ETFs or Exchange Traded Funds are a great way to invest in a diverse portfolio of underlying assets. ETFs are made up a hundreds and sometimes thousands of underlying stocks and bonds. This means you can invest in all of these assets with just one trade.
In this post I'm going to share the easiest ways to buy ETFs.
Buying ETFs through Acorns
Acorns is an app I've been using for the past two years. It basically invests your spare change in a diverse portfolio made up of ETFs.
What I love about Acorns is that you can start investing with absolutely know knowledge. You don't need to know anything about ETFs or stock trading. The portfolios have been put together by experts including Nobel Prize winning Economist Dr. Harry Markowitz. You can choose one of six portfolios based on your age and how much risk you want to take on.
Acorns works in the background by monitoring your transaction account and transferring spare change automatically. You can also choose to invest a lump sum or setup recurring deposits. Overall Acorns is a great choice if you want to start investing in ETFs but don't want to do any research. And yes it does work, I've made a profit of around 28% since I started using the app.
Buying ETFs on eToro
eToro is the broker I use for most of my trading. Through eToro you can trade stocks, commodities, forex, cryptocurrencies and of course ETFs. eToro offers a large range of ETFs that you can both buy and short.
One of the biggest advantages of eToro is that you can buy fractional shares. This means you don't need to buy 1 entire share of an ETF. You can choose to just buy a small amount – say $50 worth and increase your position over time.
You can trade ETFs with leverage on eToro, or you can trade without (my recommendation). And there are no commissions or fees for unleveraged trades. This means you can buy a diverse portfolio of ETFs and hold them for long term gains.
Disclaimer: 62% 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.
Buying ETFs on Robinhood
eToro stock trading isn't available in the U.S, but Robinhood is. Robinhood is doesn't charge any commissions when you buy stocks. This means you can start investing in ETFs with less cash. On traditional brokers, you need to invest at least $1000 (in my opinion) in order to offset the large commissions that you are charged when you open and close a trade. On Robinhood you can't buy partial or fractional shares.
Finding ETFs to Buy
When you start out I recommend investing in the ETFs that track the large markets. For example SPY tracks large and midrange U.S companies. It's important you know what you're investing in before you buy as some ETFs are very complex and only designed for experienced investors.
If you're new to trading and ETFs, you could try copy trading. This is where you copy the trades made by a more experienced ETF trader. Whenever this trader makes a trade, your account will make the same trade. You can Copytrade ETFs on eToro.