An ETF, or exchange-traded fund, is a curated selection of stocks, bonds, commodities and other assets. Individual investors can buy shares in an ETF to receive a portion of the profits generated by the ETF portfolio. Most ETFs follow the performance of an index like the Dow Jones or a certain sector such as technology or biopharm, so they provide an easy, entry-level way to passively invest your earnings. Follow these steps to get started.
Begin with a broker account
You can sign up with a traditional broker, which is just as easy as opening a bank account. Most brokers even offer online services, so you don't even have to go to a branch. If you prefer a more passive approach, consider a robo advisor. These apps and websites invest on your behalf based on your answers to questions about your investing goals.
Select the right ETF
Narrow down the extensive field of ETFs by searching for a fund in your area of interest. You can also screen the thousands of selections by geographic area, type of asset, historic performance and countless other factors. Some funds have higher fees than others, so take costs into account as well.
Buy your shares
Purchasing shares of an ETFs is just like investing in stocks. You initiate the transaction through your broker account, a process you may know well if you already have a retirement fund or other investments. The diversification of an ETF means you can safely hold your shares to support long-term financial goals.