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Investing in the S&P 500 in the year 2025: Exploring Index Funds and Exchange-Traded Funds (ETFs) as viable investment options

The S&P 500 is a market index that includes approximately 500 publicly-traded companies. One can purchase individual stocks from these companies, or invest in an S&P 500 index fund or exchange-traded fund (ETF).

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Investing in the S&P 500 through index funds and Exchange Traded Funds for the year 2025
Investing in the S&P 500 through index funds and Exchange Traded Funds for the year 2025

Investing in the S&P 500 in the year 2025: Exploring Index Funds and Exchange-Traded Funds (ETFs) as viable investment options

Top Low-Cost S&P 500 Index Funds and ETFs for Individual Investors

Investing in the S&P 500 for the long term can be a wise decision, especially if you have a time horizon of 20 or 30 years until you need the money. Retirement accounts often offer a variety of S&P 500 index funds and ETFs.

Here are some of the lowest-fee options available for individual investors as of 2025:

Mutual Funds (Index Funds)

  1. Schwab S&P 500 Index Fund (SWPPX): With an expense ratio of 0.02% and no investment minimum, this fund is very low cost and highly rated.
  2. Fidelity 500 Index Fund (FXAIX): This fund boasts an expense ratio of 0.015%, no investment minimum, a long track record, and strong 10-year returns.
  3. Fidelity Zero Large Cap Index (FNILX): This unique fund offers a zero-expense-ratio option, making it perhaps the cheapest index fund possible.
  4. Vanguard 500 Index Fund Admiral Shares (VFIAX): Although it has a slightly higher expense ratio of about 0.04%, this fund is historically significant.

Exchange-Traded Funds (ETFs)

  1. SPDR Portfolio S&P 500 ETF (SPLG): With an expense ratio of 0.02%, this ETF is the cheapest option tracking the S&P 500, offering competitive returns.
  2. Vanguard S&P 500 ETF (VOO): This ETF has an expense ratio of 0.03% and is very popular, with strong tracking and liquidity.
  3. iShares Core S&P 500 ETF (IVV): Another leading low-cost ETF option, IVV also has an expense ratio of 0.03%.
  4. SPDR S&P 500 ETF Trust (SPY): Although this ETF has a slightly higher cost of 0.095%, it is a long-established ETF with high liquidity.

When comparing these options, it's essential to consider your investment goals, risk tolerance, and the minimum investment requirements. Performance among these options is broadly similar, with 10-year returns around 12-15% annually depending on timing.

Remember that the S&P 500 consists of only large-cap U.S. stocks, and a well-diversified portfolio should include mid- and small-cap companies, international companies, and other asset classes.

Investing in fractional shares of stocks within the S&P 500 is possible through certain brokers. When deciding between an S&P 500 index fund and ETF, it's important to compare the two to determine which one is right for you.

[1] NerdWallet, "Schwab S&P 500 Index Fund (SWPPX)", 2022. [Online]. Available: https://www.nerdwallet.com/investing/mutual-funds/schwab-sp-500-index-fund-swppx

[2] NerdWallet, "Fidelity 500 Index Fund (FXAIX)", 2022. [Online]. Available: https://www.nerdwallet.com/investing/mutual-funds/fidelity-500-index-fund-fxaix

[3] NerdWallet, "SPDR Portfolio S&P 500 ETF (SPLG)", 2022. [Online]. Available: https://www.nerdwallet.com/investing/etfs/spdr-portfolio-sp-500-etf-splg

[4] NerdWallet, "Vanguard S&P 500 ETF (VOO)", 2022. [Online]. Available: https://www.nerdwallet.com/investing/etfs/vanguard-sp-500-etf-voo

[5] NerdWallet, "iShares Core S&P 500 ETF (IVV)", 2022. [Online]. Available: https://www.nerdwallet.com/investing/etfs/ishares-core-sp-500-etf-ivv

  1. Investing in the S&P 500, particularly through low-cost index funds and ETFs like Schwab S&P 500 Index Fund (SWPPX), Fidelity 500 Index Fund (FXAIX), or SPDR Portfolio S&P 500 ETF (SPLG), can be beneficial for individual investors planning for retirement.
  2. Personal credit ratings and investment goals should factor into the choice between the Schwab S&P 500 Index Fund and other low-cost S&P 500 index funds or ETFs.
  3. Education on the stock market and investing, such as understanding the differences between mutual funds like Fidelity Zero Large Cap Index (FNILX) and ETFs like Vanguard S&P 500 ETF (VOO), is crucial for making informed decisions.
  4. Businesses and financial advisors may recommend considering limitations, such as minimum investment requirements, when choosing between the S&P 500 index fund options.
  5. It's essential to expand a diversified portfolio beyond U.S. large-cap stocks found in the S&P 500 to include mid- and small-cap companies, international companies, and other asset classes.
  6. When assessing long-term investment performance, consider looking at the 10-year returns of various S&P 500 index funds and ETFs such as iShares Core S&P 500 ETF (IVV) and SPDR S&P 500 ETF Trust (SPY) for insights.

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