How to Buy S&P 500 Index Fund?
There’s a lot of investing jargon out there, and you’re wondering how to buy S&P 500 Index Fund? Don’t worry, we’ll go step-by-step on how to do that. Plus, we even provide a few suggestions depending on the brokerage you go with!
This post is about how to buy S&P 500 Index Fund.
Let’s dive into the top 5 ways on how to buy S&P 500 Index Fund.
1. Choose a Brokerage Account
This is just like choosing a bank to bank with! There are a lot of options out there, but it doesn’t have to be complicated! Fidelity, Vanguard, SoFi to name a few!
There are also brokerages that specialize in robo-advising like Betterment or Wealthfront. You also don’t have to choose just one! You can have multiple, similar to have you can have multiple bank accounts.
2. Deposit Funds
Once the account is set up, you’ll need to put money into this account. You should have the capability to link your bank account to your brokerage account so that it can be an easy transfer.
3. Watch Out for Costs and Fees
When you’re looking to make the purchase, be sure to watch out for expense ratios and trading fees. These can really eat into your gains.
Expense ratios are annual fees that index funds charge their shareholders. It’s usually displayed as a percentage, and the lower the %, the better. Fidelity famously has index funds that have zero expense ratios making it entirely free to invest in!
Trading fees are fees charged for buying or selling mutual funds. To minimize this, you might be able to find ETFs that trade completely commission-free!
4. Buy an Index Fund
There are plenty to choose from! And before you get analysis paralysis, there are a few favorites from various brokerages with relatively low expense ratios. You’ll see that there’s a version for (almost) every brokerage! Wherever you choose to open an account, you can buy that specific index fund.
Vanguard: VFAIX – 0.10%
Fidelity: FXAIX – 0.015%
Charles Schwab: SWPPX – 0.02%
SoFi: SFY – 0.05% (net)
5. Automate!
A sure way to continue investing is to set up automatic investments to the index fund you chose above. This is referred to as dollar-cost averaging, which means investors buy index funds regularly; therefore, reducing the impact of market volatility.
To reiterate, the top 5 ways on how to buy S&P 500 Index Fund are:
- Choose a Brokerage Account
- Deposit Funds
- Watch Out for Costs and Fees
- Buy an Index Fund
- Automate!
There you have it! Interested in learning more about investing? Check this post out for the best investments for Roth IRA.
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