How to buy the first ETFs?

Here is a simple article with the steps to take before buying the first ETFs. In order to invest in the stock market 😉

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Summary what is an ETF?

I wrote in the article “How to invest in the stock market” what is an ETF and why it is interesting to have stock portfolio management with an ETF.

Broadly speaking, an ETF (also known as a tracker) is a passive management of a diversified stock portfolio. The ETF invests according to a stock index, a geographic area or a stock market investment strategy by the investment fund.

For example, here are some possible stock market investments with an ETF:

Stoxx 50 (50 European stocks)
Emerging countries
SP500 (500 best US stocks)
Nasdaq (Top 100 Tech Stocks)
High Dividend Stocks
Bitcoin ETF

On the other hand, when you start trading on the stock market, choosing among the many ETFs is not easy.

Here are the steps to follow before buying the first ETFs 😊

Choosing your stock market strategy

The first step is to choose your stock market strategy ❗

I wrote 2 articles to help you:

I think that once you have read these articles and studied your strategy. As well as being aware of the risks you want to take. You will be able to move on to the next step 😊

Choosing a stock market account

Next, you need to choose a cost-effective stock account!

I have written several articles on the subject, on my page investment 😊

In broad outline, according to:

The origin of the ETF
The amount you wish to invest
The currency of the ETF.

I suggest one of these stock accounts:

⚠️ I suggest you read my articles on stock market accounts. It's on my page investment. In order to understand which stock account would best suit your investments 😉

Add money

Once you have opened your trading account, the next step is to add money to your trading account. Normally, each trading account has an IBAN with a reference number.

Therefore, tYou go to your checking account and make a bank deposit into your trading account with the amount you want. In order to have liquidity to invest in the stock market.

Choosing your ETF

Once you have added the money, you will need to choose the ETF that suits you.

⚠️ I suggest you take a look at mon article "how to choose ETF's”.

This point is very important! Analyze your stock market strategy and the ETF very well because you will probably invest regularly.

ETF Fees

I can't stress enough that the TER (ETF management fee ratio) is a very important aspect for trading.

Indeed, to make your money grow, it is important that the ETF fees impact your stock market profits as little as possible.

Purchase method

Then, depending on your stock account, you will be asked how to purchase your ETF? 🤔

We will offer you 4 modes:

Limited time
At the market
Stoploss
Stoplimit

⚠️ Note that at the limited price, stoploss and stoplimit are speculations ❗

In reality, these are modes where you can buy or sell at a price different from the current one. And you are not sure to buy or sell at the price you want.

In reality, if you are a passive investor like me who wants to waste a maximum of 5 minutes per month.

I recommend the simplest method ❗

-> You choose at the market and the quantity you want. <-

👉 At the market, simply means that you buy your ETF at the current stock market price. Which trades during business hours.

⚠️ Some ETFs have very different business hours than in Europe. For example, you may buy your US ETF at 10am in Europe and the purchase will only be made at 3:30pm Paris time (9:30am in New York).

The quantity

Here we are at the last step before finalizing your first ETF purchases!

In recent years, more and more trading accounts offer 2 ways to buy. Regarding the quantity:

At the price of the action
In fraction

👉 If you buy at the stock price, it's very simple!

For example, if one share of ETF costs $100. If you want to buy one share it's $100 (+ commissions). If you want to buy 2 shares of ETF's it's $200 (+ commissions)

1 ETF share	100 dollars
2 ETF's actions	200 dollars

On the other hand, if the price of an ETF share is trading at $100. And let's say, you only have $50 to invest.

👉 If your trading account offers the way to buy in fraction. In this case, you can buy the 0.5% of the action (+commissions).

0.5% ETF action	50 dollars
0.25% ETF's shares	25 dollars

This way of buying can be convenient if the starting price of the ETF is high for you. This way, you won't have to wait to have enough money to invest. Because you will be able to buy in fractions 😉

It's done !

🔺And it's done! You will have made your first investment! You will say to yourself “It’s super simple!”😊

Note that once purchased, you will receive a message to confirm you have purchased your first ETFs.

Indeed, investing these days is very simple and fast! For example, from a Smartphone with internet. And anywhere in the world 🗺️

Then, you just have to analyze the evolution of the ETF and receive your dividends.

Conclusion

➡️ Buying the first ETFs is not complicated. The easiest way is to:

Choosing your strategy
Open a cheap stock account
Select the ETF to invest in
Add money to the stock account
Buy at the market

👉 Since you will probably be investing regularly, it is important to be aware of the pros and cons of your investments.

Therefore, the most likely thing is that buying your first ETFs will be just a quick and easy step in your journey as a stock market investor 😉

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