What is the S&P 500 and how can Canadians invest in it? The S&P 500 is an index that is composed of America’s 500 largest companies. It’s a collection of stocks that come from many different sectors of business. Why should a Canadian invest in the S&P 500? Since 1970 the S&P 500 has achieved an average growth rate of 11.99%! Some years the growth rates have been as high as 33% and other years as low as -37%. However, the S&P 500 has managed to consistently grow over time.
Canadians have the opportunity to invest in the S&P 500 through index funds, or exchange-traded funds. One ETF would be XSP. XSP is sold on the stock market and trades in Canadian dollars. This is an advantage because a Canadian can invest in the American stock markets without using American dollars, which is relatively expensive at this point in time.
My own experience with investing in the S&P 500 has been positive. Starting 6 months ago I have been buying shares of XSP with a dollar-cost approach. I’ve been able to achieve a return of 4.81%! I am happy with this return because compared to a savings account, I am growing my investment almost 10x faster.