Dear Investors,
Zee here. Let’s be honest, nobody likes paying more than they have to. Especially not when it comes to investing. The beauty of owning the S&P 500 is that you’re already buying a slice of America’s biggest and best companies…. so why hand over extra fees to do it?
The good news: there’s an S&P 500 ETF out there today that’s so cheap, it practically whispers, “I’m here to make you richer, not poorer.” Over time, those tiny savings can quietly grow into a pretty impressive sum, without you lifting a finger.
In our 3rd issue, we’ll uncover the cheapest S&P 500 ETF you can buy right now and show you why every basis point saved matters more than you think.
Let’s jump in.
🔍 Who’s Playing in the Money-Saving Arena?
First off, all these ETFs track the same index the crème de la crème of U.S. stocks but fees vary by provider.
SPDR Portfolio S&P 500 ETF (SPLG) currently offers an ultra-low 0.02% per annum expense ratio, making it the cheapest pure S&P tracker around .
Close on its heels are Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 ETF (IVV), both charging just 0.03% per annum, and boasting gigantic assets under management hundreds of billions .
🏛️ What’s the Trade‑Off with SPLG?
Lower cost: yes. But SPLG is still less liquid than SPY, IVV, or VOO .
SPY, the original S&P 500 ETF launched in 1993, charges 0.09% per annum, yet remains the most heavily traded and liquid option, making it a favorite for active traders or institutional players .
🧠 Why Should You Care About These Tiny Fee Differences?
It might seem trivial: 0.02% vs. 0.03%. But over decades and with large amounts, that difference adds up. For instance, on a $100,000 investment over 10 years, you might pay ~$90 less per year in fees with SPLG instead of SPY—and that compounds alike .
✅ Who Should Consider What?
Investor Type | Top Pick | Why It Works |
|---|---|---|
Long-term, fee-conscious | SPLG | Lowest fee (0.02%), best for buy‑hold investors |
Solid performance + low fees | VOO or IVV | Rock-bottom cost (0.03%), massive liquidity, great reputation |
Option traders or Active traders | SPY | Exceptionally tight bid-ask spreads and unmatched trading volume |
🌍 What About Investors Outside the U.S.?
You might consider UCITS‑compliant ETFs such as SPDR’s SPY5 or SPYL, which also offer 0.03% expense ratios and carry tax efficiencies like avoiding U.S. estate and withholding taxes
Investors can also consider leaning toward iShares Core S&P 500 UCITS ETF (Acc) or Vanguard S&P 500 UCITS ETF, typically around 0.07% Total Expense Ratio (TER), combined with accumulating share classes to avoid dividend withholding tax complications . Still, SPY5 or SPYL now often beat those on cost.
💰 1. How Much Does That 0.01% Actually Cost You?
Let’s say you invest $100,000 for 30 years, and your portfolio grows 7% annually before fees. Here's how tiny fee differences stack up:
ETF | Expense Ratio | Total Fees Over 30 Years | Ending Portfolio Value | Lost to Fees |
|---|---|---|---|---|
SPLG (0.02%) | 0.02% | ~$1,820 | ~$729,800 | Baseline |
VOO/IVV (0.03%) | 0.03% | ~$2,720 | ~$728,900 | -$900 |
SPY (0.0945%) | 0.0945% | ~$8,400 | ~$723,200 | -$6,600 |
Typical UCITS ETF (0.07%) | 0.07% | ~$6,100 | ~$725,500 | -$4,300 |
📌 Even a 0.01% fee difference = ~$900 more in your pocket over 30 years. So yes, fees matter.
🌍 2. US Listed vs. UCITS ETFs: What International Investors Need to Know
If you’re and investor outside the U.S. , you have a big tax and legal reason to avoid U.S.-listed ETFs even if they’re cheaper.
Topic | U.S.-Listed ETF (e.g. VOO) | UCITS ETF (e.g. CSP1, VUAA, SPY5) |
|---|---|---|
Dividend Withholding Tax | 15% (with U.S. tax treaty) | 0% (within accumulating UCITS ETFs) |
Estate Tax Risk | YES (40% above $60k if no treaty) | NO (domiciled in Ireland, no U.S. risk) |
Availability on platforms | Sometimes blocked (e.g. in EU) | Widely available to non-U.S. residents |
Expense Ratios | As low as 0.02%–0.03% | Usually 0.05%–0.07% (but improving) |
Dividend Handling | Distributing only | Choose: Distributing or Accumulating |
⚠️ Example:
If you’re a non-US citizen investor and hold VOO (U.S.-listed):
You’ll pay 15% dividend withholding.
If you die with >$60,000 in U.S. ETFs, 40% estate tax kicks in 😨.
If you hold SPY5 (UCITS ETF) instead:
No dividend withholding (if accumulating class).
No U.S. estate tax risk.
🧠 Bottom line: Slightly higher TER is often worth it to avoid thousands in tax headaches.
⚖️ 3. ETF Comparison Table: What Should You Pick?
ETF | Type | Domicile | TER | Dividend Style | Ideal For |
|---|---|---|---|---|---|
SPLG | U.S.-listed | U.S. | 0.02% | Distributing | U.S. investors, long-term buy |
VOO | U.S.-listed | U.S. | 0.03% | Distributing | U.S. investors, core holding |
SPY | U.S.-listed | U.S. | 0.0945% | Distributing | Traders needing high liquidity |
VUAA | UCITS | Ireland | 0.07% | Accumulating | EU/Asia investors, tax-efficient |
SPY5 | UCITS | Ireland | 0.03% | Distributing | EU/Asia investors, lowest TER UCITS |
CSPX | UCITS | Ireland | 0.07% | Accumulating | Popular tax-efficient choice globally |
🧾 Final Word
Best pure S&P 500 ETF if you care only about cost: SPLG at just 0.02%, ideal for long-term, passive investing.
Best blend of cost + liquidity: VOO or IVV, both at 0.03% with good trading volumes.
If you trade actively or use options: stick with SPY for its liquidity and narrow spreads, even though fees are higher.
Non-U.S. investors: look into UCITS ETFs like SPY5 or SPYL (0.03%), which are tax efficient and low cost.
P.S. Want to go beyond just buying the cheapest S&P 500 ETF?
Knowing where to put your money is important but knowing when and how to boost your returns is the real game-changer. That’s exactly what we teach inside, our signature investing programs that shows you how to build a market-beating portfolio without spending hours glued to the screen.
Disclaimer:
All information here is for educational purposes only. This is not financial advice. Please do your own research and speak with a licensed advisor before making any investment decisions. Past performance is not indicative of future returns.