The Basics of Placing an Order to Buy ETFs - dummies

The Basics of Placing an Order to Buy ETFs

Your first step to buying exchange-traded funds is to set up an account with a brokerage house. Then, you’re ready to buy your first ETF.

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

Most brokerage houses give you a choice: Call in your order, or do it yourself online. Calling is typically much more expensive; place all your orders online. If you need help, a representative of the brokerage house will walk you through the process step-by-step — at no expense to you.

Keep in mind when trading ETFs that the cost of the trades, if substantial enough, can nibble seriously into your holdings. To avoid such nibbling, don’t trade often (buy and hold, buy and hold, buy and hold!) and don’t bother with ETFs if the trade is going to cost you more than half of 1 percent.