How to invest in the S&P 500 – Complete beginner’s guide

 

 

If you’re new to investing, the S&P 500 is probably the smartest place to start. It’s simple, it’s safe compared to betting on single stocks, and it’s delivered strong returns for decades. When people ask how to invest in the S&P 500, they’re usually looking for a way to grow money steadily without overcomplicating things.

This guide breaks it down step by step. We’ll cover what the index is, why it works, and the best way to invest in the S&P 500, whether you’re in the U.S., Europe, or anywhere else.

 

What is the S&P 500?

The S&P 500 is an index made up of the 500 largest publicly traded companies in the United States. Think of names like Apple, Microsoft, Amazon, Google, and hundreds more. Instead of betting on one company, you’re spreading your money across the giants of the U.S. economy.

Here’s why that matters: diversification. If one company struggles, the others balance it out. That’s why every S&P 500 investment guide calls it the backbone of long-term portfolios.

Historically, the S&P 500 has returned about 10% per year on average. That doesn’t mean it goes up every year – there are dips and crashes – but over decades, it’s been one of the most reliable ways to build wealth.

 

Why invest in the S&P 500?

The appeal is simple: you get diversification, steady growth, and far less stress than trying to pick individual stocks. Instead of gambling on one company, you’re spreading risk across 500.

Historically, the index has averaged around 10% yearly returns. Some years it’s down, other years it’s up big, but over decades the trend is clear—consistent long-term growth.

So, is it safe to invest in the S&P 500? Safer than most options, yes. No investment is risk-free, but the S&P 500 is built on the biggest companies in the U.S. economy. If these companies fail, the global financial system has bigger problems. 

For beginners, it’s one of the most reliable starting points you’ll find.

 

Best ways to invest in the S&P 500

There’s more than one way to buy into the index, and the right choice depends on your goals and location. Let’s break down the most common options – ETFs, index funds, and trading apps – so you can see which path fits you best.

ETFs

The easiest and best way to invest in the S&P 500 for most beginners is through an ETF (exchange-traded fund). An ETF is like a basket that tracks the index: you buy one share of the basket, and you instantly own a piece of all 500 companies. 

When you buy a single ETF share, you’re automatically invested in Apple, Microsoft, Amazon, and the rest of the index.

Here’s why ETFs work so well:

• Diversification – Instead of guessing which stock will win, you own all 500.
• Liquidity – You can buy and sell ETFs on the stock market throughout the day, just like a regular stock.
• Low cost – Management fees are tiny compared to mutual funds, often below 0.1% per year.
• Dividends – Most S&P 500 ETFs pay out dividends from the companies inside the index.
  

Popular S&P 500 ETFs include:

• VOO (Vanguard S&P 500 ETF) – Low fees, widely trusted.
  
  
• SPY (SPDR S&P 500 ETF) – The original S&P 500 ETF, very liquid.
  
  
• CSPX (iShares Core S&P 500, listed in Europe) – Great option for European investors, trades in USD or EUR.

ETFs are cheap to own, simple to buy on most brokers, and you can sell anytime during market hours.

Index funds

An index fund works almost the same as an ETF, but you buy it directly through a broker or bank instead of on the exchange. The advantage in some countries (like Spain) is tax efficiency – funds can be switched (traspasos) without triggering capital gains taxes. That makes them a strong choice for long-term, set-and-forget investors.

Trading apps and brokers

You can buy ETFs or funds through online brokers and apps. The most common SP500 investment options include:

• Revolut – Simple, mobile-first, but limited research tools.
• DEGIRO – Low-cost broker popular in Europe, wide ETF access.
• eToro – Social trading features (copy other investors), beginner-friendly.
• Fidelity / Vanguard – Great for index funds if you prefer the traditional route.

Apps vs brokers? Apps like Revolut are dead simple but limited, and their commissions can be higher on small trades. Full brokers like DEGIRO or Vanguard usually charge lower fees and offer better tax handling, but they take a bit more learning to use.

 

How to start investing step by step

Here’s the simplest path for S&P 500 for beginners. Follow each step once, then automate.

Step 1: Pick a broker or app

• Look for regulation in your country, low fees, and S&P 500 ETFs/funds available.
• Key costs – trading commission, FX fee on EUR↔USD, custody/inactivity fees.
• Must-haves – fractional shares (nice for small starts), recurring buys, two-factor auth.
• Examples to consider – DEGIRO, Vanguard, Fidelity, eToro, Revolut.
• Product check – make sure you can buy an S&P 500 ETF (like VOO, SPY, CSPX, VUSA) or an index fund that tracks the S&P 500.

Step 2: Open account + verify ID

• Sign up with email and create a strong password.
• Complete KYC – upload ID and proof of address.
• Turn on 2FA in settings.
• If your broker offers U.S. ETFs, you may see a W-8BEN form. Fill it to set the correct tax rate on dividends.
• For EU investors, UCITS ETFs (Ireland-domiciled) like CSPX or VUSA are common and come with a Key Information Document.

Step 3: Deposit funds

• Add a bank account or card. Bank transfer is usually cheaper, card is faster.
• Watch FX – if your account is in EUR and the ETF trades in USD, check the conversion fee.
• Start small. Send an amount you’re happy to learn with, for example €50–€200.

Step 4: Buy S&P 500 ETF or index fund

Choose the product:

• VOO or SPY – U.S.-listed ETFs.
• CSPX (accumulating) or VUSA (distributing) – Ireland-domiciled UCITS for EU investors.

Accumulating vs distributing:

• Accumulating auto-reinvests dividends inside the fund.
• Distributing pays cash dividends to you.

Place the order:

• Market order – executes now at the current price. Simple for beginners.
• Limit order – you set the max price you’re willing to pay.

If your broker supports fractional shares, buy by amount (€50) rather than by share count to keep it easy. Confirm, then check your portfolio to see the position.

Step 5: Hold and reinvest dividends

• Turn on a DRIP if available for distributing ETFs, or pick an accumulating ETF from the start.
  
  
• Set up a monthly recurring buy to dollar-cost average. This removes timing stress.

Tips:

Keep fees low, avoid frequent trading, and review once or twice a year.
Stay the course during dips. The S&P 500 works best with time, not timing.

Quick checklist for your first month

✔ Pick broker, open account, enable 2FA.
✔ Deposit €50–€200.
✔ Buy one S&P 500 ETF (CSPX, VUSA, VOO, or SPY).
✔ Set a monthly recurring buy.
✔ Turn on dividend reinvestment or choose an accumulating ETF.

That’s it. You’re invested. Now let compounding do the heavy lifting.

 

Special section – Investing in the S&P 500 from Spain

If you live in Spain, you have a few extra things to think about when buying into the index. The good news is, it’s absolutely possible to do it safely and cheaply. This section breaks down your main choices.

Local brokers and banks

Spanish brokers like Renta 4, MyInvestor, and ING all offer index funds that track the S&P 500. The big advantage? These funds often qualify for the traspaso tax rule. That means you can switch from one fund to another without triggering immediate capital gains tax, which is a huge perk for long-term investors.

International apps available in Spain

If you prefer the flexibility of international platforms, options like DEGIRO, Revolut, and eToro are all available in Spain. These let you buy S&P 500 ETFs such as CSPX (iShares Core S&P 500 UCITS) or VUSA (Vanguard S&P 500 UCITS). 

These ETFs are domiciled in Ireland, making them more tax-efficient for EU residents than U.S.-listed ones.

Putting it together

For S&P 500 for beginners in Spain, here’s the short version:

• Use local funds (via MyInvestor, ING, Renta 4) if you want tax advantages through traspasos.
• Use international brokers like DEGIRO or eToro if you want access to ETFs directly and lower fees.
• Apps like Revolut are the easiest entry point, but watch out for higher commissions and limited tools.

So when people ask about investing in the S&P 500 from Spain or wonder how to invest in SP500 from Spain, the answer depends on what matters most to you: tax benefits, fees, or simplicity.

Comparing S&P 500 investment options in Spain

Risks and things to know

Even with its strong track record, the S&P 500 isn’t risk-free. If you’re wondering, is it safe to invest in the S&P 500? The honest answer is: safer than most single stocks, but not without challenges.

Currency risk (USD vs EUR)

The S&P 500 is priced in U.S. dollars. If you’re investing from Europe, your returns will also depend on the euro–dollar exchange rate. A weaker dollar can eat into your gains, while a stronger dollar can boost them. Some UCITS ETFs hedge this risk, but most don’t.

Market downturns

Like any stock market investment, the S&P 500 has ups and downs. In 2008, it fell more than 35%. In 2020, it dropped 30% in weeks. These crashes hurt, but history shows the index recovers and grows over decades. The key is not to panic sell when markets dip.

Patience is everything

The S&P 500 works best as a long-term investment. You won’t get rich overnight. But if you invest regularly and hold for 10, 20, or 30 years, the compounding effect can be massive. Patience beats timing.

 

Let’s conclude

The S&P 500 is one of the simplest, most reliable ways to grow wealth over time. Whether you go through ETFs, index funds, or beginner-friendly apps, the mechanics are straightforward. This S&P 500 investment guide has shown you the main routes and what to watch out for along the way.

The real trick is consistency. Don’t try to time the market. Invest small amounts regularly, reinvest dividends, and think in decades, not days. That’s how to invest in the S&P 500 without losing sleep.

And while the S&P 500 is a strong foundation, it doesn’t have to be your only move. Some investors balance it with alternative assets for higher yields – platforms like Loanch, for example, offer peer-to-peer lending with returns up to 14.5% annually. 

A mix of steady growth from the S&P 500 and smart alternative investments can build a stronger, more resilient portfolio.

Start small, stay disciplined, and let time and compounding do their work.