How to Buy an ETF

Exchange-traded funds (ETFs) are an ideal investment for beginners because they’re easy to purchase and they provide exposure to a lot of different stocks or assets in a single fund. They also tend to have low costs, which means you won’t lose very much of your investment to fees.

ETFs often track a specific index (like the S&P 500), sector, or commodity. They’re traded on a stock exchange, just like the stock of any public company. By purchasing an ETF, you’ll get exposure to a large number of assets, which instantly gives you a more diversified portfolio than if you had purchased an individual stock.

Investing in real estate ETFs is simple, which is one of the reasons why they’re so popular. You may already have a brokerage account that allows you to invest in ETFs, and in this article, we’ll show you some of the best places to buy ETFs, like Public.com and Webull.

How to Buy an ETF

Here are the specific steps you need to follow to invest in an ETF.

Step 1: Open a Brokerage Account

You’ll need a brokerage account to buy an ETF. We recommend Public.com, but there are many other options as well (we’ll talk more about the options later in the article). Opening the account is straightforward. It’s a financial account, so you’ll need to enter your personal details to get the account set up.

You’ll need to decide which type of account you want.

• Retirement – Tax-advantaged accounts like Tradional IRAs and Roth IRAs are ideal but your contributions are limited and you’ll need to meet the eligibility requirements.
• Taxable – If your account is not a taxed-advantaged retirement account, it is taxable. The don’t come with the same restrictions as retirement accounts and you can use your money at any time. However, you’ll owe taxes for dividends and capital gains (the brokerage will provide you with the documents you need to file with your taxes).

For the purposes of this article, we’ll assume you’re opening a taxable account.

Step 2: Transfer Money Into Your Brokerage Account

Once your brokerage account is open, you’ll need to add some funds so you can invest. The details will vary, but each brokerage makes it easy to get money into your account. Typically, you’ll make a transfer from a checking account, and that will usually take a few days to process. After the money is in your brokerage account, you’ll be able to invest it.

Step 3: Research and Choose the ETF You Want

There are many different types of ETFs, so it’s important to research your options and choose one that fits with your investing strategy. ETF Database is a helpful website for researching any ETF, and there are many other sites you can use as well.

Pay attention to details like the category, expense ratio, and historical performance. We also have some articles that can help you to find specific ETFs that may be a good fit for your portfolio:

• The Best ETFs for Long-Term Growth
• The Best Real Estate and REIT ETFs

Step 4: Make the Purchase

Once you’ve chosen the ETF you want to purchase, you’re ready to invest. Buying an ETF is just like buying a stock. Each ETF will have a symbol or ticker, a short abbreviation. From your brokerage account’s dashboard, search for the ETF name or symbol to find it, and then select to purchase.

One of the reasons we recommend Public.com is because you can buy fractional shares of stocks or ETFs. If you don’t have enough money to buy a full share, you can purchase a fractional share.

Step 5: Set Up a Plan to Continue Investing

Now that you’ve made your initial investment, the next step is to consider how you will continue adding to your investment in the future. To grow wealth over the long term, you’ll need to keep adding to your investment (either purchasing more of the same ETF or purchasing other investments).

We recommend adding a line item to your budget for investing. Be sure to set aside each money to invest for the future.

How to Choose a Brokerage

When you’re deciding which online brokerage to use for buying stocks or ETFs, here are a few details you should consider.

• Fees – The less you pay in fees, the more money you’ll keep. A growing number of brokerages are offering commission-free trades of ETFs, so there’s really no reason to go with one that charges fees.
• Minimum Deposits – If you’re just getting started, you might not have a lot of money to invest right away. Some brokerages (see our recommendations below) will allow you to get started with any budget.
• Fractional Shares – The prices of ETFs will vary, but some cost hundreds of dollars. Being able to purchase fractional shares. If you don’t have enough money to buy a full share, or if you want to buy a few full shares plus a partial share, you’ll appreciate having the option to purchase fractional share. It gives you much more flexibility.

Related: How to Get Free Stocks

The Best Brokerages to Buy ETFs

Public.com

Public.com is the investing platform that helps people become better investors. You can invest in stocks, funds, and cryptocurrency with any amount of money.

You’ll also love the social aspect of Public.com. The platform prides itself on an inclusive, supportive community. You can follow investors, see inside other people’s portfolios, and learn from fellow community members. Whether you’re new to investing or a seasoned investor, Public.com is for you.

Join Public to get up to $300 of free stock when you make a deposit.*

Webull

Like Public.com, Webull also offers commission-free trades of stocks and ETFs. You can also purchase fractional shares for as little as $5 with Webull.

The most significant difference between Webull and Public is that Webull provides tools for more advanced research and analytics, while Public offers a cleaner interface and a better user experience.

Webull currently offers new users up to 12 free stocks for trying the platform. You’ll get two free stocks (each worth $3 – $3,000) for signing up. Deposit any amount to get up to 10 more free stocks. Sign up for Webull through this link to be eligible for the bonus.

M1 Finance

M1 Finance allows users to automate their investing with no management fees. You’ll get some of the same benefits you would get through a robo advisor, but without any of the fees. With a free M1 Finance account, you can invest in stocks and ETFs. You can also buy fractional shares if you want to get started with a small amount of money. The minimum initial deposit is $100.

When you create your free M1 Finance investor account, you’ll select a “pie” that you want to invest in. The pie determines the allocation for the investments that will be included in your portfolio. M1 Finance offers more than 80 expertly-created pies, or you can create your own pie. Once the pie is selected or set up, you simply need to contribute money to your account and M1 Finance will automatically invest it according to your settings.

Right now, M1 Finance is offering a $50 bonus for new customers if you sign up for M1 Finance through this link. Sign up and fund your account, and you’ll get a $50 bonus to invest.

Robinhood

Robinhood is another popular investing app that offers commission-free trades of stocks, ETFs, and popular cryptocurrencies, with no minimum deposit requirement. You’ll also be able to purchase fractional shares, so you can get started with a small amount of money. Robinhood doesn’t have the social features that you’d get with Public.com, but it does offer a user-friendly experience and plenty of investment options.

Currently, Robinhood is offering a free stock (worth $2.50 – $225) if you sign up for a free account through this link.

Fidelity

Fidelity is a popular brokerage that offers commission-free trades of stocks and ETFs. Through their “Stocks by the Slice” program, you can purchase fractional shares of most stocks and ETFs for as little as $1. There’s no minimum deposit to open an account. The minimum you need will depend on what investments you want to purchase, but you can easily start with fractional shares of an ETF.

Final Thoughts

ETFs are a popular investment partly because of their simplicity. They’re easy to buy and sell with a brokerage account, so you’ll have plenty of options. We recommend Public.com because they offer commission-free trades, fractional shares, and a $1 minimum investment.

*Public.com offer valid for U.S. residents 18+ and subject to account approval. This is not a recommendation. You can lose money with any investment. Open To The Public Investing is a member of FINRA & SIPC. Regulatory and firm fees apply. New customers receive free stock with value $3-300; 0.3% receive the max value. Cryptocurrency trading provided by Apex Crypto LLC (NMLS ID 1828849). Apex Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. See Public.com/disclosures/