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&P500 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&P500. 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!
Understanding what S&P 500 is…
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:
Diversification: The S&P 500 includes 500 of the largest publicly traded companies in the U.S., covering various sectors like technology, 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!
Historical Performance: The S&P 500 has historically delivered strong returns over the long term, averaging around 10% annually. While past performance is not a guarantee of future results, it does provide confidence in the index’s ability to generate returns over time.
Low Costs: S&P 500 index funds and ETFs generally have low management fees compared to actively managed funds.
Economic Indicator: The S&P 500 is often seen as a barometer of the overall U.S. economy. 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:
Summary
In case you’re a little impatient to read through the whole article, let me summarize the pros and cons of each platform:
| Feature | Rakuten Trade | Interactive Brokers | StashAway |
| Number of S&P500 ETFs offered | 8+ | 11+ | 1 |
| Low Brokerage Fees | ✔ | ✔ | ✘ (management fees apply) |
| Ease of Use | ✔ | ✘ (complex interface) | ✔ |
| Fractional Shares | ✔ | ✔ | ✔ |
| Access to U.S. Markets | ✔ | ✔ | ✔ |
| Advanced Trading Tools | ✘ | ✔ | ✘ |
| Rewards Program | ✔ | ✘ | ✘ |
| No Minimum Deposit | ✔ | ✔ | ✔ |
| Dividend Withholding Tax | ✔ | ✔ | ✔ |
| Margin Trading (US Market) | ✘ | ✔ | ✘ |
| In-Person Support | ✘ | ✘ | ✘ |
| Low Minimum Investment | ✔ | ✔ | ✔ |
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
- Vanguard 500 Index Fund (VOO)
- SPDR S&P 500 ETF Trust (SPY)
- iShares Core S&P 500 ETF (IVV)
- SPDR Portfolio S&P 500 ETF (SPLG)
- SPDR Portfolio S&P 500 Growth ETF (SPYG)
- Vanguard S&P 500 Value Index Fund ETF (VOOV)
- iShares S&P 500 Growth ETF (IVW)
- iShares S&P 500 Value ETF (IVE)
And more…
Pros and Cons of Rakuten Trade
| Pros | Cons |
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Fractional Shares Rakuten Trade allows you to purchase fractional shares of S&P 500 ETFs, making it accessible even if you have limited capital. |
30% Dividend Withholding Tax Dividends from S&P 500 ETFs are subject to a 30% U.S. withholding tax for Malaysian investors. This reduces the effective dividend yield you receive from the ETF, which is an important consideration if you rely on dividend income. |
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Low Brokerage Fees Rakuten Trade offers competitive brokerage fees, with commissions from as low as RM1 (MYR trading) or USD1.88 – USD25 (USD trading). This is one of the lowest among Malaysia-regulated platforms. |
Currency Conversion Costs When buying S&P 500 ETFs, you’ll need to convert MYR to USD, and vice versa when selling. Currency conversion fees can add to your investment costs and potentially reduce your returns, especially if exchange rates fluctuate unfavorably. |
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Access to U.S. Markets Rakuten Trade provides easy access to U.S. markets, allowing you to invest in S&P 500 ETFs. |
Limited Product Offerings Rakuten Trade focuses primarily on equities and ETFs like VOO. If you’re looking for a broader range of investment products (e.g., bonds, mutual funds), you might find Rakuten Trade’s offerings limited. |
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Ease of Use The platform is user-friendly, making it simple for investors to buy and manage their S&P 500 ETFs holdings, even if they are new to investing in U.S. stocks. |
No In-Person Support Rakuten Trade operates entirely online, which might be a downside if you prefer face-to-face customer service for managing your S&P 500 ETFs investments. |
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Rewards Program You can earn RT Points through Rakuten Trade’s rewards program, which can be redeemed for brokerage rebates, helping to offset some of the trading costs. |
FX Volatility The value of your investment in S&P 500 ETFs can be impacted by fluctuations in the MYR/USD exchange rate, adding an additional layer of risk beyond the performance of the ETF itself. |
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No Minimum Deposit You can start investing in S&P 500 ETFs without a minimum deposit requirement, making it accessible to a wide range of investors. |
No Margin Trading Rakuten Trade does not offer margin trading, which could be a limitation if you’re an experienced investor looking to leverage your investment in S&P 500 ETFs. |
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
- Vanguard 500 Index Fund (VOO)
- SPDR S&P 500 ETF Trust (SPY)
- iShares Core S&P 500 ETF (IVV)
- SPDR Portfolio S&P 500 ETF (SPLG)
- SPDR Portfolio S&P 500 Growth ETF (SPYG)
- Vanguard S&P 500 Value Index Fund ETF (VOOV)
- iShares S&P 500 Growth ETF (IVW)
- iShares S&P 500 Value ETF (IVE)
- Invesco S&P 500 Equal Weight (RSP)
- iShares Core S&P 500 (CSPX)
- Invesco S&P 500 Acc (SPXS)
And more…
Pros and Cons of Interactive Brokers
| Pros | Cons |
|
Access to Global Markets IBKR provides access to a wide range of global markets, such as the US, UK, Singapore and more. |
30% Dividend Withholding Tax Similar to other platforms, dividends from S&P 500 ETFs are subject to a 30% U.S. withholding tax for Malaysian investors. This reduces the effective yield from the ETF’s dividend payments. |
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Multi-Currency Accounts IBKR supports multi-currency accounts, which means you can hold and trade in USD without the need to convert MYR every time you buy or sell S&P 500 ETFs. This reduces the impact of currency conversion fees and exchange rate volatility. |
Complex Interface IBKR’s platform can be complex and overwhelming for beginners due to its advanced features and tools. It might take some time to learn how to navigate and utilize the platform effectively. |
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Advanced Trading Tools IBKR offers a comprehensive suite of advanced trading tools, research, and analytics. These can be valuable for both new and experienced investors to make informed decisions when investing in S&P 500 ETFs. |
Monthly Inactivity Fees Interactive Brokers used to charge inactivity fees if your account balance was below a certain threshold or if you didn’t meet minimum trading requirements. Although these fees have been removed for IBKR Lite users (which is only available for US citizens), it’s still important to confirm the fee structure that applies to your account. |
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Fractional Shares IBKR allows the purchase of fractional shares, enabling you to invest in S&P 500 ETFs even if you don’t have enough capital to buy a full share. This is useful for dollar-cost averaging and portfolio diversification. |
Tax Reporting Complexity Investing through IBKR might require more complex tax reporting, especially when dealing with foreign income and capital gains. This can be challenging if you’re unfamiliar with the tax obligations for international investments. |
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Strong Regulatory Oversight Interactive Brokers is regulated by multiple financial authorities globally, providing an added layer of security and trust for your investments. |
Potential Deposit/Withdrawal Delays As a Malaysian, there are 3 ways to fund your IBKR account, namely through Direct transfer from Wise balance, Direct ACH funding via Instarem, or Funding your IBKR account through a Singapore (SG) bank account, which can be intimidating for a new investor. Some users report delays in the processing of deposits and withdrawals, which could affect your ability to quickly access funds when needed. |
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
- iShares Core S&P 500 ETF (IVV)
Pros and Cons of StashAway
| Pros | Cons |
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Direct Exposure to the S&P 500 With StashAway’s flexible portfolio, you can allocate up to 99% of your investment to IVV (iShares Core S&P 500 ETF), giving you almost direct exposure to the S&P 500 index. |
30% Dividend Withholding Tax Dividends from IVV are subject to a 30% U.S. withholding tax for Malaysian investors, reducing the effective dividend yield from the ETF. |
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Ease of Use StashAway continues to offer a user-friendly platform, making it simple to invest in IVV even if you’re new to investing. |
Management Fees StashAway charges a management fee that ranges from 0.15% to 0.8% per year, depending on your investment amount. While this fee covers portfolio management, it reduces your overall returns compared to directly investing in IVV through another broker. |
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Low Minimum Investment You can start investing in the S&P 500 with a relatively low minimum amount, making it accessible to a wide range of investors. |
Potential Currency Risk Your investment in IVV involves currency risk, as the value of your investment can be impacted by fluctuations in the MYR/USD exchange rate. |
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Automated Portfolio Management The platform automates portfolio management tasks, such as rebalancing and dividend reinvestment, allowing you to invest in IVV without needing to actively manage the portfolio. |
Limited ETF Selection StashAway only offers 1 S&P500 ETF selection, which is IVV. |
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No Manual Currency Conversion StashAway handles the currency conversion from MYR to USD when investing in IVV, which simplifies the process and removes the need for you to manage currency transactions. |
Long-Term Cost Over time, the management fees can add up, reducing your overall returns, especially if you are investing for the long term. |
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.
