Want to ride the wave of US market growth but feel confused about how to buy the S&P 500? You’re not alone! Many beginner investors have heard of the S&P 500 Index but find questions like “how to invest in the S&P 500” or “which ETF to choose” challenging. This article will provide you with a complete practical guide, covering everything from core concepts and popular S&P 500 ETF recommendations to the detailed steps for opening an account and placing your first order, helping you master how to efficiently invest in the S&P 500 and easily build a portfolio of the world’s top companies.
The S&P 500 Index (Standard & Poor’s 500 Index) is compiled by Standard & Poor’s and tracks 500 of the top publicly listed large-cap companies in the United States. Investing in the S&P 500 means becoming a shareholder of world-class companies such as Apple, Microsoft, and Amazon. For beginner investors or those who don’t have time to study individual stocks, it offers two irreplaceable advantages:
“Don’t put all your eggs in one basket” is one of the fundamental principles of investing. If you invest only in a single company, your assets face significant risk if that company underperforms. However, investing in the S&P 500 spreads your capital across 500 leading companies from various industries, including technology, finance, and healthcare. This high level of diversification greatly reduces the impact of black swan events in any one company or sector, helping your investments grow more steadily.
Although the stock market fluctuates in the short term, over time the value of the US economy and its leading companies continues to rise. According to official data from S&P Global, the S&P 500 Index has delivered a long-term annualized return of about 10 percent (including dividend reinvestment). This means that even if you are not a stock-picking expert, by holding for the long term and investing consistently, you can benefit from the power of compound growth driven by the US market’s expansion. This “lazy investing” approach is especially suitable for busy professionals who have little time to monitor the market or those planning for long-term financial goals.
After understanding the advantages of the S&P 500, the next question is how to buy the US S&P 500. The most direct and cost-effective way is to invest in ETFs (Exchange-Traded Funds) that track the S&P 500 Index. There are many options available, but three ETFs stand out for their large scale, high liquidity, and low fees. They are VOO, IVV, and SPY.
VOO is issued by Vanguard, one of the world’s largest fund management companies. Vanguard is renowned for its low-cost index investing philosophy, and VOO is a prime example. Its biggest advantage is its extremely low expense ratio, currently only 0.03 percent. This means that for every 10,000 USD invested, you pay just 3 USD per year in management fees. For investors seeking long-term compound growth, even such small differences in fees can have a significant impact on total returns over time.
IVV is issued by iShares, a subsidiary of BlackRock, the world’s largest asset management company. Its expense ratio is the same as VOO at 0.03 percent, offering similar cost advantages. IVV’s asset size is comparable to VOO, and the two ETFs show almost no differences in tracking error or holdings structure. For investors, VOO and IVV are highly interchangeable, with the main distinction being the issuer. Some may prefer IVV due to their preference for the BlackRock brand.
SPY was the first ETF on the market and remains the oldest and most widely recognized S&P 500 ETF, issued by State Street Global Advisors. Its standout feature is unparalleled trading volume and liquidity, making it a favorite among short-term traders, options traders, and institutional investors. However, its expense ratio is 0.09 percent, three times that of VOO and IVV. For ordinary investors focused on long-term holding, the higher fee is a key drawback. Additionally, its trust structure is slightly less efficient for dividend reinvestment compared with VOO and IVV.
To help you clearly understand the differences among these three major S&P 500 ETFs, we have prepared the following comparison table:
| Item |
VOO |
IVV | SPY |
| Issuer | Vanguard | BlackRock | State Street |
| Inception Date | 2010 | 2000 | 1993 |
| Expense Ratio (Annual Fee) | 0.03% 🏆 | 0.03% 🏆 | 0.09% |
| Assets Under Management (AUM) | Very Large | Very Large | Very Large |
| Average Daily Trading Volume | High | High | Extremely High 🚀 |
| Target Investors | Long-Term Investors, Cost-Conscious Investors | Long-Term Investors, Cost-Conscious Investors | Short-Term Traders, Institutional Investors |
Note: Asset size and trading volume are relative comparisons; for actual data, please refer to the issuer’s official website.
Conclusion: For the vast majority of retail investors aiming for long-term investment, VOO or IVV is the better choice due to their lowest fees, which can help maximize your long-term returns.
Once you have chosen your ideal ETF, the next step is the actual execution. The following will guide you through the complete process from account opening to placing your first order.
To buy US-listed ETFs, there are mainly two channels: using a domestic broker’s “sub-brokerage” service or opening a “direct overseas brokerage” account. Both have their advantages and disadvantages:
For investors planning to invest continuously over the long term, opening a direct overseas brokerage account is more cost-effective. The savings on fees can accumulate into a significant profit over time. Before starting, choosing a reliable brokerage is essential.
Modern international brokerages offer fully online account opening in Chinese, making the process very convenient. Typically, you only need to prepare:
Follow the instructions on the brokerage’s website to fill in your information and upload the documents. The account review can take as little as a few minutes or up to 1–3 business days. Once your account is successfully opened, you will receive a set of dedicated wiring instructions. Then, go to your bank to execute an international wire transfer to fund your brokerage account. Be sure to include your brokerage account number and your name in English in the transfer reference.
Once your funds have arrived (usually within 1–3 business days), you can start trading. Log in to your brokerage’s trading platform (web or app) and enter the ETF symbol you want to buy, such as “VOO”, in the search bar.
Next, you will enter the order page, where you need to set the following items:
After confirming all details, submit your order. Congratulations! You have successfully purchased an S&P 500 ETF and officially become a shareholder of 500 leading US companies! 🎉
Not at all! The entry threshold for buying US ETFs is very low. For example, one share of VOO is around 500 USD (subject to market fluctuations), and you can start as long as you have enough to purchase a single share. In addition, many international brokerages offer a “Fractional Shares” feature, meaning you can invest with as little as 5 or 10 USD. Most brokerages also support dollar-cost averaging, allowing you to set up automatic monthly purchases of a specific ETF, an excellent way to develop a disciplined investment habit.
Yes. S&P 500 ETFs collect dividends distributed by the constituent companies and typically pay them to ETF holders on a quarterly basis. As a non-US tax resident, 30% of the dividend is withheld for taxes. For example, if you are entitled to 100 USD in dividends, 70 USD will actually be credited to your account. The brokerage handles this automatically, so no additional reporting is required. However, you can use the brokerage’s “Dividend Reinvestment Plan (DRIP)” to automatically reinvest the after-tax dividends into fractional shares, allowing the compounding effect to continue uninterrupted.
Yes. Besides these three major ETFs, there are other options in the market, such as SPLG (SPDR Portfolio S&P 500 ETF) issued by Invesco. It has a very low expense ratio of 0.02% and a lower share price, making it more accessible. Additionally, if you are seeking stronger growth, you can explore ETFs that track the Nasdaq 100 Index, such as QQQM. However, for most investors aiming for steady participation in the US market, starting with VOO or IVV remains the classic and reliable choice.
The difference is significant. Domestic sub-brokerage fees typically range from 0.5% to 1% of the transaction amount, with minimum charges of 35 to 50 USD. This means that even buying a single share could incur high fees. In contrast, mainstream overseas brokerages such as Firstrade offer zero-commission trading for stocks and ETFs. Over the long term, the difference in trading costs can greatly erode your investment returns, which is why most people recommend using an overseas brokerage for US stock investing.
In summary, purchasing low-cost ETFs such as VOO or IVV through an overseas brokerage is the simplest and most efficient way for ordinary investors to invest in the US S&P 500. This article has provided a complete guide from core concepts and ETF selection to practical execution. You now have the essential knowledge to invest in the S&P 500. The most important step in investing is to “start”, stop hesitating. Choose a brokerage that suits you, take your first step, and begin your journey into index investing today!
