We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
Investing money is really only an investment when you make a return back on what you spent — so what better place to start than by choosing the biggest and most profitable companies?
Blue-chip companies, or well-established household brand names, are easiest to invest in via the popular index fund known as the Standard and Poor’s 500, or the S&P 500. It tracks the performance of the 500 biggest companies according to market cap.
Index funds have become one of the most popular ways to invest thanks to their cost-effective way to diversify one’s holdings across broad sectors or industries. Buying one share of the S&P 500 index fund equates to buying tiny shares of the top 500 blue-chip companies in the United States with a single transaction.
Let’s take a look at the S&P 500 – and ways to invest in it.
What Is the S&P 500?
The S&P 500 is an index that benchmarks performance for businesses with a large market capitalization. The S&P 500 index is a portfolio made up of around 500 of the largest companies that trade on the U.S. stock exchange. It’s one of the most widely recognized gauges of the U.S. economy.
“It gives exposure to the different sectors of the economy, such as the energy and financial sectors, and many more,” says Monica Jalife, principal at Withum Wealth Management.
This index is also weighted, meaning the largest stocks make up a bigger portion of the portfolio. For example, the largest stock in the index right now is Apple, which makes up around 6% of the S&P 500. The smallest stock belongs to News Corporation Class B, which is only .008% of the index. So Apple is about 777 times the weight of the smallest stock – but that doesn’t mean it’s small. News Corporation Class B has a market capitalization, or market value of the company’s equity, of $14.3 billion.
With the S&P 500, you’ll get exposure to these companies as well as other recognizable names like Coca-Cola, PayPal, Disney, Home Depot, and Netflix.
How Are Stocks Chosen for the S&P 500?
Not every stock can be included in the S&P 500. To be chosen, a company must be profitable for at least a year. That’s not to say that a company can’t lose money short-term due to operating costs and market conditions, but it must post cumulative profit, meaning profit over a longer-term period.
The company must also have a large market capitalization, which is calculated as the stock price multiplied by the number of outstanding shares of stock — and over 50% of that stock has to be held by the public, meaning individual investors like you and me.
“Companies need to be public, very liquid, and have shares outstanding that can be publicly traded. A committee chooses which companies will be included in the combination of 500 or so companies included in the index,” explains Jalife.
Finally, companies must file financial statements for public review with the Securities and Exchange Commission (SEC), be domiciled in the U.S., and of course, be listed on the U.S. stock exchange.
Investing in the S&P 500 Long-Term
Two ways to invest in S&P 500 companies are through mutual funds or ETFs, which are both versions of an index fund. An index fund allows investors to gain exposure to many securities in a single investment.
“An advantage of investing in an S&P 500 index fund is the ability to try to match the performance of the companies included in the S&P 500,” says Tiffany Welka, financial advisor and accredited wealth management advisor at VFG Associates. “You can use a buy-and-hold strategy with no need to actively monitor the stock market. You also get diversification because the index represents all the different sectors within the U.S. stock market. But one disadvantage is that it’s not representative of the global market.”
Jalife adds that you might consider an additional index fund that will give you exposure to smaller or growing companies, because an S&P 500 index fund only focuses on the 500 largest.
Pro Tip
The best way to invest in S&P 500 companies is through an index fund, such as a mutual fund or ETF, that aims to match the S&P 500 performance. You might consider investing separately in small cap companies for more diversification.
Some of the biggest index funds in the world are S&P 500 funds. The second largest mutual fund in the world by assets managed is the Fidelity 500 Index Fund (FXAIX), and the largest ETF in the world by the same measure is the iShares Core S&P 500 Fund.
Virtually all of the biggest and most popular S&P 500 index funds are an excellent place for investors who want large market exposure without having to choose or manage individual stocks. Especially if there is a low expense ratio, or fee, for these funds.
Because of their popularity, competition has driven expense ratios for index funds down to nearly zero, making S&P 500 funds an affordable and historically reliable long-term investment. It’s also made it incredibly easy to open an account and start investing, even — and especially for beginner investors.
S&P 500 Annual Returns
Since its inception in 1926, the S&P 500 index’s average annual return has been between 10% and 11%. This includes the period from 1926 and 1957 when it was the S&P 90, comprising only 90 stocks. Since adopting 500 stocks in 1957, the average annual return has historically been around 8%.
But that doesn’t mean it’s always smooth sailing. “There are times when the market will be negative for a period of time,” says Jalife. “But the good times in the market will more than make up for it. Over a long period of time, you should expect a return in the single or double digits.” A buy a hold mentality will get investors through the ebbs and flows of the market.
In 40 of the past 50 years, the S&P 500 index gained value, which is a great track record. The market has sustained its share of dips and losses, but if you have a long horizon of several decades before retirement, the S&P 500 has proven itself to be a profitable and secure investment.
Compounding Interest From Investing in the S&P 500
With any investment, it’s the power of compound interest that does the heavy lifting over time. “Compounding means making money on money you didn’t have before. When you have time working for you, it’s going to really make a difference over the years,” says Jalife.
Here’s an example. If you’d put just $100 into an S&P 500 fund when it began in 1926, assuming a 10% annual return, you’d have over $855,999 today – that’s without ever adding another single cent to your original $100 investment.
With the same calculations, let’s suppose you start investing with $1,000 in an S&P 500 index fund. You plan to retire in 40 years and want to add $100 a month to your investments. You’d retire with over $604,000. Bump your contributions to $200 a month, and you’ll retire a millionaire. Those gains are thanks to compound interest working on your behalf. If you have several years to invest, the returns can add up in your favor – in a big way. As with any investment, the most important things are to get started as soon as you can and to consistently invest as often as possible.
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
