Did you know that the S&P 500 includes giants like Apple, Tesla, and Microsoft? This index acts as a thermometer for the US economy and is considered by many as one of the smartest ways to invest.

Why? Because it gives you access to the 500 largest companies in the United States with a single investment. Here, we’ll explain step-by-step how it works and how you can benefit, whether you’re a beginner or simply curious about investing. Let’s dive in!

What is the S&P 500?

The S&P 500 (Standard & Poor’s 500) is an index that tracks the performance of the 500 largest companies in the US. Learn more here.

Why is it so important?

These companies come from key sectors like technology, healthcare, finance, and consumer goods, and they have a global presence. Names like Coca-Cola, Walmart, Amazon, Nvidia, and Meta are included.

Moreover, if a company doesn’t meet the index’s standards, it’s replaced by another, ensuring that the largest and most influential companies are always represented.

Diversification

Investing in the S&P 500 is like buying a package containing shares of 500 companies. This way, you don’t have to worry about betting everything on a single company.

Advantages of Investing in the S&P 500

Investing in this index offers a range of benefits that make it ideal for both beginners and experts. Here are the key ones:

Reliable track record:

The S&P 500 has an average annual return of 10% over the long term. This means your money could double in just over 7 years thanks to compound interest and the Rule of 72.

For instance, with such returns, if you invest $100 monthly, after 20 years, you’d have over $228,033 (note: past performance doesn’t guarantee future results).

Lower risks, greater stability:

If a company faces challenges, the index isn’t significantly impacted. For example, in 2022, Meta (formerly Facebook) dropped by -64.2%, while the S&P 500 only fell by -18.1%. If one company struggles, the other 499 companies in the index still provide support.

It’s accessible:

You can start investing with little money, especially if you use ETFs (funds that replicate the S&P 500). Hapi, for instance, lets you buy fractional shares, so you can invest even if you don’t have thousands of dollars. The process is simple and quick.

Why might the S&P 500 be a smart choice?

Instead of trying to predict which stock will be the next big winner, the S&P 500 includes the top companies in the US. Here’s why it’s a favorite among investors:

Easy and cost-effective investing

The index automatically selects the best companies in the market. This saves you hours of research and the challenges of picking individual stocks. Plus, investing in these ETFs costs at least 10 times less than a mutual fund, which usually charges more than 1%. Impressive, right?

Adapts to changes

Forty years ago, energy companies dominated the index. Today, tech companies like Tesla, Microsoft, and Apple are the stars. Your investment evolves with market trends because the S&P 500 constantly updates.

A proven tool

92% of active mutual funds fail to outperform the S&P 500 in the long term. Why take a risk when you can rely on a proven strategy?

How to invest in the S&P 500 with Hapi?

Investing in this index is easier than you think, especially with Hapi. Here’s how to get started:

Download the Hapi app

Find it on Google Play or the App Store.

Choose an ETF

Look for ETFs like SPY (State Street), VOO (Vanguard), or IVV (BlackRock). These funds replicate the performance of the S&P 500 and have low fees (around 0.03%).

• Remember, this is not investment advice!

Start with a small amount

Thanks to Hapi’s fractional shares, you don’t need to buy a full share. You can begin with whatever amount you have available.

Invest consistently

Use a strategy like Dollar-Cost Averaging (DCA): invest the same amount every month, regardless of market fluctuations.

This helps reduce the impact of market volatility and is a strategy recommended by Warren Buffett, one of the greatest investors of all time.

Key facts you need to know

When it comes to the S&P 500, here are some facts to help you understand why it’s so popular:

• Impressive returns: Since its inception, the index has weathered crises like the 1999 dot-com bubble, the 2008 Financial Crisis, and the COVID-19 pandemic, consistently showing long-term growth.
• Leading sectors: Technology, healthcare, and finance dominate the index, but other sectors like consumer discretionary also play a significant role.
• Notable companies: Currently, Apple, Amazon, Nvidia, and Microsoft are among the top companies in the S&P 500.

Is it the right time to invest?

It’s always a good time to start, but the key is to think long term. The secret is to invest regularly without being swayed by news or market changes.

Remember, there may be years with higher returns than others. For instance, the index had a return of 26.3% in 2023, compared to -18.1% in 2022. However, the average long-term return (over 20 years) is above 10% annually.

Conclusion

The S&P 500 is more than just an index; it’s a gateway for all investors to access the world’s most powerful market. Its stability, diversification, and historical performance make it one of the best options for those looking to grow their wealth.

With Hapi, you can take the first step and start investing in the US’s most popular index. Make it simple, accessible, and hassle-free. Download the app and start today!