The Vanguard S&P 500 Index Fund was the first index-tracking mutual fund when it was launched in 1976. The fund owns the same stocks in the same proportion as the S&P 500 stock index. The stocks in the index represent 75 percent of the value of the U.S. stock market, and the index closely tracks the overall value of the U.S. stock markets. Vanguard offers the S&P 500 Index fund in two flavors — a mutual fund and an exchange-traded fund (ETF).
S&P 500 Mutual FundStep 1
Complete the online new account application on the Vanguard.com website. You can open an individual, joint or retirement plan type of account through the online process.Step 2
Select the Vanguard fund in which you want to invest and the amount of money you want to initially invest. In this case, the fund is the S&P; 500 Index Fund. The minimum initial investment is $3,000 for all account types except for education savings accounts, which have a $2,000 minimum.Step 3
Fund your mutual fund purchase. You can set up an electronic transfer from your bank account to Vanguard — handy if you plan on future investments with Vanguard — mail a check or use a wire transfer to send the money.
S&P 500 ETFStep 1
Use a discount stock brokerage account to buy shares of the ETF version of the Vanguard S&P; 500 Index Fund. ETF shares trade on the stock exchanges and are bought and sold in the same manner as stock shares.Step 2
Look up the current share price for the Vanguard S&P; 500 ETF using the fund's stock symbol — VOO. The share price can be found using the quotes system of your online brokerage account access.Step 3
Buy shares of VOO using the stock trade screen of your brokerage account. You place the order by entering the number of shares you want to buy. The final cost will be the share price at which the order was filled multiplied by the number of shares, plus a brokerage commission.
- The mutual fund option for the Vanguard S&P; 500 Index Fund allows you to make additions to your account in amounts of $100 or more and have dividends and capital gains automatically reinvested into more shares.
- The ETF shares of the Vanguard S&P; 500 fund can be traded during market hours to profit from short-term swings in the S&P; 500 stock index.
- You typically pay a stock commission to buy and sell shares of an ETF. With a discount brokerage account from Vanguard, you can buy or trade the ETF shares without paying any commissions.