Top 3 S&P 500 Index Funds to Buy in 2025

S&P 500 (^GSPC +0.11%) index funds are passive investments that allow investors to match the performance of the S&P 500, an index featuring the 500 largest publicly traded companies in the U.S. They're ideal for investors who want to earn returns in line with the broader market but don't want to own individual stocks. Read on to learn more about these popular funds.

All three are very low-cost ways to invest in the 500 companies comprising the S&P 500 index. 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. Vanguard has a relatively low minimum investment of $3,000.

Vanguard also offers an exchange-traded fund (ETF) focused on investing in the 500 companies that comprise the S&P 500 index. The Vanguard S&P 500 ETF (VOO +0.08%) has a low minimum investment of one share (around $590 as of mid-August 2025) and a low expense ratio of 0.03%. This index-fund-like product trades on a major stock exchange, allowing investors to buy and sell as they would a stock.

Each S&P 500 index fund has very closely replicated the index's performance:

Negligible differences exist between the performances of the S&P 500 and each of these three index funds that track it. The S&P 500 outperformed each fund slightly, as would be expected when accounting for each fund's expense ratio.

At the S&P 500's rate of return, a $10,000 investment made five years ago would have grown to $17,650 by mid-August 2025. For comparison, a $10,000 investment in the Fidelity 500 index fund would have grown to $17,630 over the same five-year period, with slight variations due to fees and tracking.

With any of these three funds, you can expect your investment to deliver a virtually identical performance to the S&P 500, minus fees. Given its lower expense ratio, Fidelity's S&P 500 index fund will likely continue to slightly outperform the funds from Schwab and Vanguard over the longer term.

You don't risk losing all your money if one company collapses, as you could with individual investments. However, you also don't have as much upside potential for the astronomical returns that can result from picking a single huge winner.

Index funds are passively managed, meaning you're not paying someone to actively pick and choose investments. Passively managed funds result in a lower expense ratio due to having lower investment management fees than actively managed funds.

Your money will track the market's performance

Historically, the S&P 500's annual returns have been in the range of 9% to 10%. In some years, the index will lose value. For example, during the Great Recession, the S&P 500 lost about half its value. Meanwhile, the index experienced a bear market starting in early 2022 and had declined by more than 20% from its peak by the fall.

However, the index rallied by 24% in 2023. On Nov. 11, 2024, the index crossed 6,000 for the first time. The index rose by another 23% in 2024. Despite a major sell-off in March and April, largely due to concerns about tariffs and higher-than-expected inflation, the S&P 500 was up about 10% year to date as of August 2025.

The S&P 500 index has a solid history of such rebounds. Over the long term, the index has always recovered. A 20-year investment has never resulted in a loss in the S&P 500's history.

You will keep more of your investment profits in your pocket

S&P 500 index funds are low-cost investments. While active managers are likely to match or even beat the market's performance over time, their fees eat away at your returns. Because they're passive investments with low fees, S&P 500 index funds deliver returns that mirror the index's returns over the long term.

You'll be investing in 500 of the most profitable companies in the U.S.

The corporations represented in the S&P 500 are subject to stringent listing criteria. To join the index, a company must have a $20.5 billion market capitalization, and the sum of its past four quarters' earnings must be positive.

Each company must also get approval from an index committee. The S&P 500's largest holdings include Apple (AAPL -1.40%), Nvidia (NVDA +1.98%), Microsoft (MSFT +0.55%), Amazon (AMZN -1.47%), and Meta (META +3.39%).

You can put your investment decisions on autopilot

The S&P 500 has a flawless track record of delivering profits over long holding periods, allowing you to invest without worrying as much about stock market fluctuations. You also don't have to research or follow individual companies.

You can simply budget a certain amount and automatically invest it on a regular schedule. This practice is known as dollar-cost averaging. Even if you pick individual stocks, S&P 500 funds are a good foundation for your investment portfolio since you're guaranteed the returns of the stock market.

Related investing topics

These leveraged products are intended to be day-trading instruments and have an inherent downside bias over the long term. In other words, a 2x-leveraged S&P 500 ETF will not return twice the index's performance over the long term.

Investing in S&P 500 index funds is one of the safest ways to build wealth over time. But leveraged ETFs -- even those tracking the S&P 500 -- are highly risky and don't belong in a long-term portfolio.