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How to Invest in Index Funds in 2025
Trade your favourite markets with our top-rated broker, .
CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.
Putting your money into an index is a simple and convenient way to create an investment portfolio, especially if you’re just getting started with investing.
An index, like the , provides a snapshot of a particular section of the stock market, and by investing in it, you gain exposure to a diverse portfolio of stocks, which can help reduce risk compared to investing in individual companies.
One of the best ways to invest in the index is through Exchange-Traded Funds (ETFs). ETFs are designed to track the performance of an index and are highly convenient for beginners. They allow you to buy shares in the with just a few clicks.
Read on to learn how to invest in the effectively and explore the best methods to do so. Compare different investment strategies, available ETFs and index funds, and find out why index investing is a low-cost, relatively low-risk approach to growing your wealth over time.
How do I invest in the WISE.LON index?
Copy link to sectionThe easiest way is to sign up to a stock broker, open an investment account, and buy shares in an ETF. This guide explains how to do it:
Step 1. Sign up to Plus500
Copy link to sectionWe recommend using Plus500 to invest in . Create your trading account and deposit some money using a payment method of your choice.
This is a fairly quick process that takes just 15-30 minutes, but you need to supply a form of photo ID to verify the account before you can use it.
CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.
Plus500
Step 2. Decide how to buy
Copy link to sectionThis boils down to choosing between an ETF or buying the stocks in the index manually. ETFs are generally better suited to investors who want to passively track the ’s performance. Individual stocks offer a greater range of trading options and flexibility.
Step 3. Invest in the
Copy link to sectionSign into your trading account and search for the . Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.
Step 4. Monitor your investment
Copy link to sectionWhen you buy a stock, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.
Your trading account will show the price change in the since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the and close your position, ideally at a profit!
How much does it cost to invest in the index?
Copy link to sectionFrom $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD*, or share, plus the fees associated with it.
*Note that CFDs are not available to US investors.
| Asset | Plus500 fees | eToro fees | Public fees |
|---|---|---|---|
| Crypto | From 2% | 1% | 1-2% (spread) |
| Commodities | From 0.04% | From 2 pips | – |
| From 0.8% | – | – | |
| Index prices | From 0.7% | From 0.75 pts | – |
| Stocks | From 0.08% | 0% commission | Spreads |
| View more > | Plus500 > | eToro > | Public > |
ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.
All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars.
Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.
The different ways to invest in the WISE.LON
Copy link to sectionAs we mentioned above, there are numerous ways to put your money into the . ETFs and individual stocks are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.
ETFs
Copy link to sectionAn ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.
An ETF is one way of investing in the . It’s simply an investment fund that mirrors the performance of the . When you buy shares in the fund, the value of your investment will rise or fall with the itself.
ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the index, because you can buy or sell shares in the fund throughout the day.
index funds
Copy link to sectionAn index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the . It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.
However, there are a couple of differences. index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in index funds.
That means an mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.
CFDs (non-US users only)
Copy link to sectionCFDs (contracts for difference) are a way to speculate on price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the – but it’s separate from it.
As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.
All of this means CFDs offer the potential to outperform a fund that passively tracks the ’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.
futures
Copy link to sectionFutures contracts are agreements to buy or sell the WISE.LON at an agreed price on a set date in the future. futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.
Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.
Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the then you might want to short the so that you still make some money if the price falls.
stocks
Copy link to sectionAnother way to invest in the is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the in order to get broad exposure to its performance.
The most heavily weighted stocks in the tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.
One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.
The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.
Where can I invest in the index?
Copy link to sectionAccording to our expert research, Plus500 is the best ETF broker to invest in index funds.
Both ETFs and CFDs are available to invest in through Plus500 .
Here are three more places to buy the , ranked according to their cost, security, and features.
Plus500
CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.
51% of retail CFD accounts lose money. Your capital is at risk.
Should I invest in the index?
Copy link to sectionYes, investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It’s also ideal if you don’t have the time to actively manage a portfolio of stocks, because you can simply invest in a bunch at the same time and then leave it alone.
The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.
What are the advantages of investing in the BEL20 index?
Copy link to sectionAn index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the BEL20 index:
- The BEL20 is full of companies that operate around Europe. Not only are the stocks on the BEL20 the biggest companies in Belgium, most of them have branches and business all over Europe. The BEL20 is a great way to invest in European business.
- As it’s a more volatile index, there are more trading opportunities. Many stock indices don’t experience much day-to-day volatility, but the BEL20 is a small index and only includes a few stocks, so it can experience larger price swings each day.
- It’s cheaper to invest in the BEL20 than buy lots of individual stocks. Buying one share in a company like AB InBev can cost more than investing in the BEL20. A BEL20 ETF is a low cost way to get a ready-made investment portfolio that includes some of your favourite Belgian companies.
- An index offers a simple way to invest. When you invest in an index like the BEL20, you don’t have to make decisions over which specific stocks to invest in, or how much money to put in each company. All you need to do is buy shares in the index.
What are the disadvantages of investing in the BEL20 index?
Copy link to sectionThe main risk of investing in the BEL20 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of BEL20 investing.
- The top three companies have a major impact on the BEL 20’s performance. Thanks to the index’s weighting, more than a third of its money is in three companies: AB InBev, KBC, and Argenx SE. If those companies do poorly, the whole index is likely to fall.
- The BEL20 is a small stock market index. There are only a maximum of 20 stocks on the BEL20 at any one time. This makes it more volatile than other indices, as it doesn’t give you the breadth of company and industry coverage that you would find on a larger index, like the S&P 500.
- The Belgian stock exchange is tightly linked to other European markets. It’s part of Euronext, a cross-border European exchange that includes seven local stock exchanges. Any issue that affects any European market is likely to spill over and affect the Belgian market as well.
- All the companies on the BEL20 are Belgian. That means that a localised Belgian or European issue is likely to impact the entire index at the same time. You won’t benefit from geographical spread, which is exacerbated by the fact that Belgium is such a small country with most of its industries focused in the same area around Brussels.