Here's the Smartest Way to Invest in the S&P 500 in January

• The S&P 500 scale is the de facto banal marketplace gauge utilized by Wall Street.

• If you privation to put successful the index, it's champion to opt for the astir cost-effective option.

• However, a 2nd enactment whitethorn connection a information valve today, albeit astatine a higher cost.

• 10 stocks we similar amended than Vanguard S&P 500 ETF ›

The percent alteration successful the S&P 500 scale is what you'll apt beryllium told if you inquire idiosyncratic however the marketplace is doing. Currently, the big-picture reply is that the marketplace is performing well, closing retired 2025 with a astir 16% summation for the year. In fact, the S&P 500 is trading adjacent its all-time highs.

Here are 2 precise antithetic ways you tin put successful the scale today. One is each astir keeping your costs low. The different is astir shifting your portfolio distant from the exertion assemblage that may, perhaps, beryllium successful a bubble.

The S&P 500 scale isn't really designed to way the market. Its intent is to beryllium typical of the broader U.S. economy. That could beryllium arguing implicit nuances, but it is important to see erstwhile examining however the scale is created.

A committee selects astir 500 stocks that are ample and economically important. The extremity isn't to simply prime stocks that execute strongly. In fact, by the precise quality of the goal, the committee is apt to extremity up selecting stocks from poorly performing sectors of the economy. There's a precise divers premix of companies by design.

The stocks are weighted by marketplace cap. Thus, the largest companies person the biggest interaction connected the index's performance. That makes logical consciousness since that's fundamentally however the system works. However, that presents a imaginable problem, since marketplace headdress weighting often leads to the scale being overweight successful the top-performing sectors (more connected this below).

Still, astatine the extremity of the day, each concern merchandise that tracks the S&P 500 is, basically, doing the aforesaid thing. You should look for the 1 that costs you the slightest to own. For most, that's apt to beryllium Vanguard S&P 500 Index ETF (NYSEMKT: VOO) and its ultra-low 0.03% disbursal ratio. That's arsenic adjacent to escaped arsenic astir investors are apt to find connected Wall Street.

The superior contented with buying the S&P 500 scale presently is that it is heavy weighted successful the exertion sector, which accounts for astir 35% of the index. That's a immense concern successful conscionable 1 sector, driven by the marketplace headdress weighting attack being used. What happens if tech stocks vessel successful 2026? The reply is that the S&P 500 volition consciousness the symptom rather acutely.