How to Create an Account for Your ETFs - dummies

By Russell Wild

You — you personally — can’t just buy a share of an exchange-traded fund (ETF). You need someone to actually buy it for you and hold it for you. That someone is a broker, sometimes referred to as a brokerage house or a broker-dealer.

Some broker-dealers, the really big ones, are sort of like financial department stores or supermarkets where you can buy ETFs, mutual funds, individual stocks and bonds, or fancier investment products like puts and calls. You’ll recognize the names of such financial department stores: Fidelity, Vanguard, TD Ameritrade, and T. Rowe Price.

ETFs are usually traded just as stocks are traded. Same commissions. Mostly the same rules. Same hours (generally 9:30 a.m. to 4:00 p.m., Manhattan Island time). Through your brokerage house, you can buy 1 share, 2 shares, or 10,000 shares.

Here’s one difference between ETFs and stocks: Although people today rarely do it, you can sometimes purchase stocks directly from a company, and you may even get a pretty certificate saying you own the stock. Not so with ETFs. Call BlackRock or State Street and ask to buy a share of an ETF, and they will tell you to go find yourself a broker.

The first step, then, prior to beginning your ETF shopping expedition, is to find a brokerage house, preferably a financial department store where you can keep all your various investments. It makes life a lot easier to have everything in one place, to get one statement every month, and to see all your investments on one computer screen.