How to buy ETFs online in 2021

Exchange traded funds offer a simple, low-maintenance route onto the stock market for beginners and experienced investors alike. Use this guide to learn how to buy one.
By: James Knight
James Knight
When he isn’t at work, James is an avid trader and golfer who likes to travel. He once fed,… read more.
Updated: Jul 30, 2021
Tip: our preferred broker is, eToro: visit & create account

ETFs are funds that trade like a stock. They’re cheap and their portfolios include a diverse range of the most popular companies in the world. This guide explains the pros and cons of using an ETF and shows you the best places to buy one.

Compare the best ETF trading platforms

You can get an ETF straight away by signing up with one of the brokers below. You can use our reviews to find out more about each platform in more detail, or simply head to their website through the links in the table. Alternatively, keep reading to learn more about how to buy your first ETF.

1
Min. Deposit
$50
Exclusive promotion
user-score
10
Trade/invest in stocks with just $50
Invest for dividends and get payout on stocks on Ex-Dividend day
Over 11 payment methods, including PayPal
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Bank Transfer, Wire Transfer
Full regulations list:
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
2
Min. Deposit
$1
Exclusive promotion
user-score
9.3
0 Commissions and no deposit minimums
Registered with and regulated by SEC and FINRA
Loss of cash protection
Start Trading
Description:
Financial company driven by technology and offering all-in-one self-directed investment platform that provides excellent user experience.
Payment Methods
Full regulations list:

How to buy ETFs online – a step-by-step guide

Step 1. Find a broker

You buy and sell ETFs like stocks, which means you need an online stock broker to execute your trades. Look for one that’s regulated, charges low trading fees, and which has a clean interface that makes it easy to find the assets you want to invest in. 

Read our reviews of the best platforms to compare them and choose your favourite. Or simply pick one of the options below, as these are two of the most popular brokers that are ideal for any beginner.

  • eToro: eToro is a leading online brokerage that lets you trade all sorts of assets, from stocks and cryptocurrencies to ETFs. You can start quickly and it’s a platform designed for beginners, with lots of material to help you on your way. Sign up for eToro >
  • Plus500: Plus500 is another popular online broker that offers CFD trading on a wide range of assets, including ETFs. It also offers more advanced features, such as leverage, for experienced traders. Join Plus500 today >

Step 2. Sign up and fund your account

Before you can make any trades you need to create an account. You will have to provide some personal information and contact details, like an email address and phone number, and attach a copy of your photo ID for verification. The process only takes a few minutes.

To deposit money into the account it’s best to use a bank transfer or card payment. If you want to use an alternative payment method, such as PayPal, then it might not be available with every platform. Use our detailed reviews to find out which brokers accept which payment method.

Step 3. Choose a fund

ETFs work by copying the performance of a market or an index. That means you can quite easily invest in companies from a particular country or industry when you choose an exchange-traded fund. If you think American stocks are going to perform well, then you could invest in an ETF that tracks the S&P 500.

If you’re more interested in a specific industry or segment of the market, then you can find ETFs for those too. Someone who was bullish about the prospects of the tech sector might want to buy a NASDAQ ETF. These are more risky, because all the stocks within them are affected by similar factors, but can grow in value quite quickly.

Step 4. Purchase your ETF

You gain access to an ETF by buying shares in it, so all you have to do is find the right fund, decide how many shares you want to buy, and execute the trade. Each ETF has its own ticker symbol that you can use to search for the one you want.

Step 5. Create a long term plan

Buying a single share in an ETF is only the first part of a successful strategy. The stock market has long been a great way to build wealth if you think about it in terms of years and decades rather than weeks and months. A strategy such as dollar-cost averaging, where you invest a small amount at regular intervals, is a relatively low-risk plan.

Should I invest in ETFs?

You should if you want a ‘set it and forget it’ investment. You can start with as much or as little as your budget allows and gain access to companies you might not otherwise be able to afford. They’re cheaper than using a managed fund and easy to buy through any online broker.

Where you should take a bit of extra time is in researching any fund you’re interested in. Each one has to publish which stocks it owns and it’s best to avoid any that are too reliant on a handful of companies. It’s also a good idea to compare the fees they charge, as their costs should be relatively low.

Still undecided?

To help you decide if ETFs are the best option, here is a summary of the pros and cons of buying one. Then there are a few more questions about timing your investment and whether ETFs are a good play for the future.

Pros

  • They’re simple to buy and sell through a broker
  • You only have to pay a small amount in fees every year
  • ETFs give you easy access to the most expensive, popular stocks
  • You can find ETFs that track the performance of any industry you like

Cons

Finally, here are three more questions to consider before you invest in ETFs.

1. Is now a good time to buy an ETF?

That depends on which ETF and on how the stock market is performing. Because these funds track the performance of whole indices, they are affected by wider economic forces. You want to invest at a time when the market is doing well, and be more wary during recessions.

You can see how the market is doing through your own research, or by following the work of our team of financial analysts. Use the links below to get the lowdown on whether we’re in a bull or bear market, and they can help shape how you invest.

Carnival Corp (NYSE: CCL) said on Friday its cruises operating in fiscal Q3 were cash flow positive. Shares of the company closed about 3.0% up on confidence that momentum will sustain in the upcoming months. Net loss increased sequentially to $2.8 billion Carnival reported $2.8 billion in net loss…
Cummins Inc (NYSE: CMI) shares didn’t perform well last several weeks as the company continues to face significant constraints in the supply chain. Fundamental analysis: Cummins continues to face significant constraints in the supply chain Cummins is an American multinational corporation that manufactures and distributes engines, filtration, and power…
Shares of Thermo Fisher Scientific Inc (NYSE: TMO) are up more than 30% on a year-to-date basis, but Goldman Sachs says “multiple growth drivers” will push the stock further up in 2022. Goldman Sachs sees 13% upside in Thermo Fisher In a note on Friday, Goldman Sachs’ Matthew Sykes…

2. What problem do ETFs solve? What are their future prospects?

They solve the problem of you having to pick your own stocks. Instead, you can easily add the most popular companies to your portfolio without paying hundreds of pounds for each share. They’re perfect for beginners who don’t have the time or expertise to decide which stocks to own.

Their prospects depend on which stocks they own and how long you invest in them for. Over a long period of time, an ETF that simply tracks the performance of a major index, such as the S&P 500 or FTSE 100, is likely to do better than the majority of other investments.

An ETF that follows a specific sector might do better, but it might do much worse as well. If you choose one with a narrower focus then you should be more active in managing it. Stay in touch with the latest news, so that you can react if there are any new developments which affect that industry in particular.

Apple shares have weakened from their recent highs above $140, and the current price stands around $128. Apple reported better than expected second-quarter results last week, and the company increased the quarterly dividend by 7.3%. Fundamental analysis: Morgan Stanley raised its target on Apple from $158 to $161 Apple shares…
Under Armour (NYSE: UAA) shares have weakened from their recent highs despite better than expected first-quarter results. The U.S. stock market is losing some ground this Tuesday, which also negatively influences Under Armour shares. Fundamental analysis: Under Armour shares are not undervalued Under Armour is an American sports equipment…
McDonald’s shares advanced after the company reported better than expected first-quarter results and closed the week at $236,08. Fundamental analysis: UBS raised its price target from $240 to $255 Even with the COVID-19 pandemic, this company’s business is going well, and McDonald’s reported better than expected first-quarter results last week.

3. Do you want to hold ETFs for the long term?

The best way to make money from ETFs is by taking a long term view. It is possible to trade them quickly, using features like leverage in order to profit from small price changes. However, the appeal of ETFs is that you can get started by simply signing up to a broker and they offer a low cost route to building your wealth over time.

Latest ETF news

Elon Musk, the CEO of Tesla Inc. (NASDAQ: TSLA), stated on Friday that the current semiconductor situation would be resolved by next year. The tech entrepreneur believes the chip scarcity is a “short-term” rather than a “long-term” problem. Several chip fabrication plants are being built Elon Musk said:…
The laboratory division, home to the original Echo and the Alexa voice assistant, is back in the news. Tech giant Amazon.com, Inc. (NASDAQ: AMZN) is working on designing and developing a series of new products and services at its Lab126 division. At a launch event which is scheduled…
Shares of Salesforce.com Inc (NYSE: CRM) have climbed nearly 10% since it raised its full-year guidance for revenue on Thursday, but Joule Financial’s Quint Tatro says it’s a stock that “he can’t get behind”. Tatro’s remarks on CNBC’s “Trading Nation”    Salesforce now forecasts $26.35 billion in revenue…

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James Knight
Financial writer
When he isn’t at work, James is an avid trader and golfer who likes to travel. He once fed, rode, and ate an ostrich all on… read more.