How to invest like an American
Britain should learn from the US. They put far more of their money into stocks and shares than we do, pay lower fees and make more — while boosting their economy
Holly Thomas
Tuesday February 24 2026, 6.00am GMT, The Times
UK investors are being trumped by those across the pond who are investing bigger and better.
The golden rules of investing start with developing a savings habit from an early age, remembering that stock market investing holds the potential for inflation-busting returns and keeping an eye on charges to help you retain more of those gains.
US investors are adhering to these rules. They start younger than us, favour the stock market far more than we do and pay less in fees by buying cheap funds.
Scott Gardner, an investment strategist at JP Morgan Personal Investing, said: “In the US, there is a greater culture and focus on business, investment and financial opportunities.
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“Society wants to celebrate success stories and it is common for people from all walks of life to want a piece of that success, whether they invest in a friend’s business idea or back a listed US tech leader in their portfolio.
“Additionally, US retail investors have a strong confidence in investing as a means to build wealth after historically high returns from the S&P 500 in recent years.
“Widespread access to financial news, investor education and US stock market coverage has made investing more accessible and fosters more informed investment decisions. As a result, many want to ensure their savings work harder. They see investing in financial markets as a viable way to build wealth.”
Here are some of the secrets behind their success and what we can learn from the Americans.
Unlock potential in the stock market
US households hold 41 per cent of their assets in equities, according to JP Morgan Personal Investing. By contrast just 8 per cent of wealth held by UK adults is in stocks and shares, according to the investment firm Aberdeen.
Gardner said: “US households have a strong exposure to equities and stocks, which has helped investors build their wealth off the back of strong home market returns in the S&P 500. Data suggests that US retail investors are more open to individual stock picking, often allocating to home-grown winners and technology stocks on the New York Stock Exchange and Nasdaq.”
Military personnel visit the New York Stock Exchange at the opening bell in May
TIMOTHY A. CLARY/AFP VIA GETTY IMAGES
Gardner said UK consumers also show a home bias to domestic markets. “Our research shows that 72 per cent of UK retail investors said they plan to invest in domestic markets like the FTSE 100 and 250. While UK markets have started the year well, returns have lagged other markets like the US over the long term.”
Having global exposure to bring balance to a portfolio is important.
Embrace low-cost investing
US investors tend to use tracker funds, which can cost less than 0.1 per cent in fees. They are cheaper than actively managed funds, which are run by a manager and a team of analysts. Investors pay for this expertise, which bumps up the cost.
According to the investment platform Vanguard, 51 per cent of US investors have money in index funds compared with 35 per cent in the UK.
Cost has been an increasingly important part of investment success in the US because American investors pay less than their UK counterparts. That’s because the US benefits from great economies of scale that can bear down on prices.
The average charge on index funds in the US is 0.05 per cent, less than half the UK figure of 0.12 per cent. It’s crucial to check the fees before you buy a fund.
• Investors make three times more money than cash savers
Keep an eye on platform fees
American investors tend not to pay a platform fee (known as broker fee in the US), which can also be significant. In the UK fees vary from about 0.15 per cent to 0.45 per cent. Even a small difference can compound over time and these costs erode returns.
Vanguard has compared the impact of costs based on an investor with a portfolio of £100,000 and a 6 per cent annual return.
A typical UK investor who pays fund fees of 0.8 per cent plus platform costs of 0.15 per cent has a net return of 5.05 per cent, equating to £165,500 after 10 years. A low-cost UK investor who pays fund fees of 0.2 per cent plus platform charges of 0.15 per cent has a net return of 5.65 per cent and would have £175,700.
By contrast a US investor paying fund fees of 0.05 per cent with no platform fee would have a 5.95 per cent net return and a pot worth £181,000 after 10 years.
US investors have strong confidence in the markets
ANGELA WEISS/AFP VIA GETTY IMAGES
The UK market is getting more competitive with the emergence of online brokers such as Trading212 and Freetrade, which is good news for investors. Traditional brands are responding — Hargreaves Lansdown is the latest to cut platform fees, from 0.45 per cent to 0.35 per cent starting in March, although this is still more expensive than other platforms.
James Norton at Vanguard UK said: “UK investors are becoming more cost-conscious, having woken up to the reality that fees eat into future returns. In the US this has been the case for decades.”
If you feel you’re paying too much, you can switch pensions, Isas and investments accounts to a more competitively priced rival platform.
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Start investing young
US investors start investing in young adulthood. The JPMorganChase Institute found that 37 per cent of 25-year-olds in the US invest, which compares with 28 per cent in the UK, according to the FCA’s report.
Gardner said: “Young Americans are getting a head start on their investment journey, often making initial investments at an earlier age than their UK peers.
“Research shows that ‘time in the market’ is one of the most significant factors in minimising the probability of loss when investing. Patience and commitment are often rewarded when investing, because time in the market gives your investments more opportunity to grow and compound over time.”
If you invest £5,000 every year from the age of 25, you will have £639,000 by the age of 65, compared with £354,000 if you started at 35. That makes you almost £300,000 better off, having contributed only £50,000 more. This is based on growth at 5 per cent a year.
The earlier you start, the better.
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