How to invest in the S&P 500?

How to invest in the S&P 500?

There are several ways for Quebec investors to invest in the S&P 500 index.

The S&P 500 is a stock index that tracks the performance of the 500 largest publicly traded US companies.

So you can’t invest directly in the S&P 500, but you can buy shares of the companies that make it up, or you can buy an index fund, such as a mutual fund or stock exchange, that tracks the overall performance of the index. .

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What is the S&P 500 Index?

The S&P 500 Index or Standard & Poor’s 500 Index is a stock market index of the 500 largest companies in the United States.

In fact, the index contains slightly more than 500 companies, and it is not necessarily the largest 500 companies. Indeed, companies must meet strict requirements to be included in the index.

Because of the diversity of the companies that make it up, the S&P 500 index is often considered a barometer of the American economy. Many US-based portfolios benchmark themselves against the S&P 500 to outperform the index.

Apple, Microsoft, Amazon, Alphabet (Google), Tesla, Berkshire Hathaway, Nvidia, Johnson & Johnson, Meta Platforms, Visa, etc. as you can find many of the world’s largest companies in the S&P 500 Index. .

The most popular S&P 500 ETF is SPY (SPDR S&P 500 ETF Trust). However, this fund trades in USD, so you need to convert before buying.

The Benefits of Investing in an S&P 500 Index Fund

The advantage of combining several companies in one index is that it is very easy to invest in all these companies at the same time. If you want to invest in the S&P 500, you can of course buy shares of each of the companies that make it up. This means 500 individual transactions.

500 individual transactions.

That means a lot of clicks or phone calls – and it can mean conversations with your very confused stockbroker or financial advisor, who tells you the S&P. Here’s an easier way to invest in the 500: simply by investing in the S&P 500 index fund. In a single transaction, you can invest in all 500 companies at once.

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How to invest in the S&P 500

  1. choose between ETFs and mutual fund. You can invest in index funds through ETFs or mutual funds. ETFs have no minimum holding period, minimum purchase amount and low MER fees.
  2. Open a trading account. To invest in the S&P 500, you must open a trading account with a broker or platform. Be sure to consider the fees for buying and selling mutual funds or ETFs based on how you plan to invest in the S&P 500.
  3. Deposit funds. To start trading, you need to deposit funds into your account. Some brokers may charge you an escrow fee or you may have to pay an exchange fee to convert your Canadian dollars into US dollars.
  4. Find an S&P 500 index fund to invest in. Some index funds track the performance of all S&P 500 stocks, while others track only a certain number of stocks or focus more on small annual stocks to invest in an index fund.
  5. Buy it ETFs or mutual fund. Once your money is invested, you can buy the S&P 500 index fund. You will usually have to pay a fee.

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What are the best Canadian S&P 500 ETFs to buy?

With that said, let’s move on to some of the best S&P 500 ETFs Canada todayi.

  • Vanguard S&P 500 Index ETF (VFV)
  • BMO S&P 500 Index ETF (ZSP)
  • Hedged to the Vanguard S&P 500 CAD ETF (VSP).
  • Horizons S&P 500 Index ETF (HXS & HXS.U)
  • iShares Core S&P 500 Index ETF (XUS)

Warning! Do your research and consult an expert before investing. This is not investment advice. LesFinances.ca is not a financial advisor.

Is It a Good Time to Invest in the S&P 500?

Is It the Right Time to Invest in the S&P 500 Index?

Since its inception, the S&P 500 has averaged an annual compound return of about 8% to 9%. Since 2009, the index has been profitable every year until 2021, except for 2018.

However, the S&P 500 ended below 4,000 on Monday, May 9, for the first time since late March 2021, as inflation, rising interest rates and economic instability worried investors.

Remember that the S&P 500 tracks large US companies, so if the overall US (and global) economy goes down, so will the indices that track the market.

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The result

S&P 500 ETFs are a great choice for investors new to the markets because they provide exposure to the largest public companies in the index without overexposure to one sector. They are also very useful for sophisticated investors who can use ETFs as hedges against their F&O positions.

The S&P 500 is one of the world’s leading indices, giving you exposure to multi-billion dollar giants like Apple, Coca-Cola and Microsoft, diversifying your investments and significantly reducing your risk.


Investing in ETFs that track the S&P 500 Index? Share your answer in the comments below.

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