How to Invest in S&P 500 Singapore [Step-by-Step Guide 2024] (2024)

Unless you’ve been living under the rock, you’ve probably heard of the S&P 500. Short for the Standard & Poor’s 500 Index, the S&P 500 is an index that consists of the top 500 largest companies.

Stocks on the S&P 500 account for about 80% of the US stock market’s value and because of that, it’s arguably one of the best indicators of how the US stock market or overall economy is performing.

In this guide, we explore:

What Companies are in the S&P 500 Index?

The S&P 500 index is made up of over 500 stocks from companies in sectors such as energy, financials, consumer staples, and materials.

Information technology (IT) stocks dominate the S&P 500, with the top 5 companies being notable tech companies like Microsoft, Apple, Nvidia, Amazon, and Meta (formerly known as Facebook)

Here’s a breakdown of the top 10 companies in the S&P 500 by weight:

How to Invest in the S&P 500

The S&P 500 is a market index, and what this means is that you can’t invest directly into it. Instead, you can either buy:

• The individual stocks of companies in the S&P 500 or
• An S&P 500 exchange-traded-fund (ETF)

Here are the steps you need to take in order to start investing in the S&P 500:

Step 1: Choose an Investment Vehicle

Stocks

The S&P 500 consists of over 500 stocks, and you can technically buy shares in these companies. But we don’t recommend this because of how tedious and expensive it is.

Buying one share of the top 10 largest companies in the index will require you to shell out over a whopping US$4,600! And that’s without considering the trading fees involved or that the index weighs the companies based on their market capitalisation.

Plus, accurately duplicating the index weighting and maintaining that weighting as the market changes daily would be a huge hassle for any individual investor.

This is why investing in the S&P 500 via an ETF might be a more practical, cost-efficient option.

Step 2: Select an ETF

ETFs

ETFs seek to replicate the performance of an index, which in this case, is the S&P 500, by buying and selling the shares within it in relation to their respective market capitalisations.

Some of the most popular S&P 500 ETFs include:

• Vanguard S&P 500 ETF (NYSEARCA: VOO)
• SPDR S&P 500 ETF Trust (NYSEARCA: SPY)
• iShares Core S&P 500 ETF (NYSEARCA: IVV)
• SPDR Portfolio S&P 500 ETF (NYSEARCA: SPLG)

If these names sound foreign or if you’re wondering how these funds vary, check out our guide that dives into the key differences between these  and which one may best suit your investment goals. 

Tip: how to choose an S&P 500 ETF for Singaporeans

• Liquidity

Interestingly, while most S&P 500 ETFs perform similarly, the funds diverge in terms of liquidity and expense ratios (more on this later).

Liquidity refers to the ability to quickly buy or sell the ETF, and a higher average daily trading volume indicates higher liquidity. Thanks to its popularity, the SPY ETF trades about 85 million shares daily, making it one of the more liquid S&P 500 ETFs in the market.

• Expense ratio

Cost is a big factor when it comes to any investment, and when you invest in an ETF, you’re exposed to the fees involved in managing the fund; an ETF with lower fees like SPLG might be a good choice for investors looking to be more cost efficient.

Step 3: Choose a Broker

There’s no shortage of brokers out there for you to choose from and many of these brokerage platforms offer a host of similar features.

Some things you might want to consider when shortlisting a broker include:

• Account and commission fees charged
• The reliability of the broker
• Types of investment options
• Availability of educational resources

Once you’ve selected a broker, fund your account, and it’s time to start investing!

Investing in the S&P 500 in Singapore

Investing in an S&P 500 ETF is a great way to diversify your portfolio, and for newbie investors, it offers you a great chance to dip your toes into the world of investing.

If you’re looking to get started on your investment journey, why not check out Syfe’s brokerage?

Syfe’s Brokerage is a brokerage platform that allows you to invest in ETFs at a low cost. Owning a slice of an S&P 500 ETF is made a lot more accessible with our fractional investing feature, and users are entitled to 2 monthly free trades when they invest in the US market.

If you’re a new Syfe user, sign up using the promo code ‘SYFEPROMO’ to receive S$20 in cash credits.