While the following content is intended to be educational, it does contain promotional material for Kaldi.

You've heard of the S&P 500. You've heard of it because everyone keeps going on about it, from your friend who got really into podcasts to a Reddit thread you clicked on late at night. Then there’s that one colleague who mentions his "portfolio" slightly too often. And somewhere in all that noise you've picked up that it's probably a good thing to be invested in. You just haven't done it yet. 

Here's how.

What is the S&P 500?

So you’ve heard people talking about the S&P 500. Or maybe you’ve read about it somewhere. You Google it (or is it “ChatGPT it” now?) for more info, but it’s a bit confusing, right? So here it is plain and simple. 

The S&P 500 is …

a list of the 500 biggest companies trading on the US stock market. Apple, Microsoft, Amazon, and Nvidia are all in there. When people say "the market is up" or "the market is down" on the news, they're usually talking about this. It's become shorthand for how the US economy is doing, which is why everyone from your financially-savvy uncle to half of financial TikTok seems to have an opinion on it.

The "S&P" stands for Standard & Poor's, the company that maintains the list. You don't need to remember that. What you do need to know is that over the long run, the S&P 500 has historically gone up. Not every year, not in a straight line, and with some horrible dips along the way. But across decades, the general direction of travel has been upward.

Can I invest in the S&P 500 from the UK?

Yes. Next question.

Okay, slightly more detail. You can't just buy "the S&P 500" directly. It's an index, not a thing you purchase. What you can buy is a fund that tracks it. These are called index funds or ETFs, and they exist specifically to follow the S&P 500's performance by holding all 500 companies in roughly the same proportions. You buy into the fund, which holds the stocks. When the index goes up, so does your investment. When it goes down. Well, you know.

The good news is that for UK investors, this is completely normal and easily accessible. The slightly more interesting news is that a global index fund (which is what Kaldi offers, but more on that in a bit) contains a huge chunk of S&P 500 companies anyway, because the US makes up the majority of the global stock market. So you're not missing out. You're just getting the rest of the world thrown in too, which most people would consider a bonus.

Why index funds beat picking stocks

Here's what  people don't tell you when you first start looking into investing: almost nobody beats the market consistently. Not your mate, nor the guy on YouTube with the ring light and the "millionaire by 30" thumbnail. Not, frankly, most professional fund managers who do this for a living and still regularly underperform a basic index fund.

Picking individual stocks is hard. You're essentially betting that you know something the rest of the market doesn't, and the rest of the market includes thousands of analysts who do nothing else all day. Sometimes people get lucky. Sometimes they get very unlucky and lose a lot of money on a company that seemed fine right up until it wasn't.

Index funds sidestep all of that so you don't have to spend your evenings reading quarterly earnings reports and pretending to understand them. Instead of betting on one horse, you're betting on the whole race. Some companies will tank, sure. But the idea is that enough of them do well enough, often enough, that the overall direction keeps moving upward over time.

Why the ISA wrapper matters

When you invest in the UK, you have a choice about where you hold your investments. You can just... hold them. Or you can hold them inside an ISA, which stands for Individual Savings Account, and which is one of the good things the government has done for ordinary people's finances.

The difference is worth noting because of tax. Without an ISA, any growth on your investments and any dividends you earn are potentially taxable. With a Stocks and Shares ISA, they're not. The government gives you an allowance of £20,000 a year to put in, and anything that grows inside it is yours to keep, entirely tax-free, forever.

Most people starting out won't get anywhere near £20,000 a year. That's fine, as the point is the wrapper, not the limit. Think of it less like a product and more like a container. The investment sits inside it, and the tax can't get in.

If you're investing for the long term, which you should be, doing it inside an ISA is almost always the right move. Kaldi lets you open one in minutes, with no minimum beyond £1, but again, more on that shortly. 

How to get started

This is the bit most articles skip over, or bury in jargon, or turn into a twelve-step process that makes you feel like you're applying for a mortgage. It isn't that complicated.

You need three things: somewhere to invest, something to invest in and some money to put in. That's it.

For the "somewhere", you want a platform that offers a Stocks and Shares ISA. Kaldi does this and takes about five minutes to set up. We also don’t require you to already know what you're doing. 

For the "something", a global index fund, like the Vanguard LifeStrategy 100% Equity Fund, available on Kaldi, gives you broad exposure to the world's biggest companies with the S&P 500 baked in as the largest chunk. 

For the money, you can start with £1, though obviously the more you put in regularly, the more you'll have later. Boring but true.

The main thing is just to start. Every month you're not invested is a month of potential compound growth you're not getting back.

Tell me more about how Kaldi fits in

Most investing apps make you feel like you should have started five years ago and already have a spreadsheet. Kaldi is built for people who haven't done this before and aren't entirely sure they want to.

The basic idea is that your everyday shopping helps keep you consistent. You spend at partner brands (Amazon, Deliveroo, Airbnb, M&S, a lot of others) and earn cashback that goes straight into your Kaldi balance rather than disappearing into an account you'll forget about. That balance then feeds into your investments automatically. You're not finding extra money from nowhere. You're making the money you were already spending work slightly harder.

On top of that there are round-ups, which turn your spare change into micro-investments, and linked accounts, which means a supportive family member can point their cashback at your savings goal instead of their own. It adds up faster than you'd expect.

The funds themselves are low-cost index funds (Vanguard, Fidelity, HSBC, and more), the same names you'd encounter on any serious investing platform, only without the intimidating interface. You pick your risk level, select a fund, get it going and then more or less leave it alone. Which is the correct approach.

Okay, but what about risk?

Fair question, and anyone who glosses over it is covering something up.

Yes, when you invest your capital is at risk and your investments can go down. The S&P 500 dropped nearly 35% in a month in early 2020 when the pandemic hit. It dropped over 50% during the 2008 financial crisis. These are not small numbers and they are not fun to watch happen to your money. If you'd invested at the peak in 2007 and then immediately needed the money back in 2009, you'd have had a bad time.

The reason people invest anyway is time. If you leave it alone long enough, the historical pattern is that markets recover and then keep going. That 2020 crash? The S&P 500 had fully recovered within six months. The 2008 one took longer, but it got there. Past performance doesn't guarantee future results, a disclaimer you’ll see everywhere and it's true, but the long-term direction of global markets has historically been upward.

The practical takeaway is to only invest money you won't need in the short term. Don't put your emergency fund in. Don't put next month's rent in. Think in years rather than months. And if seeing your balance fall temporarily will send you into a spiral, a lower-risk fund, like one of Kaldi's money market options, might be a better starting point while you find your feet.

500 and counting

The S&P 500 isn't some exclusive club for people who read the Financial Times over breakfast. It's accessible and straightforward. With the right fund and an ISA wrapper, you can be invested in it within the time it takes to drink a coffee. 

Kaldi makes that even easier. Download the app here.