How to invest in the S&P 500 from Europe (complete guide)

If you’re a European investor interested in the S&P 500, this guide will walk you through the process of investing in this major index.

I’ll explain each step and include screenshots to make it easier for you to follow along!

First thing you need to know: it is impossible to invest directly in the S&P 500!

Since you can’t invest directly in the index, you’ll need to invest in funds that track its performance, such as ETFs or index funds. In practice, it’s basically the same…

Choose an S&P 500 ETF

First, you’ll need to select an ETF or index fund that tracks the S&P 500.

Popular options for European investors include the iShares Core S&P 500 UCITS ETF (CSPX) and the Vanguard S&P 500 UCITS ETF (VUSA).

These funds are designed to replicate the performance of the S&P 500 and are listed on various European stock exchanges.

If you search on JustETF, you’ll find dozens of ETFs tracking the S&P 500:

 

Each ETF has different characteristics:

• Fund size: total amount of money invested by other people. Larger ETFs are generally more stable and liquid.
• TER: the annual fees charged.
• Distribution policy: Accumulating or distributing. Choose between accumulating ETFs (which reinvest dividends) and distributing ETFs (which pay out dividends). I am based in Portugal, where dividends pay capital gains tax, so I would prefer to choose an accumulating ETF, but the preference depends on your specific circumstances.
• Replication: Decide between physical replication (holding the actual stocks) and synthetic replication (using derivatives).
• Theme: Some of these ETFs are focused on specific areas (example: S&P 500 Information technology sector only tracks the performance of companies in this sector, so the performance will be different).

In this article, I’ll guide you through the process of investing in the iShares Core S&P 500 UCITS ETF, with the ticker CSPX, since this is the most invested S&P 500 ETF in Europe, and SPDR S&P 500 UCITS ETF, with the ticker SPY5, since this is the S&P500 ETF with the lowest cost (measured by the TER).

Select a brokerage platform

Next, you need to choose an online brokerage that allows you to trade your chosen ETF.

In this article, I’ll exemplify with eToro and Interactive Brokers, two of the largest online brokers in Europe. eToro has an easier-to-use app, and is best for beginners, while Interactive Broker is best if you don’t mind using a more complex trading platform.

Buying S&P 500 on eToro

First, you need to open an account on eToro* and make a deposit.

*eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

Then, search for the S&P 500 ETFs available in eToro. You’ll find 4 different ETFs:

 

Be aware that only SPY5.L is a real ETF. The other ETFs (VOO, SPY, and SPXL), are ETF CFDs.

Make sure you choose the correct product to avoid CFDs, which involve different risks and costs.

Choose the SPY5.L ETF, and choose the order details:

• The amount of leverage (no leverage is recommended),
• Take profit and stop loss: depends on your preference, but if you’re in it for the long term, non of these are needed,
• Order type: Market order (pleaces the order at the current market price), or Limit order (places the order once the ETF reaches your chosen price).

Place “trade”, and that’s it!

Be aware that this ETF is traded in USD, so the price is also in USD. When you sell it and withdraw the money to your account, you’ll be subject to the conversion.

eToro’s fees

eToro only accepts USD and EUR as the account currency, so if you deposit in a different currency, you’ll be charged a currency conversion fee.

Besides that, eToro charges no fees when trading real ETFs. So your only fee should be the currency conversion cost when depositing on eToro and converting to USD.

Other fees may apply, such as an inactivity fee if you don’t login for 12 months in your account.

Buying S&P 500 on Interactive Brokers

First, you need to open an account on Interactive Brokers and make a deposit.

Interactive Brokers is a broker a bit less user-friendly than eToro. However, it is one of the most reputable companies in the sector: it is an American company, publicly listed, and has a long and strong track record.

Then, search for the CSPX ETF:

Click “Buy”, and choose the order details:

• The amount of shares or money you want to invest,
• Order type: Market order (pleaces the order at the current market price), or Limit order (places the order once the ETF reaches your chosen price).
• And that’s it!

Our recommendation is that you try it out for yourself, and adapt over time.

Interactive Brokers fees

Interactive Brokers charges no account fees (similar to eToro), and accepts many currencies, so you won’t be charged a currency conversion fee for USDs.

However, IBKR does charge a commission fee when trading ETFs. This fee varies according to your country. Generally, you’ll pay a fixed commission of 0,05% of the trade value, with a minimum of 1.25€ per order, and a maximum of 29€ per order.

Conclusion

Choosing between IBKR and eToro depends on your trading volume, experience level, and preference for additional features. For cost-conscious, high-volume traders with a need for advanced tools, IBKR is likely the better option. For beginners or those who prefer a more straightforward trading experience, eToro offers an attractive platform with the added benefit of social trading features.

For more detailed information on fees and platform features, you can visit the official websites of Interactive Brokers and eToro.