Posted by forex at 1:13 AM
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1. Research and understand ETFs. Exchange-traded funds are baskets of stocks, bonds or other securities that can be held long-term or traded in the short-term just like individual stocks. It's not uncommon for exchange traded funds to track specific indexes such as the Standard & Poor's 500 Index. Others may allow you to invest by a particular sector such as the Vanguard Materials ETF (VAW), which tracks a natural resources sector. There are a wide variety of ETFs to choose from, so do plenty of reading and research online. ETFs can be lower in risk than individual stocks and typically have lower fees than mutual funds.
2. Open an online stock trading account or an account with a local broker. Fund the account with cash. If you think that you can handle the trading yourself, then an online trading account may be for you. If you prefer to visit with an adviser, open an account with a traditional broker. Either way, make sure that you have the ability to purchase ETFs.
3. Execute your first ETF purchase after ample reading and research on which ETF you'd like to purchase. Many people will purchase a well diversified ETF for their first purchase. The Vanguard Total Stock Market (VTI) ETF is a good example of a widely diversified ETF with low fees and costs.
4. Set up an automatic reinvestment plan with your online account or traditional broker. This is a way to ensure that you will continue investment in ETFs. Continued reinvestment over time is a formula for long-term wealth.