You can’t buy an index directly—it’s not a security you can own. Instead, you buy shares of an index fund or an exchange-traded fund (ETF) that tracks that index. These funds bundle the same stocks in the same proportions as the index, letting you invest in hundreds or thousands of companies with a single purchase.
Here’s the simplest way to think about it: buying one share of an S&P 500 ETF gives you a tiny stake in all 500 companies in the index—from Apple to Walmart—without having to buy each stock individually.
Quick Fix Summary: You can’t buy an index directly, but you can buy an index fund or ETF that tracks it. Open a brokerage account (like Fidelity or Vanguard), search for the fund or ETF symbol (e.g., VOO for Vanguard’s S&P 500 ETF), and place a buy order. No prior investing experience is required.
What exactly happens when you buy an index?
An index is just a mathematical construct—a list of stocks with a specific weighting (say, by market size or price). It doesn’t exist as a product you can own. Instead, index funds and ETFs are created to mirror the index’s performance. These funds are issued by financial companies like Vanguard, BlackRock (iShares), or State Street (SPDR).
There are two main types of index funds:
- Mutual funds: You can only buy or sell them once per day after the market closes. They’re priced once, at the end of the trading day.
- ETFs: Trade like stocks, so you can buy or sell them anytime during market hours at the current price.
For example, the S&P 500 index returned an average of about 10% annually from 1957 through 2025, though returns vary year to year (S&P Dow Jones Indices, 2026).
Here’s how to actually buy an index fund or ETF—step by step
- Pick a brokerage account. If you don’t have one yet, open a taxable brokerage account or a retirement account like an IRA. Some popular options include:
- Fidelity – $0 minimum for most index ETFs
- Vanguard – $0 minimum for ETFs
- Charles Schwab – $0 minimum for ETFs
- Move some cash into the account. Transfer at least $100–$500 to start, depending on the fund’s minimum. ETFs typically have no minimums; mutual funds may require $3,000+.
- Find the right fund or ETF.
- For the S&P 500, look for symbols like:
Fund Type Symbol Provider Expense Ratio (2026) ETF VOO Vanguard 0.03% ETF SPY SPDR (State Street) 0.0945% Mutual Fund VFIAX Vanguard 0.04%
- For the S&P 500, look for symbols like:
- Place your order. In your brokerage app or website:
- Go to Trade > Stocks/ETFs or Trade > Mutual Funds
- Enter the fund’s ticker symbol (e.g., VOO)
- Choose “Buy” and enter the dollar amount (e.g., $500) or number of shares
- Select Market Order (buy immediately at current price) or Limit Order (set a max price)
- Confirm the trade
- Keep an eye on your investment. Most brokerages show your holdings under Portfolio or Positions. You’ll see price changes in real time for ETFs, or once daily for mutual funds.
When your order doesn’t go through
If your order fails to execute, don’t panic. Here’s what to check:
- Confirm your cash balance. Make sure you have enough to cover the purchase plus any fees (most major brokers charge $0 per trade).
- Double-check the ticker symbol. Typos happen. For example, VOO (Vanguard S&P 500 ETF) isn’t the same as VFIAX (Vanguard’s mutual fund version).
- Try a different fund if needed. If one index fund isn’t available, look for alternatives:
- Total U.S. Market: VTI (Vanguard Total Stock Market ETF)
- Total International: VXUS (Vanguard Total International Stock ETF)
- Bond Index: BND (Vanguard Total Bond Market ETF)
Still stuck? Call your broker’s customer service. They can walk you through the process or place the trade for you over the phone.
How to avoid the most common mistakes when buying index funds
Buying index funds is straightforward, but small errors can add up over time.
- Don’t chase past returns. The S&P 500 has averaged ~10% annually, but past performance does not guarantee future results. Avoid switching funds based on recent hot streaks (U.S. SEC, 2025).
- Pay attention to the expense ratio. Even a 0.10% difference adds up. For example, $10,000 invested for 20 years at 7% return:
- With 0.03% fees: ~$38,697
- With 0.30% fees: ~$36,786
- That’s $1,911 lost to fees—enough for a nice dinner every year.
- Don’t trade too often. Index funds are built for long-term holding. Selling after a dip locks in losses. Instead, contribute regularly—even $100/month—and let compounding do the heavy lifting.
- Use tax-advantaged accounts first. If you have a 401(k) or IRA, max those out before opening a taxable brokerage account. For example, in 2026, you can contribute up to $23,000 to a 401(k) or $7,000 to an IRA (if under 50) (IRS, 2025).
