How to Invest in the S&P 500 from the UK in 2025

If you’re wondering how to invest in the S&P 500 index, we’re going to explain everything you need to know. This has been a popular choice for investors for good reason, but how and where do you actually invest in it?

What is the S&P 500?

The Standard & Poor’s 500, or S&P 500, is a stock market index that comprises 500 of the largest companies publicly listed on US stock exchanges. Because it encompasses companies spanning nearly all market sectors and industries, it’s widely considered one of the best benchmarks for the overall health of the American stock market and, in turn, the economy. Specifically, the index also serves as an insightful snapshot of how larger US companies are performing.

Given the strength of the US economy over the last century, numerous index funds are available to investors seeking to replicate its performance. It often serves as a central foundation for many retirement plans. At the same time, actively managed funds often use it as a benchmark to compare their own performance against.

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Why invest in the S&P 500?

Investing in the S&P 500 index means that you can own shares in some of the best companies in America with just one investment.

Here are three great reasons for investing in the S&P 500:

1. Simple and cheap

Investing in an S&P 500 index fund is relatively straightforward. There are plenty of similar trackers to choose from, most offering the same results at an exceptionally low cost. After all, these trackers are not actively managed funds. And that means more of the investor’s money is going towards growing wealth rather than paying management fees.

Since index funds effectively put an investment portfolio on autopilot, a passive investing strategy is very low-maintenance, making it easy to automate with regular contributions. As a result, this investment vehicle is often considered ideal for retirement accounts, such as SIPPs or Investment Lifetime ISAs.

2. Diverse selection of companies

By investing in an S&P tracker fund, a portfolio gains indirect exposure to 500 of the largest US-listed businesses. That includes companies across almost every sector, such as technology, healthcare, finance, consumer goods, manufacturing, materials, and real estate, among others.

That means if one business or sector is struggling, the adverse impact on an investor’s portfolio can be offset by the strength or continued outperformance of another. That’s why index funds generally provide better diversification benefits compared to a concentrated, hand-picked portfolio of US companies.

3. Track record of great performance

While there have been wobbles along the way, the S&P 500 has historically delivered a return of around 10% per year. At this rate, investors have, on average, doubled their wealth every seven years, assuming a consistent approach to investing.

While there are actively managed funds that have outperformed the index, most have struggled to maintain their lead after accounting for the high management fees. As such, many investors could have enjoyed superior performance if they had opted to effectively own the whole market.

However, as seen in recent years, the stock market can be exceptionally volatile, and that includes the S&P 500. Double-digit drawdowns can and do happen. Therefore, investors should keep in mind that past performance is not a guarantee of similar future returns.

What are the drawbacks of investing in the S&P 500?

While investing in S&P 500 stocks comes with a lot of advantages, there are also some drawbacks to consider. Greater exposure to the technology industry has helped pave the way to superior returns, but it also introduces significantly higher levels of volatility. And this trend has only intensified over time.

Since the S&P 500 is weighted based on market capitalisation, the biggest US tech stocks now dominate. In fact, seven of the largest 10 companies operate within the tech industry. Overall, this sector represents close to a third of the total.

Consequently, despite an investment being indirectly diversified across 500 companies, a portfolio would still be fairly concentrated. In fact, just the top 10 stocks are responsible for close to 38% of overall returns. This is why the S&P 500 has become increasingly more volatile in recent years – significantly more than other large-cap indices such as the UK’s FTSE 100.

There are alternative index funds that allow investors to invest in the S&P 500 on an equal-weighted basis rather than market-cap weighting. This helps restore the diversification benefit of the index. But it also increases the weighting on companies that have underperformed. So while these alternative funds are much less volatile, the returns haven’t been as impressive.

What are the top 10 S&P 500 stocks?

In order of market capitalisation, the 10 largest companies currently dominating the S&P 500 as of September 2025 are:

What is the best way to invest in the S&P 500?

The most common way to invest in this index is through a fund.

Investing in an S&P 500 index fund isn’t really something that needs a lot of maintenance because it should all be arranged automatically. So it’s definitely an investment you can manage yourself. Your only options are to buy or sell the fund.

This is usually done as an exchange-traded fund (ETF). An ETF just means that the fund is available on multiple platforms and exchanges.

How you invest in the S&P 500 will be very similar across all platforms. So, it’s important that you aim for a fund with low fees. All platforms should contain the same companies.

What are the most popular funds?

It’s important to remember that S&P 500 funds should be tracking the same index. This means that any difference in returns should be marginal.

Nevertheless, some are cheaper than others, and there are a few that tend to be very popular amongst investors, such as:

• iShares Core S&P 500 UCITS ETF
• Vanguard S&P 500 UCITS ETF
• Invesco S&P 500 UCITS ETF
• SPDR S&P 500 UCITS ETF
• HSBC S&P 500 UCITS ETF

Bear in mind that some investment companies might call their fund something like ‘The America 500’ fund. This is to avoid paying licensing fees and keep their costs down. Although these can be the same as ‘official’ S&P 500 index funds, it’s always worth double-checking exactly what’s in the fund you’re buying.

What is the minimum investment for the S&P 500?

When investing with funds, minimum investment requirements can creep into the picture. As the name suggests, a minimum investment requirement forces investors to put a minimum amount of capital into a fund in order to invest.

Depending on which index fund, the minimum investment requirement will vary. However, in most cases for index trackers, there isn’t one beyond the share price of the fund itself, especially for an ETF.

For example, the iShares Core S&P 500 UCITS ETF does not have a minimum investment requirement. However, at a share price of around $615 (£477), investors must have at least $615 to start investing in the S&P 500 with this index tracker.

Alternatively, the Vanguard S&P 500 UCITS ETF offers effectively the same access to investing in the S&P 500, but since the share price is currently around £84, it’s far more accessible to investors with smaller sums of capital.

Where can I invest in the S&P 500?

Common ways to invest in this popular index are:

• Using a share-dealing platform or brokerage
• With a robo-advisor
• Through a financial advisor

The cheapest way is to do it yourself through a platform. This will be the preferable option for most people because it is quite a simple investment to purchase and manage.

An investing solutions provider may be difficult to organise because they choose the investments, and a financial adviser is likely to be more expensive with no real added benefit.

How do I invest in the S&P 500 in the UK?

Investors cannot buy the S&P 500 index directly, but they can invest in it through passive index funds that track its performance, such as an exchange-traded fund or ETF. To get started, there are three main steps:

1. Research & Choose An S&P 500 Fund

The most common low-cost way to access the S&P 500 is through ETFs. And two popular options here are iShares Core S&P 50 UCTIS ETF or Vanguard S&P 500 UCTIS ETF, although there are other option.

When selecting a fund, it’s essential to compare the fees, which are usually measured by the total expense ratio (TER). This is measured as a percentage representing how much of your investment will be gobbled up each year. Therefore, a lower TER means more of your money stays invested. Typically, the TER for index funds is usually below 0.1% per year.

2. Pick An Investment Platform

To invest in an ETF, investors need access to the stock market through a Share Dealing Account. Each investment platform offers a different suite of features and tools, so it’s important to check if it has the ETF available to buy. Something else to watch carefully is the fees the platform charges.

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For British investors, it’s also worth considering two special share dealing accounts:

• Stocks and Shares ISA – shields your profits from capital gains, dividends, and income taxes, making it the best option for most investors.
• Self-Invested Personal Pension – shields your profits from capital gains and dividends, while deferring income taxes to when withdrawals begins. Also provides tax relief on deposits when building wealth, making it a suitable option for investors saving for retirement.

3. Fund Your Account And Start Investing

Deposit money into your account and purchase the fund. Most platforms should allow you to use a lump sum or invest a regular monthly amount to pound-cost average. By using pound-cost averaging, it can smooth out short-term market volatility.

Please note that tax treatment depends on the specific circumstances of the individual and may be subject to change in the future.

LSE Index Fund vs S&P 500

LSE index funds are a popular alternative to the S&P 500 in Britain. The main difference lies in geographical exposure. An LSE index fund, such as one tracking the FTSE 100 or FTSE 250, allows investors to invest primarily I the UK’s largest companies.

While these firms are global in nature, many earn significant revenues from overseas and are often heavily tilted towards defensive sectors like energy, financials, consumer staples, and healthcare.

By contrast, as previously mentioned, the S&P 500 represents the 500 largest businesses in the US. It grants investors far better access to fast-growing technology giants. And since this sector has been a top performer, the historical returns of the S&P 500 have been stronger over the long run compared to the FTSE 100 or FTSE 250, albeit at a greater level of volatility.

Many UK investors often choose to invest in both, relying on the S&P 500 to build their wealth and using the FTSE 100 as a balance to offset volatility and gain exposure to the UK market. Holding a mix of the two can improve portfolio diversification while also generating a more substantial passive income stream from dividends, as UK shares typically offer superior yields.

Should I invest in the S&P 500?

If you want a straightforward, low-cost investment that gives you access to some of America’s best companies, then this might be a great pick. The whole index contains companies of different sizes from various industries, which is what you want in a diversified portfolio.

However, although you get some diversification, it is heavily reliant on the US. Many of the companies will operate internationally, but they are still influenced by what is happening in America. What happens with the dollar or politics can really impact the S&P 500.

Because the index is weighted by market capitalisation, most of your investment goes to the biggest companies. This can work against you sometimes, as these large companies have already seen a lot of growth. Meanwhile, the smaller cap companies can see bigger gains.

Frequently asked questions

Should a beginner invest in the S&P 500?

Yes. Investing in an S&P 500 low-cost index tracker is often considered to be a good investment for beginners. It offers several advantages for novice investors, including:

• Diversification – The index contains 500 of the largest companies listed in the US.
• Strong Past Performance – While not an indicator of future results, the S&P 500 has historically delivered an average annualised return ranging from 7% to 11%.
• Passive Approach – Investors aren’t required to actively manage their portfolio as the index is managed by a professional or automated algorithm.
• Low Fees – Most modern index trackers are managed by computer algorithms, making them a very low-cost approach to investing. Most passive index trackers typically charge a fee that is less than 0.1%.

Can you directly invest in the S&P 500?

No. You cannot directly invest in the S&P 500. Instead, investors have to buy shares of an index fund that specifically tracks and aims to replicate the desired index.

What if I invested $1,000 in the S&P 500 5 years ago?

Over the last five years, the S&P 500 has delivered a total return of 117% as of September 2025. This includes capital gains as well as dividends. Therefore, if an investor had bought $1,000 worth of a low-cost index tracker, the value of their investment today would be $2,170. However, this is before paying any fund fees or taxes.