What is the S&P 500?

There is a growing demand for simple investment products for beginners who are ready to take their first steps into the world of investing. Increasing numbers of first-time investors are looking for products that are easy to understand and to invest in. Electronic trading platforms offering around-the-clock access to trading are especially high on the list.

Interest rates and risk

People are increasingly realising that they need to reconsider their former financial strategies of saving and investing money if they still want to profit. Due to low interest rates, deposits to savings accounts and call deposit accounts are hardly yielding any returns. What is the reason your savings are generating less and less profit?

While conditions for taking out loans are favourable owing to central banks' low interest rate policies, saving your money exclusively in savings accounts is consistently yielding smaller returns. Since the commercial banks' own investments are also affected, owners of savings accounts receive very little interest. Last but not least, inflation is also eating away at the real value of your hard-earned savings. As you can see, it is definitely worth your while to inform yourself about the basics of personal finance with easy-to-understand articles.

Starting with investing does not have to be complicated - investing with little money has become easier than ever. However, bear in mind that stocks and ETFs are considered investment products with higher risk than savings accounts, which are comparatively lower-risk products with correspondingly lower returns. Higher-risk equities, with their higher volatility, raise the possibility of higher losses as well as the opportunities for higher profits.

Should I as a beginner invest in stocks?

Starting your investing journey with stocks is possible. However, for easy and convenient access, exchange-traded funds (ETFs) are among the most popular products, as they provide an excellent way to diversify a portfolio with investment products, and thus, also spread your risks more broadly.

An ETF follows the performance of a stock index. Investing directly in an index itself is not possible because an index is a measure of change in a value that tracks data such as prices. ETFs that track the major indices of leading global markets are particularly popular, including the S&P 500 as one of the best-known stock indices.

What is the S&P 500?

The S&P 500 (short for Standard and Poor's 500) is a U.S. stock market index that tracks the performance of 500 of the largest American companies listed on exchanges in the United States.  

In order to qualify for inclusion in the S&P 500, a company, among other things, has to be based in the USA and prove unadjusted market capitalization of at least $11.8B US dollars. It also needs a record of at least four consecutive quarters with positive net income. The S&P 500 is weighted according to free float (proportion of company shares freely outstanding and divided among many investors) and capitalisation (total value of company shares outstanding).

Standard & Poor's (S&P) is part of S&P Global, a leading financial services provider focused on credit risk research, financial information and analysis for public and private companies and governments. The index serves as a benchmark for overall market developments for many investors and is used for comparison with other investments and economic forecasts.

Which companies are included in the S&P 500?

The S&P 500 includes all of the major U.S. companies of note that are traded on U.S. exchanges, such as Alphabet (Google), Amazon, Apple, Adobe, Facebook, Mastercard, Microsoft, Netflix, Nike, Nvidia, PayPal, Pfizer, Tesla, Visa, BlackRock, Exxon, Cisco, Coca Cola, Salesforce, Starbucks, Intel, Pepsi, McDonald's, Moderna, Qualcomm and Walt Disney, to name just a few.

How can I invest in the S&P 500?

The Top US 500 is an exchange-traded index fund (ETF) that replicates the performance of the S&P 500 Index as closely as possible. With Bitpanda Stocks*, you can invest in ETFs such as the Top US 500 fractionally from as little as €1, commission-free and with tight spreads. This is made possible by derivative contracts covered by the underlying stocks and ETFs.

*Bitpanda Stocks enables investing in fractional stocks. Fractional stocks in Europe are always enabled via a contract which replicates the underlying stock or ETF (financial instruments pursuant to section 1 item 7 lit. d WAG 2018). Investing in stocks and ETFs carries risks. For more details see the prospectus at bitpanda.com.