For those would-be investors wanting to jump into the stock market but wondering which stock to buy, legendary investor Warren Buffett has a suggestion: Try buying 500 stocks instead.
"In my view, for most people, the best thing to do is own the S&P 500 index fund," Buffett said at Berkshire Hathaway's annual meeting in May.
But what is the S&P 500, and how do you invest in one of its funds?
The Standard & Poor's 500, or S&P, is a stock market index comprised of shares of 500 large, industry-leading U.S. companies. It is widely followed and often considered a proxy for the overall health of the U.S. stock market.
Contrary to popular belief, the stocks forming the index are not the 500 biggest U.S. companies, but they are arguably the 500 most-important companies. More than $11.2 trillion is invested through the index, with these 505 stocks representing about 80% of the total U.S. stock market's value.
The S&P 500 is a cap-weighted index, meaning each stock within the index is weighted according to its market capitalization, or total market value.
As of Aug. 31, these are the top five companies by index weight: Apple, Microsoft, Amazon, Facebook and Alphabet.
You don't directly invest in the index itself.
