The analyst sees revenue growth of 3% to 4% a year and earnings growth of 6% to 8%. FI trades at 29 times expected 2025 earnings per share – a discount compared to competitors, notes analyst Stephen Biggar at Argus Research. The names on our list of the best stocks to buy vary by size and industry and are not meant to make up a diversified portfolio.
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They’re different from mutual funds, which usually rely on an active fund manager who actively researches stocks, then buys and sells shares in an attempt to outperform the market. Index funds that track the S&P 500 typically own most or all of the stocks included in the benchmark index so that they can mimic the performance of the index as closely as possible. They then sell shares of the fund so investors like you can buy exposure to their hundreds of constituent investments.
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Market orders are better when you’re transacting just a few shares or when the stock is large and liquid. The S&P 500 includes some of the most recognizable and popular stocks in the world. The easiest way to invest in the S&P 500 is to invest in either an ETF or mutual fund that tracks the S&P 500. Funds that track an index like the S&P 500 are known as index funds. Learn about the advantages and disadvantages of investing in the S&P 500 and how to add this investment cornerstone to your portfolio. Meta Platforms (META), formerly known as Facebook, is the current parent company of Facebook and Instagram.
Research and analyze stocks to buy
Another option is to buy individual stocks of companies listed in the index, but this isn’t the most economical approach. Unless you invest in a significant number of the constituent stocks, you’ll only capture a portion of the index’s performance. Diversifying the assets you own by including several ETFs, individual stocks, bonds, and more helps you reduce volatility and risk. Some ETFs that might add investment diversification are bond, international, commodity, and real estate ETFs. If you prefer low-cost investments with built-in diversification, S&P 500 index funds may be a good choice. However, remember that they aren’t fully diversified, leaving out investments like small-cap stocks and bonds.
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Analysts expect annual earnings growth of 15% in 2025, and the stock yields 1.7%. From your research you can develop an investment thesis for the stock or discard it and look at another potential candidate. You’ll want to buy stocks that look poised to outperform for years rather than ones you think will do better next week or month. That is, you want to invest for the long term and think like the owner of a business, not a stock trader looking to make a quick buck.
What is the minimum investment in an S&P 500 ETF?
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- However, if you have to pay capital gains taxes, know that any investments held for less than one year are often taxed at a less favorable rate, known as the short-term capital gains tax rate.
- Then you can add more stocks to your portfolio as your expertise grows.
- S&P 500 index funds have some of the lowest expense ratios on the market.
No level of diversification or asset allocation can ensure profits or guarantee against losses. Article contributors are not affiliated with Acorns Advisers, LLC. Acorns is not engaged in rendering tax, legal or accounting advice. That certainly doesn’t guarantee investment returns, but it might help risk-averse investors sleep a little better. Over the last 10 years, the S&P 500 has had an average annualized return of 9.76%. S&P 500 exchange-traded funds (ETFs) and index funds allow for slow-and-steady investing over the long term.
Consider your capital gains tax
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That’s almost three times higher than the average return for hedge funds, which are considered high-risk investments. The less you’re able to invest, the more important it is to find a broker that offers you low fees, because that’s money that could otherwise go into your investments. Like index funds, passively managed ETFs aim to duplicate the performance of a market index like the S&P 500. Managers purchase a basket of securities to duplicate the benchmark index’s holdings and then sell shares to investors. When assembling this list of Kiplinger’s best stocks to buy, we sought out high-quality companies that boast solid fundamentals such as strong earnings and revenue growth as well as free cash flow.
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And because they are passively managed investments, investors save a lot of money on administrative and other fees. Standard & Poor’s 500 index funds are among the most popular investments — and it’s little wonder why. The S&P 500 index, on which these funds are based, has returned an average of about 10 percent annually over time and represents hundreds of America’s best companies.
As an alternative to buying stocks, consider ETFs instead
Some even offer zero trading commissions, which makes it cost-efficient to begin investing. The index was introduced in 1957 and has been jointly managed by S&P Global, the CME Group, and News Corp since 2012. S&P Global estimates that it tracks the performance of assets with a total value or market capitalization of about $49.5 trillion, as of April 2025. The Standard & Poor’s 500, or S&P 500, is a stock market index that follows the stock prices of 500 of the largest companies in the U.S. by value. It gives investors a quick snapshot in the form of a score reflecting how these companies are generally performing as a group.
That’s why they’re used mainly by advanced individual investors and fund managers. However, investing in an S&P 500 index fund is simple, as the process is similar to investing in ETFs. Using your brokerage account or investment platform, you could look up an index fund such as the Vanguard 500 Index Fund Admiral Shares (VFIAX) or the Schwab S&P 500 Index Fund (SWPPX). The main difference between an ETF and an index fund is when they can be traded. Investors can trade ETFs any time the market is open, whereas index funds trade once at the end of the trading day.
- Market orders are better when you’re transacting just a few shares or when the stock is large and liquid.
- So if you’re considering one for your portfolio, here’s what you’ll need to know to get started.
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- You’ll want to understand the company, its products, its balance sheet and its industry.
Buying a stock is only part of the process of being a stockholder. You’ll also need to continue following the company, tracking quarterly or annual earnings and keeping up with the industry. And as the company performs well, you can allocate more money to the position. Then you can add more stocks to your portfolio as your expertise grows. If you’re investing more than a few thousand dollars, you’ll want to consider buying more than one stock, so that you’re diversifying and spreading your risk. While we cover a range of products, our comparison may not include every product or provider in the market.