Investing in S&P 500 ETFs

Investors should also consider their long-term goals. Investing in stocks is one of the best ways to build wealth over time. However, investing solely in the S&P 500 may not be the best strategy for retirees in need of income. Incorporating other asset classes into the mix would be advisable.

On the other hand, younger investors with decades until they plan to tap into their investments may also want to invest outside of the S&P 500. For example, the S&P 500 is a large-cap stock index. That means it yields no exposure to smaller businesses, many of which are fast-growing and could be future leaders of the S&P 500.

Nevertheless, for investors looking for a quick way to get started in their investing journey, an S&P 500 ETF is a fantastic place to begin.

It's a common misconception that you need to buy individual stocks to create wealth in the stock market. While it's certainly possible to achieve excellent returns by doing so, you might be surprised at how well the stock market has performed over time.

Over periods of decades, the benchmark S&P 500 -- which is widely considered to be the best indicator of the overall stock market -- has delivered annualized total returns of about 10%. A return rate like this, sustained over a long period, can help you create a surprising amount of wealth.

That's where an S&P 500 ETF can be handy. There are several great ETFs that allow you to track the performance of this benchmark index with a bare minimum of expense.

The SPDR S&P 500 ETF from State Street Global Advisors was the first ETF to be listed in the U.S. The fund has been available since 1993. Paired with the S&P 500 index's popularity, this has made the SPDR S&P 500 ETF one of the largest exchange-traded fund products around, with $603 billion in investor funds under management as of mid-2025.

The SPDR S&P 500 ETF tracks the performance of the S&P 500 index, less the annual fee, and distributes dividends paid by the companies in the index. The ETF charges 0.0945% per year in annual fees. For every $1,000 invested, that works out to just under $0.95 per year subtracted from the fund's performance.

2. iShares Core S&P 500 ETF

The iShares Core S&P 500 ETF is another long-tenured U.S. ETF that invests in the stocks of the S&P 500 index. It offers an almost identical investing product to the SPDR offering, except that iShares' annual fee is even lower at just 0.03% per year.

The fund was launched in 2000 and had $585 billion in assets under management as of mid-2025. iShares is the ETF division of massive investment manager BlackRock (NYSE:BLK), which collectively manages more than $11.5 trillion in global assets.

3. Vanguard S&P 500 ETF

Like the previous two ETFs, the Vanguard S&P 500 ETF is a simple way to invest in the companies of the S&P 500 index. It also charges just 0.03% annually. The ETF version of this Vanguard fund has $608 billion in assets under management as of June 2025. The company also offers a mutual fund that tracks the S&P 500, and both types combine for a total of $1.3 trillion of investor assets.

Vanguard’s founder, Jack Bogle, invented the passive index fund in the 1970s, which helped revolutionize access to investments for everyday retail investors.

4. ProShares Short S&P500

Unlike the previous ETFs, the ProShares Short S&P500 fund is a way to bet against the S&P 500 index. An investor might seek to profit by betting against an investment, as some investors did during the bear market of 2022. It can also be used as a hedge if you think the market might be a little overvalued but aren't exactly ready to start selling your stocks.

The ProShares Short S&P500 aims to provide a return exactly the inverse of the S&P 500 index's daily return. So, if the S&P 500 is up 1% on a given day, the ProShares fund will be down 1% (before fees, which total 0.89% on an annualized basis).

The fund might have a place in the portfolios of investors looking to hedge against what they expect to be a downturn in the market. However, remember that due to the use of derivatives contracts and the compounding effect of returns, the ProShares fund is designed only to reflect daily inverse returns of the S&P 500, not to be a buy-and-hold fund over extended periods. Fund performance will deviate from the exact inverse performance of the S&P 500.

Also, while designed to be a hedge in a bear market, this ETF will decline severely in value during a bull market. Investors should note this particular risk and understand the fund's function as a shorter-term hedge.

5. Invesco S&P 500 Equal Weight ETF

One problem with the S&P 500 is that it's a weighted index, meaning that larger companies contribute more to its performance. These days, massive tech stocks like Nvidia (NASDAQ:NVDA) and Microsoft make up a disproportionate amount of the index's weight.

The Invesco S&P 500 Equal Weight ETF takes a different approach. It invests in the exact same 500 companies as other S&P 500 ETFs, but it invests an equal amount of money into each one. In other words, all 500 of the companies in the index get a 0.2% weighting in the fund -- no more, no less. This can be a good ETF to consider if you want a broad index fund but aren't comfortable with a large percentage of your performance dependent on just a handful of stocks.

Related investing topics