3 Easy Ways to Invest in S&P500 as a Malaysian

It may seem overwhelming to invest in US stocks as a new investor. Everyone on the Internet is talking about it being one of the best performing investments in the world. 

But how can you start? 

How to invest in S&P 500 easily? 

What even is the S&P 500?

First off, do your own research!

Do take note that there are many other types of investments besides the S&P 500. The content in this article is not financial advice. 

I write this article as if I were speaking to my younger self who had no idea what investments are, so do treat it as a form of educational content!

What is the S&P 500?

It is important to know where your hard-earned cash is going. Investing in the S&P 500 is a popular choice for several reasons:

1. The S&P 500 tracks 500 of the largest public companies in the U.S. across major sectors like tech, healthcare, finance, and consumer goods.

This broad exposure helps reduce risk, as poor performance in one sector can be offset by better performance in another.

Check out the list of S&P500 companies here!

2. The S&P 500 has historically returned about 10% per year over the long term.

While past performance is not a guarantee of future results, it does provide confidence in the index’s ability to generate returns over time.

3. S&P 500 index funds and ETFs usually have lower fees than actively managed funds.

The Vanguard S&P 500 ETF (VOO) has a very low expense ratio (total fee) of 0.03%, which translates to about $0.30 per year for every $1,000 invested, consisting of a 0.02% management fee and other operational costs.

This extremely low cost is a major advantage, making VOO a cost-effective way to get broad exposure to the U.S. large-cap market. 

4. The S&P 500 is often used as a measure of how the U.S. economy is doing.

Investing in it gives you exposure to the economic growth of one of the world’s largest economies.

How I invest in the S&P 500

I personally still use Rakuten Trade and Interactive Brokers to invest in VOO. I use both platforms just in case 1 of my accounts are compromised, I wouldn’t lose all of my investments.

Therefore, you can use more than 1 platform to test them out and see which ones you like. 

Here are 3 platforms I would recommend to new Malaysian investors who is interested in investing in S&P 500:

1. Rakuten Trade Malaysia
2. Interactive Brokers
3. StashAway

Summary of Platforms to invest in the S&P500

In case you’re a little impatient to read through the whole article, let me summarize the pros and cons of each platform:

Platform #1 to invest in the S&P500: Rakuten Trade

What is Rakuten Trade?

Rakuten Trade is an online stock trading platform in Malaysia, a joint venture between Malaysia’s Kenanga Investment Bank Berhad and Japan’s Rakuten Securities, Inc., which is part of the Rakuten Group. 

The platform was launched in 2017, offering an easy-to-use and accessible way for Malaysians to trade stocks on Bursa Malaysia, the country’s stock exchange.

S&P500 ETFs offered in Rakuten Trade

1. Vanguard 500 Index Fund (VOO)
2. SPDR S&P 500 ETF Trust (SPY)
3. iShares Core S&P 500 ETF (IVV)
4. SPDR Portfolio S&P 500 ETF (SPLG)
5. SPDR Portfolio S&P 500 Growth ETF (SPYG)
6. Vanguard S&P 500 Value Index Fund ETF (VOOV)
7. iShares S&P 500 Growth ETF (IVW)
8. iShares S&P 500 Value ETF (IVE)

And more…

Pros of Using Rakuten Trade Malaysia

When investing in S&P 500 ETFs in Malaysia, Rakuten Trade is a popular platform worth considering. It offers several advantages that make it especially appealing for beginner and long-term investors who want exposure to the U.S. stock market.

1. Ability to buy fractional shares of S&P 500 ETFs, which allows you to start investing even with limited capital.
2. Low brokerage fees, with commissions starting from just RM1 for MYR trades and USD1.88 to USD25 for U.S. trades, making it one of the most cost-effective Malaysia-regulated brokers.
3. Investors also get direct access to U.S. markets, making it easy to invest in well-known S&P 500 ETFs such as VOO.
4. The platform’s user-friendly interface simplifies the process of buying and managing S&P 500 ETF investments, even if you’re new to investing.
5. There is no minimum deposit, which lowers the barrier to entry.
6. Rakuten Trade rewards program (RT Points) allows investors to earn points that can be redeemed for brokerage fee rebates, helping to reduce costs over time. Read more about RT Points here!

Cons of Using Rakuten Trade Malaysia

That said, there are important downsides to consider when buying S&P 500 ETFs via Rakuten Trade.

1. Malaysian investors are subject to a 30% U.S. dividend withholding tax on dividends from S&P 500 ETFs, which significantly reduces the effective dividend yield—an important factor if you’re investing for income.
2. You’ll also incur currency conversion fees when converting MYR to USD and again when selling your investment, which can reduce overall returns.
3. On top of that, MYR/USD exchange rate volatility adds another layer of risk, as currency movements can impact your investment value regardless of the ETF’s performance.
4. Rakuten Trade’s product offerings are relatively limited, focusing mainly on stocks and ETFs, so investors looking for bonds or mutual funds may need to use another platform.
5. The broker operates entirely online, with no in-person support, which may be a drawback for those who prefer face-to-face assistance.
6. Lastly, margin trading is not available, which could be a limitation for experienced investors looking to leverage their S&P 500 ETF investments.

Summary of Using Rakuten Trade Malaysia

Pros	Cons
1. Fractional Shares	1. 30% Dividend Withholding Tax
2. Low Brokerage Fees	2. Currency Conversion Costs
3. Access to Malaysian, Hong Kong and U.S. Markets	3. Limited Product Offerings
4. Ease of Use	4. No In-Person Support
5. Rewards Program	5. FX Volatility
6. No Minimum Deposit	6. No Margin Trading

Overall, Rakuten Trade is a strong option for Malaysians looking to invest in S&P 500 ETFs in a simple and cost-effective way, but understanding the tax implications, currency risks, and platform limitations is essential before getting started.

Read more: Rakuten Trade Malaysia Review: Why I Chose This Platform

Platform #2 to invest in the S&P500: Interactive Brokers

What is Interactive Brokers?

Interactive Brokers (IBKR) is a well-established online brokerage firm that provides a comprehensive range of services for trading and investing across global markets. 

Founded in 1978, it is one of the largest and most versatile brokerage firms in the world, known for its advanced trading platform, low-cost structure, and broad market access.

S&P500 ETFs offered in Interactive Brokers

1. Vanguard 500 Index Fund (VOO)
2. SPDR S&P 500 ETF Trust (SPY)
3. iShares Core S&P 500 ETF (IVV)
4. SPDR Portfolio S&P 500 ETF (SPLG)
5. SPDR Portfolio S&P 500 Growth ETF (SPYG)
6. Vanguard S&P 500 Value Index Fund ETF (VOOV)
7. iShares S&P 500 Growth ETF (IVW)
8. iShares S&P 500 Value ETF (IVE)
9. Invesco S&P 500 Equal Weight (RSP)
10. iShares Core S&P 500 (CSPX)
11. Invesco S&P 500 Acc (SPXS)

And more…

Pros of Using Interactive Brokers

When investing in S&P 500 ETFs in Malaysia, Interactive Brokers (IBKR) is often seen as one of the most powerful and flexible platforms available.

1. Access to global markets, including the United States, United Kingdom, Singapore, and other major exchanges, allowing Malaysian investors to diversify beyond a single market. This makes IBKR especially attractive for investors who want long-term exposure not only to S&P 500 ETFs but also to other international assets.
2. IBKR’s multi-currency account feature, which allows you to hold and trade directly in USD. By avoiding frequent MYR-to-USD conversions, investors can reduce currency conversion fees and minimise the impact of foreign exchange (FX) volatility when buying and selling S&P 500 ETFs.
3. IBKR also stands out for its advanced trading tools, research, and analytics, which are useful for investors who want deeper insights when analysing S&P 500 ETF performance.
4. IBKR supports fractional share investing, making it possible to invest in S&P 500 ETFs even with smaller amounts of capital. This is especially useful for dollar-cost averaging and gradual portfolio building.
5. Interactive Brokers is well known for its strong regulatory oversight, as it is regulated by multiple financial authorities worldwide, offering Malaysian investors an added layer of confidence when investing in U.S.-listed ETFs.

Cons of Using Interactive Brokers

However, there are several downsides to consider before choosing Interactive Brokers for S&P 500 ETF investing.

1. Like other U.S.-based platforms, dividends from S&P 500 ETFs are subject to a 30% U.S. dividend withholding tax for Malaysian investors, which reduces the effective dividend yield.
2. IBKR’s trading platform can be complex and overwhelming for beginners. It is designed primarily for experienced traders and active investors.
3. While inactivity fees have been removed for IBKR Lite accounts, this option is only available to U.S. residents. Malaysian investors should carefully review the applicable IBKR fee structure before opening an account.
4. Another important consideration is tax reporting complexity. Investing in S&P 500 ETFs through Interactive Brokers may require more detailed record-keeping for foreign income and capital gains, which can be challenging if you are unfamiliar with international tax reporting.
5. In addition, funding an IBKR account from Malaysia can feel intimidating for new investors, as common methods include Wise transfers, Instarem ACH funding, or using a Singapore bank account.
6. Some investors have also reported deposit and withdrawal delays, which may affect access to funds in time-sensitive situations.

Summary of Using Interactive Brokers

Pros	Cons
1. Access to Global Markets	1. 30% Dividend Withholding Tax
2. Multi-Currency Accounts	2. Complex Interface
3. Advanced Trading Tools	3. Monthly Inactivity Fees
4. Fractional Shares	4. Tax Reporting Complexity
5. Strong Regulatory Oversight	5. Potential Deposit or Withdrawal Delays

Overall, Interactive Brokers is a strong choice for Malaysians who want low-cost access to global markets, multi-currency flexibility, and advanced tools for investing in S&P 500 ETFs.

However, it is better suited for investors who are comfortable with a steeper learning curve, international tax considerations, and more complex funding methods.

Platform #3 to invest in the S&P500: StashAway

What is StashAway?

StashAway is a digital wealth management platform (often referred to as a robo-advisor) that offers investment and financial planning services. 

It was founded in Singapore in 2016 and has since expanded to several countries, including Malaysia, the UAE, and Hong Kong. 

The platform provides users with an automated, low-cost, and data-driven way to invest their money.

S&P500 ETFs offered in StashAway

1. iShares Core S&P 500 ETF (IVV)

Pros of Using StashAway Malaysia

When investing in S&P 500 ETFs in Malaysia, StashAway is often positioned as a beginner-friendly, hands-off platform.

1. Investors can allocate up to 99% of their portfolio to IVV (iShares Core S&P 500 ETF) through its flexible portfolio, offering almost direct exposure to the S&P 500 index.
2. One of the biggest advantages of using StashAway is its ease of use. The platform is designed for simplicity, making it ideal for first-time investors.
3. It also comes with a low minimum investment, allowing more Malaysians to start investing in the S&P 500 with a small amount of capital.
4. StashAway provides automated portfolio management, including rebalancing and dividend reinvestment, which helps investors stay disciplined and invested over the long term.
5. There is no manual currency conversion, as StashAway automatically converts MYR to USD when investing in IVV, reducing friction and simplifying the investment process.

Cons of Using StashAway Malaysia

However, there are important downsides to consider when investing in S&P 500 ETFs through StashAway.

1. Like other U.S.-listed ETFs, dividends from IVV are subject to a 30% U.S. dividend withholding tax for Malaysian investors, which reduces the effective dividend yield.
2. StashAway also charges an annual management fee ranging from 0.15% to 0.8%, depending on the size of your investment. While this fee covers automation and portfolio management, it reduces your overall returns compared to directly buying IVV through a brokerage platform. Over time, these management fees can significantly impact long-term returns, especially for investors who rely on compounding.
3. There is also currency risk, as fluctuations in the MYR/USD exchange rate can affect the value of your investment, even though currency conversion is handled automatically.
4. Another limitation is the limited ETF selection, as StashAway only offers one S&P 500 ETF option—IVV, which may not suit investors who want more flexibility or choice.

Summary of Using StashAway Malaysia

Pros	Cons
1. Direct Exposure to the S&P 500	1. 30% Dividend Withholding Tax
2. Ease of Use	2. Management Fees
3. Low Minimum Investment	3. Potential Currency Risk
4. Automated Portfolio Management	4. Limited ETF Selection
5. No Manual Currency Conversion	5. Long-Term Cost

Overall, StashAway is a good option for Malaysians who want a simple and automated way to invest in the S&P 500 with minimal effort and low starting capital.

However, investors who prioritise lower fees, greater control, and maximum long-term returns may find that investing directly in S&P 500 ETFs through a broker is a more cost-effective strategy.

Read more: Investing in the S&P 500 with StashAway Malaysia

Conclusion

It is very important to do your own research before you start investing in the S&P 500! 

All 3 platforms have their own pros and cons, but in the end it’s up to you to decide which platform is the most convenient for you.