How to Invest in Nikkei 225 Index Funds in 2025

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 Nikkei 225, 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 Nikkei 225 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 Nikkei 225 with just a few clicks.

Read on to learn how to invest in the Nikkei 225 effectively and explore the best methods to do so. Compare different investment strategies, available ETFs and index funds, and find out why Nikkei 225 index investing is a low-cost, relatively low-risk approach to growing your wealth over time.

How do I invest in the N225 index?

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The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an Nikkei 225 ETF. This guide explains how to do it:

Step 1. Sign up to eToro

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We recommend using eToro to invest in Nikkei 225. 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.

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Step 2. Decide how to buy Nikkei 225

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This boils down to choosing between an Nikkei 225 ETF or buying the stocks in the index manually. ETFs are generally better suited to investors who want to passively track the Nikkei 225’s performance. Individual stocks offer a greater range of trading options and flexibility.

Step 3. Invest in the Nikkei 225

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Sign into your trading account and search for the Nikkei 225. 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

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When 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 Nikkei 225 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 Nikkei 225 and close your position, ideally at a profit!

How much does it cost to invest in the Nikkei 225 index?

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From $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.

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 N225

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As we mentioned above, there are numerous ways to put your money into the Nikkei 225. 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.

Nikkei 225 ETFs

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An 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 Nikkei 225 ETF is one way of investing in the Nikkei 225. It’s simply an investment fund that mirrors the performance of the Nikkei 225. When you buy shares in the fund, the value of your investment will rise or fall with the Nikkei 225 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 Nikkei 225 index, because you can buy or sell shares in the fund throughout the day.

Nikkei 225 index funds

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An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the Nikkei 225. 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. Nikkei 225 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 Nikkei 225 index funds.

That means an Nikkei 225 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.

Nikkei 225 CFDs (non-US users only)

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CFDs (contracts for difference) are a way to speculate on Nikkei 225 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 Nikkei 225 – 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 Nikkei 225 CFDs offer the potential to outperform a fund that passively tracks the Nikkei 225’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.

Nikkei 225 futures

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Futures contracts are agreements to buy or sell the N225 at an agreed price on a set date in the future. Nikkei 225 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 Nikkei 225 then you might want to short the Nikkei 225 so that you still make some money if the price falls.

Nikkei 225 stocks

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Another way to invest in the Nikkei 225 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 Nikkei 225 in order to get broad exposure to its performance.

The most heavily weighted stocks in the Nikkei 225 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 Nikkei 225 index?

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According to our expert research, eToro is the best ETF broker to invest in Nikkei 225 index funds. 

Both Nikkei 225 ETFs and Nikkei 225 CFDs are available to invest in through eToro .

Here are three more places to buy the Nikkei 225, ranked according to their cost, security, and features.

Should I invest in the Nikkei 225 index? 

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Yes, Nikkei 225 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 Nikkei 225 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 Nikkei 225 index?

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An 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 Nikkei 225 index:

• The Nikkei indicates how the Japanese economy is performing. The Nikkei consists of 225 stocks hailing from 35 different sectors, with electronics the most heavily represented of those sectors. The Nikkei 225 Index is one of the most widely-used indicators of the performance of the Japanese economy.
• Get exposure to the largest businesses in Japan. The Nikkei 225 tracks the performance of Japan’s top companies, providing investors with exposure to the largest and most established companies in the country. 
• It is a diverse index. The Nikkei 225 is a diverse index that is spread across a good number of businesses. While the technology sector features heavily, other industries include providing some diversification to investors. 
• There is potential for growth. Japan has been experiencing economic growth, and its stable political environment means the Nikkei is much less volatile than other indexes. 
• You may benefit from currency fluctuations. Foreign investors may also be able to profit from foreign exchange rates changing in their favour. If the Japanese Yen appreciates against an investor’s home currency, it could be a positive, leading to larger gains. 

What are the disadvantages of investing in the Nikkei 225 index?

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The main risk of investing in the Nikkei 225 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 Nikkei 225 investing.

• The Nikkei 225 is concentrated in a few sectors. While it is a diverse index, it is heavily weighted towards certain sectors, such as the technology and automotive industries, which could expose investors to sector-specific risks. 
• The Japanese economy is growing very slowly. Japan’s overall economic growth has been slower in recent years than many of the world’s other major economies. Still, plenty of large-cap stocks on the Nikkei offer growth potential. Remember that bull markets send a signal to buy Nikkei stocks, and bear markets send a signal to stay away.

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