A Summary of the Differences Between UK and US Investors

At first glance, most of the investment articles, videos and podcasts shared on the web are created generally for ‘the general public’, but if you look closer, you’ll notice a clear orientation towards US investors. This has significant consequences because UK investors are not the same as US investors. They live in a different economy, face different financial prospects, and invest in a totally different environment. In this article, we’ll summarise the key differences between UK and US investors. We hope that this will help you spot red flags when US writers or content creators are providing information that may not apply directly to you as a British investor.

US v UK stockbrokers

If you’re reading US content, you may see frequent references to ‘Robinhood’ E*trade and Ameritrade and Charles Schwab. Of this list, only Charles Schwab actually operates in the UK under the same brand. This can make US financial journalism slightly disorientating for UK readers expecting to see some of the following top UK brokers:

Overall best broker

Etoro stockbroker

Trade shares with zero commission. Open an account with just $100. High performance and useful friendly trading app. Other fees apply. For more information, visit etoro.com/trading/fees.

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Best for £100k+

Interactive Investor Broker

Large UK trading platform with a flat account fee and a free trade every month. Cheapest for investors with big pots.

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Best for funds

Hargreaves Stockbroker

The UK’s no. 1 investment platform for private investors. Boasting over £135bn in assets under administration and over 1.5m active clients. Best for funds. 

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AJ Bell Youinvest Stockbroker

Youinvest stocks & shares ISA offers lower prices the more you trade! Which? 'Recommended Provider' for last 3 years.

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Nutmeg Stockbroker

Choose a pre-made portfolio in minutes with Nutmeg. Choose your level of risk and let Nutmeg efficiently handle the rest.

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Fidelity stockbroker

Buy and sell funds at nil cost with Fidelity International, plus simple £10 trading fees for stocks & shares and ETFs.

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Freedom Finance

Trade stocks & options on the advanced yet low-cost Freedom24 platform that arms retail investors with the tools to trade like professionals.

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Historical returns

The historical returns of the US stock market is markedly higher than the UK stock market. This difference persists over different time horizons, including the last few decades. 

UK v US investors
UK & US stock market returns don’t necessarily match up

It is easy to understand why this is the case. If you list some of the largest public companies in the US market today; 

  • Apple
  • Microsoft
  • Alphabet (Google)
  • Amazon

You’ll notice that all of these titans are technology-based and were founded in the last few decades. These companies created enormous value, and due to them choosing to IPO early in their corporate lives, this growth in value has accrued to US investors. Their rise to dominance (represented by trillion dollar valuations) has turbocharged the returns of US investors holding the stock of these high-flying tech companies since the 1990s. Fresher names such as Tesla, Netflix and Facebook have continued this trend in the 2010 – 2020 decade. 

In stark contrast, the four largest listed UK companies together with their founding dates are: 

  • Shell (1907)
  • Astrazeneca (can trace roots back to Imperial Chemical Industries in 1926)
  • BHP (1885)
  • HSBC (1865)

It is staggering that most of these firms on the UK main market were founded prior to the First World War.

While these firms are financially successful and have delivered reasonable shareholder returns over their lives, the magnitude of wealth created by these mature companies cannot compare to that of the trillion-dollar firms that have emerged in the US. 

This shows in the data. The S&P 500 has returned an average annual return of 11.88% between 1957 and 2021. Over its 38 years, until the date of writing this article, the FTSE 100 has increased by only 5.65% on an annualised basis. This ignores the effect of dividends, which will revisit later in this article, but with or without dividends, the S&P 500 is the highest-performing index.

The consequences of different historical returns of US and UK markets have consequences for financial planning. US financial advisers will use this higher dataset to model likely future performance. In contrast, a UK investor should treat such data with a pinch of salt unless they are planning to invest ‘like an American’. 

Regulatory environment

The UK financial markets are overseen by the Financial Conduct Authority and the Bank of England. Together, these bodies police all of the firms that offer a prescribed list of regulated activities. The UK regulatory system is generally well-regarded by international peers, although London’s status as a money-laundering hub is certainly hampering this reputation. 

The most high-profile US regulator is the Securities & Exchange Commission, who regulates public markets. The US also has stringent rules – take for example the Sarbanes Oxley act which raised the bar for corporate governance and financial controls. However, when it comes to the broader investor experience, the US operates a looser framework. 

Take Robinhood, the investing app, as an excellent example. Using the app, Robinhood traders can access complex derivatives such as options. The promotion of such products to retail investors is banned in the UK. Robinhood has repeatedly stalled its launch in the UK. 

This is a pervasive theme across the private and public financial markets. US investors generally have easier access to complex or higher-risk investment options than UK investors. The sophisticated investor framework applied by the UK makes it very difficult for an armchair investor to get access to hedge funds, private equity, venture capital and other moonshot options. 

Financial education

The approach taken in education is another difference between UK and US investors. 

There is little to no mandatory financial content in the UK curriculum for under 16s. Whereas in the US, many states have laws that require financial literacy classes to be taught in schools. 

While these courses will focus on the more fundamental issues such as money, debt and budgeting, saving & investing will also naturally feature in any course. This will encourage students to think of savings and investments as a key part of financial prosperity and give others the inspiration to learn more about this area in time for adulthood.

Risk-seeking behaviour

Culturally, UK citizens are known for being cautious and prudent. Our life assurers carry names such as ‘Prudential’ and ‘Legal and general’. This branding reflects the demands of UK savers, for safety and certainty when it comes to saving. 

When someone refers to an ‘ISA’ – a tax-free savings or investment account in the UK, they will most likely be referring to a cash ISA, rather than its risk-oriented ‘Stocks and Shares ISA’ variant. This reveals the pivot households in the UK have towards saving.

The UK property market has more supply-side constraints than the US, due to both a shortage of land and a highly restrictive planning system. This has led to property price growth across many decades. Owning a home and watching its value appreciate over time has become a national hobby – even if this is counterproductive for the economy and the younger generations.

As a result, discussion of property investment carries further than equities when friends and family discuss financial topics at the dinner table. Property has an (unearned) reputation for being a safe investment, whereas the stock market crashes of 2001, 2008 and 2020 will live on in public memory. 

In the US, there appears to be a stronger appetite to take risks in the prospect of higher returns. It seems tied to the national story of how the country came to be and its defining moments. 

The gold rush of the 1800s, the oil boom of the early 1990s and the Wall Street mania of the ‘roaring’ 1920s. US history is littered with bold examples of people risking it all in the hope of striking rich and creating a fortune. 

This attitude and mindset seem to have survived successive generations and motivate the day traders and investors of modern-day America. 

Income v accumulation preference

A key difference between US and UK investors that often goes unnoticed is the UK’s market’s skew towards dividends.

At the time of writing, the FTSE 100 index has a dividend yield of 3.6% – double the yield offered by the S&P 500. 

This is connected to the earlier point about the composition of these indexes. Technology companies, still enjoying a growth spurt, will tend to pay minimal dividends or even eschew them altogether. Whereas the steady oil, banking and pharma profits generated by the largest UK companies tend to be distributed rather than retained. 

This means the UK is a great place to be an income investor. With a careful selection of stocks, sustainable yields of 5% – 6% can be found in the UK market. Some British retirees rely upon a stream of dividends for their income, rather than selling units or shares to raise money. 

Culture of stock picking

The UK hosts The Financial Times, arguably the most successful financial print journalism outfit in the world. Yet in the US, investing media seems to permeate into everyday life. Take for example the news channel CNBC, which is dedicated to business and financial market news. 

Access to tax-free accounts

One factor that influences financial planning to an extreme extent is the availability of tax-free accounts. 

In the UK, investors can invest post-tax cash in the best stocks & shares ISAs, where their investments will be free from income and capital gains tax forever. Alternatively, they can invest their pre-tax cash in a pension scheme, which allows them to invest their untaxed income in the stock market, although future withdrawals are generally subject to income tax. 

In the US, the main tax-free account still offered is the 401(K) – an employer-sponsored pension plan that works in a similar way to UK-defined contribution schemes. Deposits are made from the pay cheque before tax is deducted, but future income taken from the scheme may be taxable. 


The common thread woven into most of the differences between US and UK investors above, is that the US stock market is larger, healthier and has produced more wealth. It makes sense that US investors, having grown accustomed to this market, have adapted by accepting the higher risks and devoting more of their savings and investments to the stock market. 

In the UK, savers place a higher value on security of income, using savings accounts, property and were available – dividend stocks to create a retirement portfolio that works for them. 

We can by no means generalise the differences between UK and US investors for everyone living in each nation. There are many financially illiterate folk in the US, and conversely many UK investors enjoy the thrill of having a 100% full tilt equity portfolio.

Thankfully, there is certainly no shortage of great UK stockbrokers for investors to compare.

Upon reflection, this article serves as a reminder that our geographical allocations are important. The Vanguard Lifestrategy equity portfolio (UK) allocates almost as much to US equities as to UK equities, showing how important the Vanguard team believes the US market is, even to investors residing in the British Isles.