How to Buy ETFs Online in 2024
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ETFs are funds that trade like a stock. They’re cheap and their portfolios include a diverse range of the most popular companies and sectors in the world. This guide explains the pros and cons of buying an ETF and shows you the best places to purchase one.
Compare the best ETF trading platforms
Copy link to sectionYou 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.
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How to buy ETFs online – a step-by-step guide
Copy link to sectionStep 1. Find a broker
Copy link to sectionYou 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 to find the best ETF platforms and compare them to 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 >
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Step 2. Sign up and fund your account
Copy link to sectionBefore 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
Copy link to sectionETFs 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
Copy link to sectionYou 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
Copy link to sectionBuying 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.
What is an ETF?
Copy link to sectionAn exchange traded fund (ETF) is an investment fund that pools together money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other assets.
Like individual stocks, ETFs are traded on stock exchanges across the world and allow investors to buy and sell shares throughout the trading day. ETFs offer a cost-effective way to invest in a broard market index, or specific sector without needing to purchase individual assets separately.
Should I invest in ETFs?
Copy link to sectionYou 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?
Copy link to sectionTo 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
Copy link to section- 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
Copy link to sectionWhat types of ETFs are available?
Copy link to sectionETFs come in all shapes and sizes. Some track a specific market, while others focus on a particular industry or sector. Below are a few examples of the types of exchange traded funds available.
- Stock ETFs. These types of ETFs invest in a collection of stocks, typically tracking a specific index like the S&P 500 or the FTSE 100.
- Bond ETFs. The best Bond ETFs focus on fixed-income securities, such as government or corporate bonds.
- Commodity ETFs. You can buy shares in a commodity ETF to track the price of physical commodities like gold, oil, or agricultural products.
- Sector and industry ETFs. If you want to target specific sectors then you can buy technology ETFs, healthcare ETFs, and more.
- International ETFs. These ETFs provide exposure to stocks or bonds from foreign markets. Use our guide to find the best international ETFs in 2024.
- Thematic ETFs. Thematic ETFs focus on trends or themes. For example, there are clean energy ETFs, artificial intelligence ETFs, blockchain ETFs, and more.
- Inverse and leveraged ETFs. These ETFs are designed for short-term trading, aiming to deliver multiples or inverse returns of an index. Our guides on the best inverse ETFs and best leveraged ETFs offer good examples.
- Crypto ETFs. A newcomer to the ETF world is crypto funds. You can now buy a range of Bitcoin ETFs or Ethereum ETFs.
ETF vs mutual fund, what’s the difference?
Copy link to sectionETFs and mutual funds are both popular investment vehicles and while they’re similar they differ in several key ways. ETFs are traded like stocks on exchanges, offering real-time pricing and liquidity throughout the trading day.
Mutual funds, however, are bought and sold at the end of the trading day at a set price. These funds are generally actively managed which means they’re usually more expensive than ETFs.
Finally, here are three more questions to consider before you invest in ETFs.
1. Is now a good time to buy an ETF?
Copy link to sectionThat depends on which ETF and on how the stock market is performing, that’s why there’s a detailed list of the best ETFs to buy in the current year. 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.
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2. What problem do ETFs solve? What are their future prospects?
Copy link to sectionThey 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 other FTSE 100 ETFs, 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.
3. Do you want to hold ETFs for the long term?
Copy link to sectionThe 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
Copy link to section
Michael Saylor’s MicroStrategy invests $1.1 billion to add 18,300 Bitcoins to its holdings
Coinbase stock nears death cross; Base Blockchain could be a catalyst
Meta resumes AI training using public social media data, testing UK regulators
More ETFs to buy
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