 = result The Dow is the top 30 companies in the USA representing different business sectors. Companies are replaced from time to time but a math equation keeps it statistically correct.   The S&amp;P 500 is the same concept as the Dow but with a much larger base of companies. Generally S&P 500 will be used as the benchmark for US investors because it represents how's the US market performs as a whole. If you've outperformed the S&P 500 during the last couple years, great. However, at the end of day, you would want to look at the total growth percent that your portfolio has achieved, as compared with that of S&P 500.  Anyway, your portfolio might actually ride along with the bull market during the 2009-2010 period (more-so for the small caps). The reports of my death have been greatly exaggerated. - Twain I use index funds in my retirement planning, but don't stick to just S&P 500 index funds. Suppose I balance my money 50/50 between Small Cap and Large Cap and say I have $10,000.  I'd buy $5,000 of an S&P Index fund and $5,000 of a Russell 2000 index fund. Now, fast forward a year.  Suppose the S&P Index fund has $4900 and the Russell Index fund has $5200.   Sell $150 of Russell Index Fund and buy $150 of S&P 500 Index funds to balance.  Repeat that activity every 12-18 months.  This lets you be hands off (index fund-style) on your investment choices but still take advantage of great markets.   This way, I can still rebalance to sell high and buy low, but I'm not stressing about an individual stock or mutual fund choice. You can repeat this model with more categories, I chose two for the simplicity of explaining. S & P's site has a methodology link that contains the following which may be of use: Market Capitalization. Unadjusted market capitalization of US$ 4.6   billion or more for  the S&P 500, US$ 1.2 billion to US$ 5.1 billion   for the S&P MidCap 400, and US$ 350  million to US$ 1.6 billion for   the S&P SmallCap 600. The market cap of a potential  addition to an   index is looked at in the context of its short- and medium-term   historical  trends, as well as those of its industry. These ranges are   reviewed from time to time to  assure consistency with market   conditions.  Liquidity. Adequate liquidity and reasonable price – the   ratio of annual dollar value  traded to float adjusted market   capitalization should be 1.00 or greater, and the company  should   trade a minimum of 250,000 shares in each of the six months leading up   to the  evaluation date.  Domicile. U.S. companies. For index purposes,   a U.S. company has the following  characteristics:  The final determination of domicile eligibility is made by the U.S.   Index Committee. To determine how much you can contribute to a regular and roth IRA you have to calculate your compensation: What Is Compensation?  Generally, compensation is what you earn from   working. For a summary of what compensation does and does not include,   see Table 1-1. Compensation includes all of the items discussed next   (even if you have more than one type).Wages, salaries, etc. Wages,   salaries, tips, professional fees, bonuses, and other amounts you   receive for provid-ing personal services are compensation. The IRS   treats as compensation any amount properly shown in box 1 (Wages,   tips, other compensation) of Form W-2, Wage and Tax Statement,   provided that amount is reduced by any amount properly shown in box 11   (Nonqualified plans). Scholarship and fellowship payments are   compen-sation for IRA purposes only if shown in box 1 of Form   W-2. It a also includes commissions, self-employment income, and alimony an non-taxable combat pay. For most people it is what i in box 1 of the W-2. For the example in the question. If the sum of Box 1's equals $3,200 that is the maximum you can contribute to all your IRAs (regular and Roth). The funds can come from anywhere. It is not related to your net check. The money can be from savings, gifts, parents, grandparents... The IRS doesn't care about the source of the funds, only that you don't over contribute. Of course the calculation is more complex if the person is married, and if they have access to a retirement account.