If you typed "index 500" into a search bar, you are almost certainly looking for the S&P 500. It is the most-watched stock index in the world, and a single fund that tracks it can give you a piece of 500 of the largest companies in the United States.
This guide explains exactly what the index 500 is, what it has returned over time, what it costs to own through a fund, and the honest risks. All figures are current as of June 2026.
What "Index 500" Actually Means
The term "index 500" is shorthand for the Standard & Poor's 500, almost always written as the S&P 500. It is a stock market index, not a fund you can buy directly. An index is just a list that measures the performance of a group of stocks.
The S&P 500 tracks about 500 of the largest publicly traded U.S. companies, chosen by a committee at S&P Dow Jones Indices. Together these companies make up roughly 80% of the total value of the U.S. stock market.
Because one number sums up so much of the market, news anchors often say "the market was up today" when they really mean the S&P 500 moved.
What Companies Are in the Index 500
The index holds household names across every major sector: technology, healthcare, banks, retailers, energy, and more. Think large companies in software, consumer goods, and finance.
It is weighted by market capitalization. That means bigger companies count more. The handful of largest companies, mostly big technology names, can make up a sizable share of the whole index, so the index 500 is less evenly spread than the "500" in its name suggests.
The list is not frozen. The committee adds and removes companies a few times a year as businesses grow, shrink, or get acquired.
How the Index 500 Has Performed
History is not a promise, but it gives useful context.
Since the modern S&P 500 launched in 1957, it has returned about 10% per year on average, with dividends reinvested, through early 2026. Different data sources put the long-run figure between roughly 10.3% and 10.5% depending on the exact window.
The last 10 years have been unusually strong, with an average annual return of about 15.6% through early 2026. That stretch is above the long-term norm and should not be treated as the expected future return.
Averages also hide big swings. The index has had single years down more than 30% and years up more than 30%. The long-run average only shows up if you stay invested through the rough patches.
How You Actually Buy the Index 500
You cannot buy the index itself. You buy a fund that copies it, either an index mutual fund or an exchange-traded fund (ETF). Both hold the same 500 stocks and aim to match the index, minus a small fee.
That fee is the expense ratio. As of June 2026, S&P 500 mutual funds charge as little as 0.015% to about 0.04% a year, and S&P 500 ETFs commonly run between 0.03% and 0.15%. On a $10,000 balance, a 0.03% ratio costs about $3 a year.
The difference between an ETF and a mutual fund is mostly about how you trade. ETFs trade like stocks throughout the day. Index mutual funds price once after the market closes. For a long-term holder, the cost difference between the cheapest options is tiny.
The Honest Pros and Cons
The pros are real. You get instant diversification across 500 companies, very low fees, and a hands-off approach that has historically beaten most actively managed funds over long periods.
The cons matter too. The index is concentrated at the top in a few large companies, so it is not as diversified as the headline number implies. It holds only large U.S. companies, so it leaves out small companies and the rest of the world. And it can drop sharply in a downturn, with no safety net.
All investing carries risk, including the possible loss of principal. Past performance does not guarantee future results.
Where to Open an Account
To own an index 500 fund, you need a brokerage account. Many app-based brokers let you start with a small amount and charge no commission to buy ETFs. If you want a step-by-step walkthrough, see how to buy the S&P 500 through funds and ETFs.
Robinhood is a commission-free platform where you can buy S&P index ETF options that track the 500, often with the choice to buy fractional shares so you can invest a fixed dollar amount instead of a whole share. Compare its account types, fees, and available funds before you decide.
Robinhood
Robinhood
Robinhood is a trading platform that brings stocks, ETFs, options, futures, prediction markets, crypto, and retirement accounts together in one app.
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$0 commission on stocks, ETFs, and options.
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Best perks (high APY, lower margin rates) require Gold subscription ($5/month)
Public is another commission-free option for buying S&P 500 ETFs, also with fractional shares so you can put a set dollar amount to work. As with any broker, look at the account types, fees, and fund lineup before committing.
This article is educational and not investment advice. Consider your own goals, timeline, and risk tolerance, and talk to a licensed financial professional before investing.
Public
Public
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Standout feature
A 5%+ yield Bond Account paired with 3.3% APY on cash — Public is one of the only consumer apps where idle and conservative money is treated as seriously as the equity portfolio.
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• Invest in stocks, bonds, crypto & more• Earn 3.3% APY* on your cash with no fees• 1% match when you transfer your portfolio• Lock in a 5%+ yield with a Bond Account
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Customer support is in-app and email only, no phone
What Users Commonly Report
Long-term index investors often describe the same lessons. Many say the low fees and "set it and forget it" simplicity are the biggest draws, and that buying steadily over time felt easier than picking individual stocks.
A common complaint is the emotional difficulty of watching the balance fall during downturns, when the urge to sell is strongest. Some are also surprised to learn how much of the index sits in just a few large technology companies. Several note that returns over short periods can look very different from the long-run average.
Frequently Asked Questions
Is the index 500 the same as the S&P 500?
Yes. "Index 500" is informal shorthand for the S&P 500, the index that tracks about 500 large U.S. companies. There is no separate official index called the "index 500."
How much money do I need to start?
It depends on the platform and fund. Many app-based brokers let you buy fractional shares of an S&P 500 ETF for as little as $1, while some traditional index mutual funds may set a minimum. Check the specific fund and broker before you start.
Is an S&P 500 index fund a safe investment?
It is diversified across 500 companies, which lowers the risk tied to any single stock, but it is not low risk overall. The index can fall sharply in a market downturn, and you can lose money, so it is best suited to long time horizons.
What is the difference between an index fund and an ETF?
Both can track the S&P 500. An index fund prices once a day after the market closes, while an ETF trades throughout the day like a stock. For long-term investors holding low-cost versions, the practical difference is small.
