How to Invest in S&P 500: A Complete Guide for Indian Investors

The S&P 500 officially began in 1957 and is regarded as a broad successor to the earlier 90-stock composite. The index currently comprises over 500 leading companies across all major sectors in the United States of America. Over the years, the S&P 500 has reflected the nation’s economic cycles: it surged during the post-war boom, survived the stagflation of the 1970s, and became a symbol of prosperity during the 1980s and 1990s bull markets. The dot-com bubble of the 1990s pushed valuations to extremes, followed by a sharp correction in the early 2000s.

As of November 2025, the index is over 6,500 points, up 88% over the last five years.

Why Invest in the S&P 500?

The five benefits of investing in the S&P 500 are:

• Technology Leaders: The S&P 500 includes companies such as Apple, Microsoft, and NVIDIA, which dominate global technology markets. These firms are not just US-centric; they generate decent revenues from other countries, including India. This gives investors indirect exposure to worldwide growth.
• Diversification: Unlike investing in a single industry, the S&P 500 spans 11 sectors, including healthcare, energy, consumer staples, and financials. This diversification reduces the risk from sector-specific downturns. For example, if energy stocks decline during oil price drops, healthcare and consumer staples may remain stable.
• Currency Diversification: When you invest in the S&P 500, you get exposure to US dollar-denominated assets. This serves as a hedge against rupee volatility. When the rupee falls, the value of dollar assets rises. The result? Your purchasing power remains intact.
• Inflation Hedge: Equities often outperform bonds and cash during inflation because companies with strong pricing power can raise their product prices to offset higher costs. For example, consider a company like Procter & Gamble, a consumer staples firm in the S&P 500. If raw material costs rise, it can increase the price of everyday products like toothpaste or detergent without losing customers. This allows the company to maintain profit margins despite inflation, unlike bonds or cash, whose fixed returns lose real value.
• Sustainability Trends: Many S&P 500 firms are leaders in ESG (Environmental, Social, Governance) practices. With global capital increasingly flowing into sustainable investments, these firms attract premium valuations.

Ways to Invest in the S&P 500

With Vested, you can access the S&P 500 in the following ways:

• Direct Investment: You can invest directly in the S&P 500 by buying individual shares of the companies that make up the index, such as Apple, Microsoft, or Amazon. This approach gives you full control over stock selection, timing, and allocation.
• Index Mutual Funds/FoFs: You can access the S&P 500 through index mutual funds or FoFs. These funds either directly replicate the S&P 500 index or invest in overseas S&P 500 ETFs (Fund of Funds). They offer diversified global equity exposure, passive management, low costs, and returns aligned with the index’s performance.
• Derivatives: You can also take an advanced route by choosing derivative contracts on the S&P 500 that let you speculate on or hedge against movements in the S&P 500 index. Futures obligate you to buy or sell the index at a defined price on a future date. Options give the right, but not the obligation, to buy (call) or sell (put) the index at a fixed price before expiry.

How Can Indians Invest in the S&P 500?

If you are an Indian resident, you can have direct exposure to stocks listed on the S&P 500 by either opening an account with an Indian broker partnered with US brokers or using a foreign-registered online platform that allows trading in US equities.

Once you have opened an account, you can invest up to USD 250,000 in a financial year under the provisions of the Liberalised Remittance Scheme (LRS) introduced by the Reserve Bank of India. However, this limit includes remittances made towards travel, education, and gifts.

If you are looking for a trusted partner to start an S&P 500 investment journey in the US market, switch to Vested. To begin, register on the platform by submitting KYC details and documents, link your Indian bank account, and fund it with Indian rupees. The platform automatically converts INR to USD at the prevailing rate, and you can then start investing. 

How to Invest in the S&P 500?

Here is how to invest S&P 500 from India:  

• Step 1: Visit the Play Store or App Store on your phone and download the Vested app. You can also sign up directly on the website.
• Step 2:  Share your details and upload scanned copies of your PAN card and other ID proofs to complete the KYC.
• Step 3: After online verification, link your bank account to the Vested app and fund your account. The app will convert your deposits into USD in accordance with the RBI’s LRS rules.
• Step 4: Go to the search bar and search for S&P 500 funds or stocks. The stock details will appear on your screen. 
• Step 5: Scroll the screen, click on the ‘Buy’ option, and then enter the amount. Since Vested permits fractional ownership, you can enter any amount you wish to invest. Once done, confirm your order.
• Step 6: Re-login, and your investment details will appear at the top.

Risks of Investing in the S&P 500

Some of the risks associated with investing in the S&P 500 are:

• Currency Risks: Returns depend not only on index performance but also on USD–INR movements. If the rupee strengthens against the dollar, your gains can shrink even when the S&P 500 rises.
• Market Volatility: Global events like interest-rate changes, wars, or recessions cause sharp swings in US markets. The S&P 500 can experience quick drawdowns, which may unsettle investors not prepared for short-term volatility.
• Overvaluation Risk: During bull markets, S&P 500 stocks can become overpriced based on earnings expectations. Buying at high valuations increases the chances of muted future returns or temporary losses during market corrections.
• US Economic Dependence: The S&P 500 reflects the health of the US economy. Any recession, financial crisis, or prolonged US slowdown can reduce index performance, regardless of India’s economic conditions.

Taxation & Compliance

Before you invest in S&P 500 shares, there are certain investment and taxation rules you must be aware of.

• Dividend Income: When stocks listed on the S&P 500 declare dividends, they are credited to your account after deducting a withholding tax of 25%. The same income is taxed again in India, as per your tax slab. However, under the India–US Double Taxation Avoidance Agreement (DTAA), you can claim a foreign tax credit by submitting Form 67. Ensure the reported dividend is converted using the SBI TT buying rate on the last day of the month preceding the month of receipt.
• Capital Gains: Any profit made by selling stocks listed on the S&P 500 attracts long-term capital gains tax of 12.5% if the holding period exceeds 24 months. If sold before 24 months, it is taxed at your income tax slab rate, which can be as high as 30%.
• TCS Collection: If you invest over ₹10 lakh in a financial year under the LRS, the surplus attracts tax collected at source (TCS) at 20%. You can offset this TCS against the tax deducted at source (TDS) for the period by using Form 12BAA at the time of filing your ITR.
• Mandatory Disclosure: Whether your investments in S&P 500 stocks have delivered a profit or not, it is mandatory to disclose them in Schedule FA of the ITR. While disclosing, mention the date and cost of acquisition, broker details, and the total income or loss from each investment. Failure to disclose attracts a penalty under the Black Money Act.
• FEMA Compliance: As per the Foreign Exchange Management Act (FEMA) rules, you can invest in S&P 500 stocks as a resident in your own name. However, no investment is permissible in the name of a trust, partnership, or company, or through a joint account, and investments with foreign nationals or NRIs are not permitted.

Conclusion

With Vested, investing in the S&P 500 is easier than ever. All you need to do is go to the platform, register, link your Indian bank account, and fund it. After the conversion of rupees into USD, you can start investing in S&P 500–listed stocks. The best aspect of Vested is that you don’t need thousands to get started; regardless of the share price, just USD 1, which is equivalent to ₹87, is enough to access S&P 500–listed stocks.