How do I invest in the S&P 500 Index?

There are three ways to invest in the S&P 500 index: Buy shares of all 500 individual stocks. Buy a mutual fund that tracks the S&P 500 index. Buy an exchange-traded fund (ETF) that tracks the S&P 500 index. Investing in each S&P 500 stock individually isn't a very practical approach.

What is the average annual return of the index?

There are a lot of different numbers cited for the average annual return of the index. And while the average return is easy to compute, it’s important to define what you’re computing. The average annual return since 1928 is 7.7%. But that overstates the compound annual growth rate of the index, which was just 5.8%.

What is the average annual return (AAR) of a mutual fund?

The average annual return (AAR) is the percentage showing the return of a mutual fund in a given period. In other words, it measures a fund's long-term performance, so it's a vital tool for investors considering a mutual fund investment. The index acts as a benchmark of the performance of the U.S. stock market overall, dating back to the 1920s.