Intro
Regular investment into an S&P 500 ETF is a popular way to start building your own savings portfolio. If you decided to do the same, but you've been discouraged by the complexity of opening a brokerage account and executing the trade itself, well, we feel your pain. In this guide, we will help you take the first step, which is for sure the hardest one. We will also help you turn investing into an easy habit.
ETF or exchange-traded fund (ETF) is a basket of securities that typically track an index, commodity, sector, or other assets. For example, if you invest in an S&P 500 ETF, you invest in the 500 biggest companies in the United States.
Your first broker
Finding the right broker could be a burdensome task. Let's keep it simple for your first trade. We think you should choose a cheap broker with an easy-to-use platform – a mobile app is even better. Account opening should be smooth and quick. This is what our Best brokers for beginners article is all about, check it if you like! Our choice for ETFs is the silver medal winner among the best brokers for beginners, Trading 212 . It offers:
- Real stocks and ETFs are commission-free.
- Quick and easy account opening.
- Great trading platforms.
You can easily open your account by clicking on the link below. This is an important step, but still not a commitment!
Visit Trading 212
When investing, your capital is at risk
If you don't like Trading 212, Alpaca from the third place is also a good choice to start investing into ETFs. It also offers free stock & ETF trading and a simple web and mobile trading platform. The winner of our Best brokers for beginners list, eToro is also a great platform however you should be careful to buy a real ETF there for regular investments, not a CFD based on that ETF.
If you would like to take a deep dive into the details, you can easily compare these brokers in our broker comparison tool. Do not worry too much though, all three could be a great choice to start investing.
Your first trade
At Trading 212 's Investment platform click "Search" and "ETFs". You will find a few different S&P 500 ETFs, for example, Vanguard S&P 500 ETF Accumulating (VUAA) or iShares Core S&P 500 ETF Accumulating (SXR8). There are minor differences that you can check on the platform or at the ETF provider's website, for example, the currency denomination (for example, if you would like to invest euros, you should choose a EUR-denominated one). However, your investment return will be pretty much the same.
After selecting the one you would like to buy, you can easily buy it on the platform.
Funding your account
To be able to trade, you need to fund your account. As ETFs are usually denominated in USD, EUR, or GBP, it could make sense to deposit in these currencies. If your local currency is a different one, you should check a digital bank to make currency exchange cheaper. However, for your first trade, you can simply deposit money with your favorite credit or debit card, and your broker will provide the right currency for a small fee.
Regular investment liberates you
Now that your first trade is done, you can easily do it again every month or so. This means that you should not deal with the issue of when to buy, and worry about trends, you should simply stick to your strategy of regular investments. When the price goes up, your existing holdings are worth more, when the price goes down, you'll buy your next chunk cheaper.
This strategy does not have a preset maturity. You can sell your holdings when you need the money you invested, however it is more likely that you will enjoy favorable returns if your investment horizon is longer.
If you would like to read more about regular investments, and the different types of securities you could consider besides ETFs, check out our article.
Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology.
