Summary: A savvy way to dip your toes into the world of stocks is to invest in the SPDR S&P 500 ETF Trust (NYSE Arca: SPY). This exchange-traded fund (ETF) tracks the performance of the S&P 500 index, offering investors exposure to a diversified portfolio of some of the largest and most well-established companies in the United States. The most convenient way to buy SPY stock is through a reputable online broker eToro.
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What is the SPY ETF?
The SPDR S&P 500 ETF Trust is one of the oldest and most widely traded ETFs in the world. It was created in 1993 and is managed by State Street Global Advisors. SPY aims to replicate the performance of the S&P 500 index, which is composed of 500 of the largest publicly traded companies in the United States, spanning various sectors such as technology, healthcare, finance, and consumer goods.
Investing in SPY offers several benefits, including diversification, low expense ratio, and liquidity. Furthermore, by owning shares of SPY, investors gain exposure to a broad range of companies without having to individually select and purchase each stock.
What are the top 10 holdings in SPY?
As of April 5, 2024, the SPY ETF’s top 10 holdings collectively account for 32.07% of its total assets. These holdings are as follows:
| Company | Ticker | Exchange | Percentage |
| Microsoft | MSFT | NASDAQ | 7.07% |
| Apple Inc. | AAPL | NASDAQ | 5.63% |
| Nvidia | NVDA | NASDAQ | 5.05% |
| Amazon.com Inc | AMZN | NASDAQ | 3.73% |
| Meta Platforms Inc. Class A | META | NASDAQ | 2.42% |
| Alphabet Inc. Class A | GOOGL | NASDAQ | 2.01% |
| Berkshire Hathaway Inc. Class B | BRK.B | NYSE | 1.73% |
| Alphabet Inc. Class C | GOOG | NASDAQ | 1.70% |
| Eli Lilly and Co | LLY | NYSE | 1.40% |
| Broadcom Inc | AVGO | NASDAQ | 1.32% |
How to buy SPY stock: Step-by-step
Investing in SPY stock is a straightforward process. To do so, you can follow these steps to get started:
Step 1: Choose the right broker
Before you can buy SPY stock, you’ll need to open an account with a brokerage firm that offers access to ETFs. Also, it’s key to look for a reputable broker with low trading fees, a user-friendly platform, and a wide range of investment options.
That said, our go-to broker for buying SPY stock is eToro, a widely popular service with over 30 million registered accounts that provides a range of solid investing features, such as:
- Commission-free stock trading;
- Access to over 2,000 stocks from 17 different exchanges;
- Charting tools;
- The option to purchase fractional shares.
Highly Rated Stock Trading & Investing Platform
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
Step 2: Fund your account
Once you’ve chosen a broker, you’ll need to fund your brokerage account. This typically involves transferring money from your bank account to your brokerage account. Luckily, most brokers offer multiple funding options, including bank transfers, wire transfers, and electronic funds transfers (EFTs).
Step 3: Place your order
After funding your account, you’re ready to place your order to buy SPY stock. Here’s how to do it:
- Log in to your brokerage account;
- Search for SPY or the SPDR S&P 500 ETF Trust using the search bar;
- Click on the ETF symbol to view more details;
- Select the number of shares you want to purchase and choose whether you want to place a market order or a limit order;
- Review your order details and submit your trade.
Once your order is executed, you’ll officially own shares of SPY and will be able to track its performance in your brokerage account.
SPY stock price today
Pros and cons of buying SPY stock
Like any investment, buying SPY stock has its advantages and disadvantages.
Pros
- Diversification: SPY provides exposure to a diversified portfolio of stocks, reducing the risk of investing in individual companies;
- Low expense ratio: SPY has a low expense ratio compared to actively managed mutual funds, making it a cost-effective investment option;
- Liquidity: SPY is highly liquid, meaning you can easily buy and sell shares without significantly impacting the market price.
Cons
- Market risk: Since SPY tracks the performance of the S&P 500 index, its value is subject to market fluctuations and economic downturns;
- Limited upside: While SPY offers diversification, it also means that you won’t benefit from the outperformance of individual stocks;
- Tracking error: SPY may not perfectly replicate the performance of the S&P 500 index due to factors such as expenses and transaction costs.
Common mistakes when buying ETFs
When buying ETFs like SPY, it’s important to avoid these common investing mistakes:
- Overlooking expenses: While ETFs typically have lower expenses than mutual funds, it’s still important to consider the expense ratio and other fees associated with owning the ETF;
- Ignoring diversification: While SPY offers diversification, it’s still important to maintain a well-balanced portfolio that includes a mix of asset classes and investment strategies;
- Timing the market: Trying to predict short-term market movements can be risky. Instead, focus on your long-term investment goals and stick to your investment plan.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about how to buy SPY stock
What is the difference between the S&P 500 and the SPY ETF?
The S&P 500 is a market index that tracks the performance of 500 of the largest publicly traded companies in the United States. It is considered a benchmark for the overall health of the U.S. stock market. On the other hand, SPY (SPDR S&P 500 ETF Trust) is an exchange-traded fund that aims to replicate the performance of the S&P 500 index.
Is SPY a good ETF to invest in?
SPY is widely regarded as one of the best ETFs for investors seeking exposure to the broader U.S. stock market. It offers several advantages, including diversification across 500 large-cap stocks, low expense ratio, and high liquidity. Additionally, SPY has a long track record of closely tracking the performance of the S&P 500 index, making it a reliable option for investors looking to passively invest in the U.S. stock market.
What is the 10-year return of SPY?
As of March 31, 2024, the 10-year annualized return of the SPDR S&P 500 (SPY) ETF is 12.85%, while the inflation-adjusted return over the same period is 9.78%.
Is SPY the best S&P 500 ETF?
While SPY is one of the most popular and widely traded ETFs that tracks the S&P 500 index, whether it is the best S&P 500 ETF depends on individual investor preferences and investment goals. There are other S&P 500 ETFs available in the market, each with its own set of features, expense ratios, and tracking methodologies. Some investors may prefer alternative S&P 500 ETFs based on factors such as cost, tax efficiency, or specific investment strategies.
What is the minimum investment required to buy SPY stock?
There is no minimum investment required to buy SPY stock. You can purchase as little as one share of the ETF.
Can I buy SPY stock through a retirement account?
Does SPY pay a dividend?
Yes, SPY pays dividends quarterly, typically in March, June, September, and December. The last dividend date was March 15, 2024.
Can I reinvest dividends from SPY?
Yes, many brokerage firms offer dividend reinvestment programs (DRIPs) that allow you to automatically reinvest dividends from SPY to purchase additional shares of the ETF.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
-
eToro USA is registered with FINRA for securities trading.
