How to Buy Index Funds on Robinhood

Yes, you can buy index funds on Robinhood, but you are actually buying the individual stocks or ETFs that track an index

Robinhood does not sell traditional mutual funds. What you can buy instead are exchange-traded funds (ETFs) that track major indexes like the S&P 500, Nasdaq-100, or total market indexes. ETFs trade like stocks — you buy and sell them during market hours at a price that changes throughout the day. Robinhood charges no commission on these trades.

You can also build an index-like portfolio by buying individual stocks that make up an index, though this requires more work and gives you less diversification than a single ETF purchase. Most people looking for index exposure on Robinhood choose an ETF instead.

The main difference between an ETF and a traditional index mutual fund is timing and price. An ETF price moves during the trading day. A mutual fund price is set once per day after the market closes. On Robinhood, you get the ETF route only.

Key Takeaways

• Robinhood offers index-tracking ETFs like SPY, VOO, and VTI, which you can buy with no commission during market hours.
• ETF prices change throughout the day, so you can buy or sell at any time the market is open, unlike mutual funds that price once daily.
• You can set up automatic recurring investments in ETFs through Robinhood's recurring investment feature.
• Fractional shares are available, so you can invest any dollar amount rather than waiting to afford a full share.
• Robinhood does not offer mutual funds, so traditional index mutual funds from providers like Vanguard or Fidelity are not available on this platform.

Index-tracking ETFs available on Robinhood

The most common index-tracking ETFs you can buy on Robinhood track the S&P 500, which holds 500 large U.S. companies. SPY (SPDR S&P 500 ETF Trust), VOO (Vanguard S&P 500 ETF), and IVV (iShares Core S&P 500 ETF) all track this index. They hold nearly identical stocks and charge different expense ratios — the annual fee you pay to own them. VOO typically has the lowest expense ratio of the three.

For broader U.S. market exposure, VTI (Vanguard Total Stock Market ETF) and ITOT (iShares Core S&P Total U.S. Stock Market ETF) track the entire U.S. stock market, including mid-size and small companies that the S&P 500 does not cover. These are slightly more diversified than S&P 500 funds.

International stock indexes are also available. VXUS (Vanguard Total International Stock ETF) and IEFA (iShares Core MSCI EAFE ETF) track developed markets outside the United States. IEMG (iShares Core MSCI Emerging Markets ETF) tracks faster-growing economies.

Robinhood's search function lets you find any ETF by ticker symbol. Type the symbol into the search bar, and you will see the current price, expense ratio, and holdings breakdown before you buy.

How to place your first index fund trade on Robinhood

Open the Robinhood app or website and tap the search icon. Type the ETF ticker symbol — for example, "VOO" for the Vanguard S&P 500 ETF. The fund's page will open, showing the current price, a chart, and a list of top holdings.

Tap the "Buy" button. You will see a screen where you enter the dollar amount you want to invest or the number of shares. Robinhood allows fractional shares, so you can invest $50 or $500 or any amount in between — you do not have to wait until you have enough for a whole share. Review the order details, including the current price and any applicable fees (there are none for ETF purchases on Robinhood).

Tap "Review Order" and then "Confirm" to submit the trade. The order executes immediately if you are trading during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). If you place an order after hours or on a weekend, it will execute at the next market open.

Your ETF shares appear in your portfolio within seconds. You can hold them indefinitely, sell them at any time during market hours, or set up automatic recurring investments to buy more on a schedule you choose.

Expense ratios and costs to compare

Each index-tracking ETF charges an annual expense ratio — a percentage of your investment that goes to the fund company to cover management and operating costs. This fee is deducted automatically and does not appear as a separate charge on your account.

VOO (Vanguard S&P 500 ETF) typically charges 0.03% per year, meaning you pay $3 annually on a $10,000 investment. SPY charges around 0.09%, and IVV charges around 0.04%. For total market funds, VTI charges 0.03% and ITOT charges around 0.03%. These differences are small but compound over decades.

Robinhood itself charges no commission on ETF trades, no account maintenance fees, and no minimum balance. You pay only the expense ratio of the fund itself. This is different from some other brokers that may charge per-trade fees, though most major brokers have eliminated these in recent years.

When you sell an ETF at a profit, you may owe capital gains tax. Robinhood does not charge this — it is a tax you owe to the government. Holding an ETF for more than one year before selling qualifies you for long-term capital gains rates, which are typically lower than short-term rates.

Automatic investing and fractional shares

Robinhood's recurring investment feature lets you set up automatic purchases of an ETF on a schedule you choose — weekly, biweekly, or monthly. You link a bank account, set the dollar amount, and Robinhood buys the ETF on your chosen date. This is useful for dollar-cost averaging, a strategy where you invest the same amount regularly regardless of price, which can reduce the impact of market swings.

Fractional shares mean you can invest any dollar amount, not just whole-share amounts. If VOO costs $450 per share and you have $100 to invest, Robinhood buys you 0.22 shares. This removes the barrier of waiting until you have enough cash for a full share and makes it easier to invest small amounts consistently.

You can sell fractional shares at any time during market hours. The sale price is based on the current ETF price, just as it would be for whole shares.

Tax-advantaged accounts and index funds

You can hold index-tracking ETFs inside a Robinhood IRA (individual retirement account) or a Robinhood taxable brokerage account. In an IRA, you get tax benefits: contributions may be tax-deductible, and gains grow tax-free until you withdraw in retirement. In a taxable account, you pay capital gains tax when you sell at a profit.

Robinhood offers both traditional IRAs and Roth IRAs. A traditional IRA may let you deduct contributions from your taxable income in the year you make them. A Roth IRA takes after-tax contributions but lets your money grow tax-free and allows tax-free withdrawals in retirement. The rules around deductions and contribution limits change based on your income and whether you have access to a workplace retirement plan, so review the current IRS rules or consult a tax professional.

For most people, holding index ETFs in a Roth IRA is a simple, tax-efficient way to build long-term wealth. You contribute after-tax dollars, buy low-cost index ETFs, and never pay tax on the growth.

Differences between ETFs and mutual funds on Robinhood

Robinhood does not offer traditional mutual funds — only ETFs. The key difference is how they trade. An ETF price changes throughout the day as buyers and sellers trade it on an exchange, just like a stock. A mutual fund price is calculated once per day after the market closes, and all trades that day execute at that single price.

ETFs are also more tax-efficient for long-term holders. When you hold a mutual fund, the fund manager may sell stocks within the fund to rebalance or meet redemptions from other investors. Those sales can trigger capital gains that are passed to you as a shareholder, even if you did not sell your own shares. ETFs have a structure that minimizes this tax leakage.

If you want a traditional mutual fund — such as Vanguard's Admiral Shares mutual funds or Fidelity's index mutual funds — you would need to open an account at Vanguard, Fidelity, or another broker that offers them. Robinhood's focus is on ETFs and individual stocks.

Frequently Asked Questions

Can I set up automatic monthly investments in an index ETF on Robinhood?

Yes. Robinhood's recurring investment feature lets you schedule automatic purchases of any ETF on a weekly, biweekly, or monthly basis. Set the dollar amount, link a bank account, and Robinhood buys fractional shares on your chosen date. You can pause or cancel the recurring investment at any time.

Do I pay taxes on index fund gains while I hold the ETF?

Not in a taxable account. You pay capital gains tax only when you sell the ETF at a profit. If you hold the ETF for more than one year before selling, you may have access to for long-term capital gains rates, which are usually lower. Inside an IRA, you pay no tax on gains at all until you withdraw in retirement.

What is the difference between SPY, VOO, and VTI?

SPY and VOO both track the S&P 500 (500 large U.S. companies), but VOO has a lower expense ratio. VTI tracks the entire U.S. stock market, including mid-size and small companies, so it is more diversified. For most long-term investors, VOO or VTI are better choices than SPY because of lower costs.

Can I buy index funds with a Robinhood Gold membership?

Yes. Robinhood Gold is a paid subscription that offers margin investing and other features, but it does not change how you buy index ETFs. You can buy index funds with or without Gold. Gold membership costs extra and is not necessary to invest in index funds.

What happens if Robinhood shuts down or goes out of business?

Your ETF shares are held in your name and protected by SIPC (Securities Investor Protection Corporation) insurance up to $500,000 per account. If Robinhood closes, your shares would be transferred to another broker. Your ownership of the ETF does not depend on Robinhood's survival.