You cannot buy the S&P 500 itself, but you can invest in it by buying shares of a fund that holds all 500 stocks in the same proportions as the index. For most people in the United States, that means opening a brokerage account and purchasing an exchange-traded fund or an index mutual fund that tracks the S&P 500, sometimes for as little as one dollar. The practical question is which fund to pick and whether any of the usual barriers, such as identity verification, residency, or a fund minimum, apply to you.
What You’re Actually Buying
The S&P 500 is an index. It is a number that S&P Dow Jones Indices calculates every second of the trading day based on the market value of roughly 500 large U.S. companies.1S&P Global. S&P 500 – S&P Dow Jones Indices Nobody sells the number.
What you buy is a share of a fund that physically owns the same 500 stocks in roughly the same weights. Its price moves with the index. These funds are regulated under the Investment Company Act of 1940, which sets the rules for how they pool investor money, hold assets, and report to shareholders.2Office of the Law Revision Counsel. 15 USC Chapter 2D, Subchapter I – Investment Companies This indirect ownership is how essentially every retail and institutional investor gets S&P 500 exposure.
The Funds and What They Cost
Two vehicles do the job: exchange-traded funds and index mutual funds. ETFs trade on an exchange like a stock, so you can buy a single share at market price. Mutual funds price once a day and can impose minimums.
The three largest S&P 500 ETFs are cheap to own:
- Vanguard S&P 500 ETF (VOO): 0.03% annual expense ratio
- iShares Core S&P 500 ETF (IVV): 0.03% annual expense ratio
- SPDR S&P 500 ETF Trust (SPY): 0.095% annual expense ratio
On the mutual fund side, Fidelity’s 500 Index Fund (FXAIX) charges 0.015% and has no minimum investment.3Fidelity Investments. No Minimum Investment Mutual Funds Vanguard’s 500 Index Admiral Shares (VFIAX) require $3,000 to start.4Vanguard. Vanguard Mutual Fund Fees and Minimum Investment If a full ETF share price is more than you want to commit, most major brokerages now sell fractional shares. Fidelity, for example, allows dollar-based ETF investing starting at $1.5Fidelity. Fractional Shares – Invest in Stock Slices
If a mutual fund minimum blocks you, the ETF version of the same index will almost always be within reach.
Opening a Brokerage Account
Before you can buy anything, you need a brokerage account, and opening one triggers identity verification. Under the USA PATRIOT Act, every financial institution must run a Customer Identification Program before opening an account.6Financial Crimes Enforcement Network. USA PATRIOT Act At a minimum, the brokerage collects your name, date of birth, address, and a taxpayer identification number, such as a Social Security Number or Individual Taxpayer Identification Number.7FFIEC BSA/AML Manual. Assessing Compliance with BSA Regulatory Requirements – Customer Identification Program Without verifiable documentation, the account gets rejected or frozen. There is no anonymous route in. Most platforms will also ask you to link a bank account so they can move money and verify its source.
If You’re Under 18
Minors cannot open their own brokerage accounts. FINRA rules require broker-dealers to record whether a customer is of legal age before opening an account.8FINRA. FINRA Rule 4512 – Customer Account Information An adult can open a custodial account for you under the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act. Control transfers to you when you reach your state’s age of majority, which is 18 or 21 in most states, and up to 25 in a handful.
If You Live Outside the U.S. or You’re an Expat
Residency can knock out the most popular U.S. funds even if you otherwise qualify.
European Union Residents
The EU’s Packaged Retail and Insurance-based Investment Products regulation requires fund issuers to produce a Key Information Document before selling to retail investors.9European Commission. Key Information Documents for Packaged Retail and Insurance-Based Investment Products Most U.S. fund companies do not produce that document, so ETFs like SPY and VOO are unavailable to European retail buyers. The workaround is a UCITS-compliant fund domiciled in Europe that tracks the same 500 companies, with its own fee schedule, tax treatment, and currency exposure.
U.S. Citizens Living Abroad
The rule cuts the other way for Americans overseas. If you buy a local fund, including a European UCITS fund, the IRS will likely classify it as a Passive Foreign Investment Company. Gains on PFIC holdings are taxed as ordinary income at the highest marginal rate, spread across your entire holding period, with an interest charge added for the deferred tax years.10Office of the Law Revision Counsel. 26 USC 1291 – Interest on Tax Deferral Every PFIC holding also requires a separate Form 8621 filing each year.11Internal Revenue Service. Instructions for Form 8621 U.S. expats are usually better off using a U.S. brokerage and U.S.-domiciled funds, though finding a brokerage willing to serve overseas clients can take some searching.
Taxes on Your Returns
Nothing in the tax code prevents you from owning an S&P 500 fund, but three kinds of taxable events shape your net return: selling shares for a gain, receiving dividends, and running afoul of the wash sale rule.
Capital Gains
Sell fund shares you’ve held more than a year and the profit is taxed at long-term capital gains rates. For 2026, those rates are 0%, 15%, or 20% depending on taxable income. A single filer pays 0% on long-term gains up to $49,450 in taxable income, 15% up to $545,500, and 20% above that. Married couples filing jointly reach the 15% bracket at $98,900 and the 20% bracket at $613,700.12Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates Shares held a year or less are taxed as ordinary income, which can run as high as 37%.
Higher earners pay an additional 3.8% Net Investment Income Tax when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly.13Internal Revenue Service. Topic No. 559, Net Investment Income Tax That puts the effective top federal rate on long-term gains at 23.8%. State income tax can add anywhere from nothing to more than 13% on top.
Dividends
S&P 500 funds pay quarterly dividends from the underlying stocks. Most qualify as “qualified dividends,” taxed at the same long-term capital gains rates rather than as ordinary income. To qualify, you generally need to hold the shares for at least 61 days around the ex-dividend date. Dividends you reinvest automatically are still taxable in the year you receive them, unless the fund sits inside a tax-advantaged account.
The Wash Sale Rule
Sell a fund at a loss and buy back a “substantially identical” fund within 30 days before or after the sale, and the IRS disallows the loss under the wash sale rule.14Office of the Law Revision Counsel. 26 USC 1091 – Loss from Wash Sales of Stock or Securities The IRS has never defined “substantially identical” precisely. Swapping one S&P 500 ETF for another that tracks the same index is risky ground. A safer approach for tax-loss harvesting is to move into a fund tracking a different but similar index, like a total market or large-cap fund, and wait out the 30-day window.
Tax-Advantaged Accounts
Most of these headaches go away inside a retirement account. In a traditional IRA or 401(k), gains and dividends grow tax-deferred until you withdraw. In a Roth IRA or Roth 401(k), qualified withdrawals come out tax-free. If your employer’s plan offers an S&P 500 index fund, that is often the most tax-efficient place to hold it, and the contribution limits become the real constraint rather than any fund minimum.