Buying your first ETF can seem daunting when you're new to investing. However, by following a simple method, investing becomes accessible to everyone. This guide will help you make the leap. «"How to buy your first ETF in 7 steps (simple guide)"», tu découvriras exactement quoi faire, du choix de ton ETF jusqu’à ton premier ordre d’achat, afin d’investir sereinement sur le long terme.😉
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Introduction: Buying your first ETF
You want to invest in the stock market, you have basic training, but you don't know where to start? Good news: buying your first ETF is much simpler than you might think.
Here are the 7 steps to follow to make your first investment with peace of mind.
The 7 steps to buying your first ETF
1. Understanding what an ETF is
Before investing, it's important to understand what you're buying.
An ETF (Exchange Traded Fund), also called tracker, is an investment fund that automatically replicates a stock market index.
Instead of buying a single stock, you invest in dozens, or even hundreds, of companies in a single transaction.
Some examples of ETFs:
- S&P 500 (500 large American companies)
- Nasdaq-100 (technology)
- STOXX Europe 50 (50 major European stocks)
- VT (global market)
If you'd like to delve deeper into this topic, I invite you to read my article. " How to invest in the stock market? ».
2. Define your investment strategy
Not all ETFs pursue the same objective.
Before choosing an ETF, ask yourself:
- What is your investment horizon?
- What level of risk are you willing to accept?
- Do you want to invest globally, in the United States, Europe, or in a particular sector?
A clear strategy will prevent you from changing your mind every three months.
I also recommend you read my article ” Dividend ETFs or Growth ETFs ».
3. Open a cheap stock market account
To buy an ETF, you need a broker. My favorites are:
The best choice depends primarily on:
- of the amount you invest each month
- of the ETF's currency
- the exchange rate fees
Take the time to compare the long-term fees before opening your account.
4. Add money to your stock market account
Once your account is open, make a bank transfer to your broker's account.
After receiving the funds, your money will be available to buy your first ETF.
5. Choose your ETF
This is probably the most important step.
Don't choose an ETF solely because it's popular. Check, for example:
- the index it follows
- management fees (TER)
- the size of the fund
- its diversification
- the motto
- its history
THE TER deserves special attention: the lower it is, the less the costs reduce your long-term performance.
If you're unsure, check out my article on... ETF selection.
6. Place your first market order
Once you have selected your ETF, all that remains is to buy it.
Most brokers offer several types of orders:
- market order (buy at current price)
- limit order (choose the purchase price)
- stop or stop limit (price speculation)
For a passive investor who invests regularly over the long term, Market ordering is the simplest.
It allows you to buy at the current price when the market is open, without seeking to speculate on the stock market.
7. Invest every month
Once you've bought your first ETF, the most important thing is to stay consistent.
Each month, after paying your expenses and putting some money aside, deposit the amount you can afford into your brokerage account and buy your ETF.
It doesn't matter if you invest 100 CHF, 300 CHF or 1,000 CHF per month The key is to invest regularly, without trying to guess the best time to buy.
Over the years, your portfolio will grow thanks to your new investments, potential dividends, and compound interest.
Investing is a marathon, not a sprint.
Buy in full or in part?
In most brokerage accounts, there are two ways to buy your ETF:
Buy a full share
For example, if an ETF is currently worth 100 $, you will need to invest a minimum of 100 $ to purchase your ETF (excluding fees).
In that case, you buy the entire ETF.
Buy a fraction
Many brokers now allow you to buy a fraction of an ETF.
For example, if your ETF is currently worth 100 USD, it is possible to buy:
- 100 $ → 1 share of the ETF
- 50 $ → 0.5 part of the ETF
- 25 $ → 0.25 ETF share
It's an excellent solution for starting to invest even with a small budget.
In your opinion, is it better to buy in full or in fractions?
In my opinion, except for investors with limited resources, It's better to buy ETFs in their entirety.
Primarily for two reasons:
- Easier to declare to the tax authorities
- By purchasing the entire ETF, the shareholder also receives the entire dividend.
Congratulations on your first purchase!
You have just made your first investment by buying your first ETF. Congratulations!
You will then receive a purchase confirmation and your ETF will appear in your portfolio.
This is the beginning of the road to financial independence.
From there, the hardest thing is… to do nothing.
Passive investors generally achieve better results by investing regularly and holding their investments for the long term.
In truth, The monotony of passive investing and impatience are often the two main enemies of an investor in a growth ETF.
It takes at least 10 years to obtain significant returns from a passive investment via a profitable ETF, and some investors even suggest 15 years.
Conclusion
Buying your first ETF is actually quite simple:
- Understanding what an ETF is
- Defining your ETF strategy
- Open a cheap stock account
- Deposit money
- Choosing which ETF to invest in
- Place a buy order in ”market” mode”
- Invest every month
The important thing is not to find the perfect ETF, but to:
- choose a coherent, diversified and potentially profitable ETF strategy
- to let the ETF grow over a long period (more than 10 years)
- to invest each month in your favorite ETF
FAQ: Buying your first ETF
How to buy your first ETF?
To buy your first ETF, simply follow seven steps: understand what an ETF is, define your strategy, open a brokerage account, deposit money, choose your ETF, place a market order and invest regularly.
What is the best ETF for beginners?
There is no single best all-around ETF. Global ETFs like the VT or those replicating the S&P 500 are often preferred for their diversification and low costs.
Which broker should I choose to buy an ETF?
The choice depends on your budget, the ETF's currency, and fees. Interactive Brokers, Saxo, Yuh, and Neon Invest are among the popular brokers depending on the type of ETF you're looking for.
How much investment is needed to get started?
You can start with a few dozen francs if your broker allows you to buy fractional ETF shares. The key is to invest regularly, according to your means.
Is it better to buy an ETF in its entirety or in fractions?
Both solutions work. Buying a fraction is ideal with a small budget, while a full share can be simpler to manage, especially for certain administrative procedures.
What type of order should I use to buy an ETF?
For a passive investor, a market order is generally the simplest solution. It allows for quick purchases at the available price when the market is open.
How often should I invest in an ETF?
Most passive investors prefer monthly investing. This regularity helps smooth out market fluctuations and benefit from compound interest over the long term.
How to buy your first ETF in 7 steps (simple guide)
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