How to Invest in S&P 500 UK – Beginner’s Guide

The S&P 500 is one of the most popular ways you can invest in the financial markets, and for a good reason. This index is utilised by large amounts of investors, both beginner and professional, to park their money to earn a passive return. Furthermore, it provides an effective benchmark of the US equity market.

If, like many others, you are interested in investing in the S&P 500 – you have come to the right place. This guide on How to Invest in S&P 500 UK will guide you through the entire process, helping you decide which broker to choose, how you can invest in the index, and which strategy to employ to maximise your return.

How to Invest in S&P 500 UK Quick Tutorial

If you’re wondering how to invest in S&P 500 UK, it doesn’t have to be complicated. In fact, if you follow the steps below, you will be able to invest in the index in as little as 10 minutes!

  1. Choose a Broker to Invest in the S&P 500 with: The first thing you need to do is find a broker that is both reliable and allows you to invest in S&P 500 tracker. Our recommended broker is eToro, as they are regulated by the FCA and will enable you to quickly and easily invest in the S&P 500.
  2. Open an Account: Secondly, you will need to open an account with eToro. Luckily, this process is incredibly fast – all you need to do is upload proof of ID/address and enter some personal details, and you’re good to go.
  3. Fund Your Account: Before investing, you’ll need to fund your account. eToro makes this easy to do, allowing you to deposit via credit card, debit card, bank transfer, or even e-wallet.
  4. Invest in S&P500 UK: Once you have funded your account, all that’s left to do is finalise your investment. Simply search for the S&P 500 index ETF in the search bar and then enter the amount you’d like to invest. The minimum investment in these ETFs is $200.

And that’s it! You are now officially invested in the S&P 500 – and all without paying a penny in commission!

Step 1: Choose an S&P 500 Investment Platform

The most crucial part when contemplating how to invest in S&P 500 tracker is researching and choosing a suitable stock broker. There are many brokers to choose from these days, so it can be tough to decide.

To help inform your decision, we have narrowed it down to these two best-recommended brokers and investment apps to invest in, which provide the ability to invest in the S&P 500. Below, we discuss each of these brokers, along with what you can expect if you utilise each one.

1. eToro – Overall Best Platform to Invest In S&P 500 UK (FCA Regulated)

etoro logoeToro is one of the most popular brokers when it comes to investing in the S&P 500. Best known for its extensive portfolio where you can buy shares, stocks, commodities, and cryptocurrencies, eToro allows users to trade assets with 0% commission. This means you can invest in the S&P 500 index without having to pay a penny in commission fees!

What’s more, eToro is regulated by the Financial Conduct Authority (FCA), which means they offer a secure and reliable way to invest your funds. Also, opening an account at eToro is highly efficient and can be completed in around 10 minutes. All you need to do is provide proof of ID and proof of address (both of which can be uploaded digitally), and you’re good to go.

etoro invest in s&p 500 price chart

Depositing into your eToro account is also a simple process, meaning you can get this done quickly so that you can invest in S&P 500 tracker. Many deposit options are offered, such as through credit cards, debit cards, bank transfers, and even electronic wallets. What’s more, whether you want to invest £500 or even invest £40k, eToro will never charge a deposit fee.

Finally, eToro offers you more than one option when it comes to investing in the S&P 500. You can invest directly into the index (using the ticker SPX500), allowing you to gain immediate exposure. Alternatively, you can utilise one of eToro’s S&P 500 ETFs, offered by both themselves and Vanguard. You can even invest in actively managed funds that aim to achieve returns that exceed the S&P 500 index. If you’d like to gain exposure to the UK market, you can even invest in the FTSE 100. With such a wide variety of options, there is an investment for everyone.

etoro invest in s&p 500 uk

Pros

  • Offers S&P 500 along with many other indices
  • Buy S&P 500 with 0% commission
  • More than 17 million people using the platform
  • Accepts debit/credit cards, e-wallets, and bank transfers
  • Minimum investment of just $200
  • Fully regulated in the UK by the FCA
  • Over 2,400 stocks and 250+ ETFs

Cons

  • A small withdrawal fee of $5
  • The platform operates in US dollars

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – CFD Broker That Offers S&P 500 Trading with 0% Commission

Capital.com commodity broker

An alternative brokerage to consider is Capital.com. Capital.com is a CFD broker based in the United Kingdom. They are regulated by CySec, which means they comply with all of the security policies necessary throughout Europe. They offer a vast selection of securities to choose from, including stocks, ETFs, commodities, forex, and more.

capital.com invest in s&p 500 uk price chart

As Capital.com is a CFD broker, you actually trade a contract based on the underlying asset. For example, at Capital.com, you would invest in an S&P 500 CFD, which would give you exposure to movements in the actual S&P 500 index. This is a great way to invest, as these CFDs will pay out the difference between the price you open the contract at and the price you close the position.

If you choose to invest in S&P 500 tracker with Capital.com, it is a quick and easy process. They allow you to deposit as little as £20 and offer a vast selection of deposit methods, such as credit card, debit card, wire transfer, Skrill, Giropay, and more. What’s more, Capital.com offers up to 20:1 margin trading for major indices, meaning you can boost any returns you make by trading their S&P 500 CFDs.

capital.com newsfeed

Finally, Capital.com even offers a revolutionary, AI-powered ‘newsfeed’ to users of the platform. This newsfeed is automatically tailored based on your investment decisions, providing you with videos and articles that help you make more informed decisions. These educational materials are designed to help you refine your strategy when trading securities such as S&P 500 CFDs.

Pros

  • Trade over 3000+ CFD instruments
  • 0% commissions
  • Very low spreads
  • No deposit fees
  • Minimum investment of just £20
  • Great leverage facilities

Cons

  • Does not offer traditional share investments
  • Does not support Metatrader 4 or 5

71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.

Step 2: Choose How You Want to Invest in S&P 500 UK

Once you have chosen a broker to invest in the S&P 500 with, it’s time to determine your chosen investment method. Found below are three of the most effective ways to gain exposure to the S&P 500 index.

S&P 500 Index Trading

One of the most popular ways to invest in the S&P 500 is through an S&P 500 index fund. This is the most direct manner to gain exposure to the US market and can be done in various ways. The quickest and most effective way is through an S&P 500 cash index, such as the one offered by eToro. Quoted as ‘SPX500’ on eToro’s platform, this index allows a minimum of $200 investment. However, as the index is known to generate positive growth over the longer term, this could be a wise move; if you invested $1000 now, and the index grew 10% over the next year, you would have $100 profit which you could then withdraw or leave to compound even more.

A more speculative method to invest in the S&P 500 is through futures trading. This type of trading allows you to speculate on the price that the S&P 500 will be at a designated point in the future. These futures act as a legally binding contract between a buyer and a seller and are used by many investors to hedge against market fluctuations. S&P 500 futures are mainly utilised by large institutions, as they are traded on the Chicago Mercantile Exchange (CME) and are often relatively expensive to purchase.

A more accessible form of futures are the S&P 500 E-mini futures. These futures contracts are very liquid and can be more easily traded by retail investors as they are 1/5 of the price of regular futures contracts. Again, much like standard S&P 500 futures, these E-mini futures allow investors to speculate on or hedge against market fluctuations.

Finally, if you are looking for the most active method to get involved in S&P 500 trading, you could even day trade the index. Although not the most efficient manner to invest in this index, if you are the type of person who likes to get in and out of the market fast and is happy with smaller returns, this could be something you consider. To trade the S&P 500, you would need to set strong entry/exit rules and aim to leave the market after price increases of around 1-2%.

S&P 500 Tracker Funds

The best way to invest money in the S&P 500 is through tracker funds. Tracker funds (sometimes referred to as index funds) essentially aim to replicate a specific market index’s performance – in this case, the S&P 500. They provide a well-diversified investment that is inherently low-risk.

Tracker funds are an ideal investment for someone who is not interested in actively managing their assets and would prefer to park some capital in a fund and let it do its thing. These funds almost always offer a low expense ratio, which means they are a low-cost way to invest your capital.. Finally, tracker funds are endorsed by many successful investors – Warren Buffet famously swears by S&P 500 as the best tracker funds!

S&P 500 ETFs & Stocks

If the previous two methods of gaining exposure to the S&P 500 aren’t for you, you could perhaps consider investing in an ETF or even a stock that follows a similar price path to the S&P 500. Firstly, exchange-traded funds (ETFs) are similar to tracker funds in that they attempt to replicate the performance of an index, sector, or asset. However, what is notable about ETFs is that they are actively traded on the stock market, meaning they can be bought or sold in the same way as shares are.

With eToro, you can invest in the best S&P 500 ETF UK quickly and easily. One of the most popular options is the SPDR S&P 500 ETF, which will give you exposure to the US equity market. What’s more, at eToro, you can invest in this ETF with zero commissions whatsoever, meaning you get to keep more of the profits for yourself.

If you’d like to gain more indirect exposure to the S&P 500, you could even invest in a stock correlated with the movements of the index. Although this is riskier than investing in a tracker fund or an ETF, investing in a stock with similar trends to the S&P 500 could even present you with more significant returns over the longer term.

Due to the nature of the index, large-cap U.S. stocks are more likely to follow similar price patterns to the S&P 500. Some stocks that have historically been observed to positively correlate to the S&P 500 index are Apple and Microsoft. If you are interested in investing in either of these stocks, you can do this through eToro’s online platform. Much like ETFs, eToro will charge 0% commission on any trades you make, and as an FCA-regulated broker, you can rest assured that your money is safe.

Step 3: Research S&P 500 Investment

Before taking the plunge and investing in the S&P 500, you must do your due diligence. The section below will touch on some key aspects you need to consider before investing in the S&P 500 index.

Is S&P 500 a Good Investment?

There’s a reason the S&P 500 is one of the most popular investment vehicles for both retail and professional investors. As it provides exposure to the US equity market and comprises 500 firms from various sectors, it is an incredibly efficient way to diversify your portfolio.

In addition, the S&P 500 is generally thought of as a good investment due to its consistently positive past performance; over the past ten years, the index has displayed an average annual return of 13.6%. Within those ten years, though, individual years have deviated quite significantly from the average. In 2013, the index returned 32.4%; however, in 2018, it returned -4.4%. This makes it a better investment in terms of returns than a tax free ISA. What’s more, the S&P 500 even performed well across the pandemic, returning 15.76, which is more than some mutual funds.

67% of retail investor accounts lose money when trading CFDs with this provider.

Overall though, the S&P 500 is a good investment because, even when it ends the year down, is it not a huge amount. Compare this to the years where it generates a positive return, and you can see that the pros outweigh the cons. The lack of volatility in the index means it is a good investment for more risk-averse investors.

How to Make Money from Investing in S&P 500

Making money from the S&P 500 involves investing in the index and then leaving it for some time in the hope that it generates a positive return. As mentioned, eToro offers various ways you can get this exposure – through both investing directly in the index or through eToro’s S&P 500 ETFs.

However, if you want to make a decent amount of money investing in this index, you will need to consider placing a larger amount of capital in it than you would invest in a single equity. This is because the S&P 500 is never going to experience 100% returns, the type which can be seen by many equities.

etoro trade invest in S&P 500 UK

67% of retail investor accounts lose money when trading CFDs with this provider.

So, if you would like to make money investing in the S&P 500, a minimum of $200 is an appropriate amount (this is the minimum investment figure for eToro’s S&P500 offerings). With this amount, you have every chance to experience worthwhile growth.

S&P 500 Investment Strategies

So, what are the best investment strategies when it comes to investing in the S&P 500? Well, as mentioned previously, the most appropriate strategy when it comes to this type of long term investment. Investing in the S&P 500 over the short-term isn’t the most efficient approach; due to the index’s nature, it generates much smaller returns and tends to fluctuate between negative and positive quite regularly.

One of the most popular strategies is the ‘invest and forget’ approach. As the name suggests, this strategy involves placing your investment into the S&P 500 and then ‘forgetting about it for a more extended period, such as 1-5 years. As difficult as this may be, trying to ignore your investment will help take emotion out of your trading decisions and stop you from closing out the position if you see a slight pullback in price.

Another appropriate investment strategy is dollar-cost averaging. This strategy involves placing fixed investments amounts over a consistent period, regardless of where the price is. Using the S&P 500 as an example, you could gain the benefits of this strategy by investing $1000 in an eToro S&P 500 ETF every six months. Over 3 years, you would eventually have $6000 invested in the index. What’s more, dollar cost averaging is appropriate, even if prices fall; it allows you to ‘get in’ at a lower price, meaning you are open to better returns in the future.

Finally, it is worth pointing out how vital an index such as this is to your diversification strategy. The S&P 500 index is inherently diversified, which means that you are essentially invested in all 500 firms that are included within it. This means that you are not subjected to the same level of risk as in the case where you just invested in ten of these firms directly.

etoro indices

What’s more, the S&P 500 can be a great addition to your existing portfolio. If you hold a variety of equities, and one year they experience some poor performance, the diversification benefits of the S&P 500 can help protect you from a significant loss of capital if the index has performed well overall.

Step 4: How to Invest in S&P 500 UK on eToro

Now that you know how to invest in S&P 500 UK and all of the elements you need to consider, it is time to discuss the process of actually making your investment. This guide will guide you step-by-step through what you need to do, using FCA-regulated broker eToro as an example. We favour eToro when it comes to S&P 500 investing as they offer a fair minimum investment amount of $200 whilst also charging 0% commission on trades.

Step 1: Open an Account with eToro

The account opening process at eToro is speedy and straightforward. All you need to do is head to the eToro website and opt to create an account. After this, simply provide the necessary personal details, along with your National Insurance number.

etoro sign up

67% of retail investor accounts lose money when trading CFDs with this provider.

Step 2: Upload ID and Proof of Address

As eToro is FCA-regulated, you must confirm your ID and address with the broker. You can do this very quickly through eToro’s digital platform – simply upload a copy of your ID, along with a bank statement or utility bill that will act as proof of address.

After this, eToro will then go ahead and verify your documents. Verification usually only takes a few minutes.

Step 3: Deposit Funds

Just before you invest in S&P 500 UK, you will need to fund your account. The fastest way to do this is via credit card, debit card, or e-wallet, as the funds will appear in your account instantly. If you opt to deposit via bank transfer, this can take up to 3 business days.

Step 4: Search for the S&P 500

Nearly there! Simply search ‘SPX500’ in the search bar at the top of the screen, and choose the first option at the top of the dropdown menu. Alternatively, you can also invest in S&P 500 ETFs offered by eToro and Vanguard.

etoro spx500

67% of retail investor accounts lose money when trading CFDs with this provider.

Step 5: Place Your Trade

The last thing you need to do is place your trade. Simply enter the amount you wish to invest (minimum of $200), check everything is correct, and then click ‘Open Trade’

etoro open trade

67% of retail investor accounts lose money when trading CFDs with this provider.

After you have completed the above steps, you have officially invested in the S&P 500 index!

How To Invest In S&P 500 UK – Conclusion

As a provider of passive returns, the S&P 500 index is hard to beat. With incredible diversification benefits and an average annualised return of 10%, this index is a favourite of many investors, and for a good reason.

It is accessible, low-risk, and does not require you to actively trade or re-balance whatsoever. All you need to do is decide how much you want to invest, make the transaction, and let the index do its thing – simple!

In our opinion, the best broker to use to gain exposure to the S&P 500 is eToro. eToro offers an S&P 500 ETF and a Vanguard S&P 500 ETF, both of which mimic the index’s movements and can allow for a practical way to invest in the index. Also, eToro will enable you to invest in these securities for as little as $200. Finally, as the FCA regulates eToro, you can rest assured that your money is safe, allowing you to trade with confidence.

eToro – Best Broker to Invest in S&P 500 – Zero Commission

75% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

Should I invest in S&P 500?

This all comes down to your investment goals. The S&P 500 is inherently low risk and provides a solid level of diversification. If that is something that appeals to you, then the S&P 500 is definitely worth investing in. However, it is worth heeding this disclaimer - only you can make this decision, so seek the advice of a professional financial adviser if you are unsure.

How can I day trade the S&P 500?

You can day trade the S&P 500 by determining entry and exit point and conducting fundamental and technical analysis that provides good opportunities. However, many people invest passively in this index, so day trading opportunities are somewhat limited.

What are the best S&P 500 companies to invest in?

Some of the top performers in the S&P 500 are Tesla, Etsy, NVIDIA, PayPal, and L Brands. All five of these companies experienced double-digit returns in 2020 alone.

What sort of returns can I make when investing in the S&P 500?

This depends on how long you plan to invest in the index fund. On a daily basis, the S&P 500 rarely moves more than 2% in either direction. However, over the longer term, the S&P 500 generates more significant returns, with a historic annual average return of approximately 10% since its inception back in the 1920's.

How much money should I invest in the S&P 500?

It is recommended to invest a little bit more than you usually would when day trading. At eToro, you can invest in S&P 500 ETFs for as little as $200, which would provide a chance to earn notable returns. Again, this depends on your own personal finance situation.

About Connor Brooke PRO INVESTOR

Connor is a Scottish financial expert, specialising in wealth management and equity investing. Based in Glasgow, Connor writes full-time for a wide selection of financial websites, whilst also providing startup consulting to small businesses. Holding a Bachelor’s degree in Finance, and a Master’s degree in Investment Fund Management, Connor has extensive knowledge in the investing space, and has also written two theses on mutual funds and the UK market.

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