I wrote a blog post on 1 January 2019 and shared it to my personal Facebook profile. Two days later, a Facebook message was sent to me by a friend asking what are the available S&P 500 index funds.
For those who are unsure what is S&P 500, it is the Standard & Poor’s 500, an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange or Nasdaq Stock Exchange. In simple terms, if you invest or buy into a S&P 500 Index Fund, you own a part of all 500 companies.
SINGAPOREANS HOW TO BUY AH?
To my understanding, there are at least two ways you can buy the index fund. Number 1, you can open an US brokerage account such as TD Ameritrade. There are many different index funds, offered by different companies, with different ticker symbols. The funds will be managed by the respective fund managers. His/Her job is to “take care” of the fund on your behalf. You can find the ticker symbols for the various funds by searching on a search engine. Do note that you need to manually load your money into the brokerage yourself and manually execute the order. There is a commission (usually about US$10) for every order you execute.
INDEX FUNDS
Some of the index funds you may choose to buy are:
iShares Core S&P 500 ETF (Ticker Symbol: IVV)
Vanguard S&P 500 ETF (Ticker Symbol: VOO)
Their expense ratio is about 0.04%, which is generally one of the cheapest ways to own 500 large U.S. companies.
AUTOMATED BUYING
Number 2, you can use a giro service offered by Dollardex. Your money can be automatically “giro-ed” to buy into the fund (Infinity U.S. 500 Stock Index Fund) every month. This fund is a feeder fund to Vanguard U.S. 500 Stock Index Fund. There are sales charges, management fee and an expense ratio of 0.72%. 0.72% divided by 0.04% equals 18. It is “18 times” more expensive if you choose this automated service. If you want automated and added services, you would need to pay all these fees.
If you compare the expense ratios, it is cheaper to do it manually. However, in order to keep the commission charge low (to about 1%), you need to buy about US$1000 worth every time. If you do not have that much of money, you can start by using the automated way, the minimum monthly amount should be S$100. For more information, please contact the respective companies. This is not a sponsored post. I do not earn a single cent from writing this post. Please do your own due diligence. This is only a simple introduction to investing in S&P 500.
FINAL THOUGHTS
Many different people introduced their funds to me. They always tell me they can help me make all my money back if I switched to their funds. In my personal opinion, one way to benefit the general public may be to do a simple historical performance comparison between S&P 500 with other unit trusts offered by different companies in Singapore. People can make informed decision before investing. In this way, we can all know how to pay less, to get the same or (slightly) better results.
Singaporeans… want CHEAP and want GOOD… right?
Disclosure: The author does not own the stocks/funds at the time of writing this post. This is not a buy or sell recommendation but merely the opinion of the author meant for sharing and educational purposes only.