Want to ride the growth train of US equities but do not know where to start? Many people have heard of the “S&P 500 Index”, the only index recommended by Warren Buffett, yet feel confused about questions such as “how to buy the S&P 500” or “how to invest in the S&P 500”. Do not worry. This article is your ultimate guide. Starting from zero, we will walk you through how to buy the US S&P 500 and provide a detailed comparison of three mainstream investment methods, so you can clearly understand how to choose the strategy that suits you best and take your first step with confidence.
Before diving into how to buy it, let’s first understand why the S&P 500 is so highly regarded. Simply put, it offers a simple, effective, and relatively steady way to participate in the long-term growth of the US stock market.
The S&P 500 (Standard & Poor’s 500 Index) is a stock market index maintained by S&P Dow Jones Indices. It includes 500 of the most representative large-cap companies listed on US stock exchanges, such as Apple, Microsoft, Amazon, and NVIDIA. Therefore, investing in the S&P 500 is equivalent to diversifying your capital across these top companies in a single move, capturing the overall pulse of the US economy. This not only eliminates the need to research individual companies, but also significantly reduces investment risk arising from poor performance by any single company.
Historical data shows that the S&P 500 has delivered a long-term annualized return of around 10%. Although the market experiences short-term volatility and even bear markets, over the long run the index has consistently recovered and reached new highs. This is due to its built-in “survival of the fittest” mechanism: underperforming companies are removed, while emerging and high-potential companies are added, ensuring that the index always represents the strongest forces in the market. For investors seeking steady growth without taking on excessive risk, this is undoubtedly a core choice in asset allocation.
After understanding the appeal of the S&P 500, the next key question is “how to buy the S&P 500”. There are many financial instruments available in the market that allow you to invest in the S&P 500. Below, we introduce three of the most common channels and analyze their pros and cons to help you find the approach that suits you best.
An ETF (Exchange-Traded Fund, index equity fund) is a financial product that tracks the performance of a specific index and can be traded on an exchange like a stock. Investing in an S&P 500 ETF is equivalent to buying all 500 companies in the index in proportion. This is the most direct, lowest-cost, and most beginner-friendly investment method.
S&P 500 futures (such as the E-mini S&P 500) are standardized contracts in which buyers and sellers agree to trade the S&P 500 index on a specific future date at a pre-set price. Futures trading has high leverage characteristics, allowing you to control higher-value assets with a smaller margin, thereby amplifying both profits and losses. This requires precise market judgment and strict risk management.
If you want to learn more about futures trading, you can refer to this beginner’s futures trading guide.
A contract for difference (CFD) is a financial derivative that allows traders to speculate on the price movements of the S&P 500 index without actually owning the underlying asset. Similar to futures, CFDs also offer high leverage, but with a lower entry barrier and more flexible contract sizes. However, the risks are equally significant. High leverage can lead to rapid and substantial losses.
For most investors, buying an S&P 500 ETF is the best choice. So how do you actually do it? There are two main ways: through a domestic broker’s “sub-brokerage” service, or by opening an account directly with an overseas broker.
Sub-brokerage refers to placing orders for US stock ETFs through your existing Taiwan stock brokerage account, with the broker executing the trades overseas on your behalf. This is the most painless entry-level approach.
To learn more about a detailed comparison of sub-brokerage fees, you can refer to our in-depth analysis.
This involves opening a brokerage account directly in the US (such as Charles Schwab or Interactive Brokers) and wiring funds to the US for trading. This is currently the lowest-cost option.
🤔 How should you decide? Here is a simple guideline:
When you decide to invest in the S&P 500 through ETFs, you will find three of the largest and most well-known ETFs on the market: VOO, SPY, and IVV. They all track the same index and have very similar performance, but there are still subtle differences. The next step in learning how to invest in the S&P 500 is choosing the one that suits you best.
When comparing these three ETFs, the main factors to focus on are as follows:
| Ticker | Full Name | Issuer | Expense Ratio | Key Features |
| VOO | Vanguard S&P 500 ETF | Vanguard | 0.03% | Lowest expense ratio, structured as an ETF rather than a trust, supports dividend reinvestment, and is best suited for long-term holders. |
| SPY | SPDR S&P 500 ETF Trust | State Street | 0.09% | The longest track record, the largest size, and the highest trading volume, with excellent liquidity, making it the top choice for short-term traders and options traders. |
| IVV | iShares CORE S&P 500 ETF | iShares | 0.03% | The same expense ratio as VOO, with overall performance very close to VOO in all aspects, and also an excellent choice for long-term investing. |
Final Selection Recommendations:
This depends on your investment channel. Through an overseas broker, you can buy just one share of an ETF, with the amount being approximately one-tenth of the current S&P 500 index level (for example, if the index is at 5,000 points, one ETF share is about US$500). Some brokers even offer “fractional shares”, allowing you to start investing with as little as US$1! If you invest through sub-brokerage, you need to consider minimum commission charges, and it is generally more cost-effective for single investments of at least US$1,000 to US$2,000.
Yes. Companies included in the S&P 500 index pay dividends, and therefore ETFs that track the index (such as VOO, SPY, and IVV) also distribute the dividends they receive to investors. Dividends are usually paid quarterly, which means four times a year. You can choose to receive the dividends in cash, or automatically reinvest them to purchase more shares through the DRIP feature offered by overseas brokers.
Yes. Because S&P 500 ETFs are denominated in US dollars, exchange rate exposure arises when you convert Taiwan dollars or other currencies into US dollars to invest. If you later convert US dollars back into Taiwan dollars, a depreciation of the US dollar will reduce part of your gains, while an appreciation will generate additional returns. However, for long-term investing, the growth of the asset itself is usually the primary source of returns. The impact of exchange rate fluctuations tends to be smoothed out over the long term, so there is no need for excessive concern.
In theory, this is almost impossible. The S&P 500 represents the 500 strongest companies in the US. For it to fall to zero would mean that all 500 leading companies (including Apple and Microsoft) have gone bankrupt. If that were to happen, the global economic system would likely have already collapsed, and any currency you hold might have lost its value as well. Therefore, this is an extreme and unrealistic concern.
In summary, for investors who want to participate in the long-term growth of the US market, S&P 500 index ETFs are undoubtedly the best entry-level choice. This article has provided a detailed analysis of various ways to invest in the S&P 500, from ETFs and futures to CFDs, and compared the pros and cons of sub-brokerage and overseas brokers. It also offered an in-depth comparison of mainstream ETFs such as VOO, SPY, and IVV. Now that you fully understand how to buy the US S&P 500, it is time to choose a broker and investment instrument that suits you and begin your passive income journey. Take action now and let top US companies grow your wealth!
