You need a brokerage account, money to invest, and about five minutes to place an order

Buying an ETF is simpler than buying individual stocks because you are purchasing a basket of securities all at once. The process starts with opening an account at a brokerage firm — the company that holds your money and executes trades. You then deposit cash, search for the ETF by its ticker symbol, enter how many shares you want, and confirm the purchase. The whole transaction typically settles within two business days, meaning the ETF shares appear in your account and your cash is deducted.

The main decision before you buy is which brokerage to use. Different firms charge different fees, offer different research tools, and have different account minimums. Some brokerages charge per trade; others charge nothing. Some require $500 to open an account; others have no minimum. Your choice of brokerage does not change what ETF you can buy — nearly every major ETF is available at nearly every major brokerage — but it does change what you pay and what tools you have access to.

Key Takeaways

  • You must open a brokerage account before you can buy any ETF, and you will need to deposit cash into that account first.
  • ETFs trade during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), and your order executes at whatever price the ETF is trading at when your order reaches the market.
  • Most brokerages charge no commission to buy or sell ETFs, but some charge per-trade fees or require account minimums, so compare before opening an account.
  • Your ETF shares settle in your account within two business days, and you can sell them anytime the market is open.

Choose a brokerage and open an account

A brokerage is a financial firm licensed to buy and sell securities on your behalf. Major brokerages include Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Vanguard, and Robinhood. Each one operates the same basic way — you open an account, deposit money, and place trades — but they differ in fees, minimum deposits, and the tools they provide.

To open an account, visit the brokerage's website and click the button to open a new account. You will provide your name, address, Social Security number, and employment information. The brokerage will ask what type of account you want: a taxable account (also called a standard or individual account) or a retirement account (such as an IRA). For most people buying their first ETF, a taxable account is the right choice because there are no contribution limits and no age restrictions on withdrawals. Retirement accounts have tax advantages but come with rules about when you can withdraw money.

The application takes 10 to 15 minutes. Once you submit it, the brokerage will verify your identity and approve your account, usually within one business day. You will then receive login credentials and can proceed to funding your account.

Deposit money into your account

Before you can buy an ETF, you must have cash in your brokerage account. Log into your new account and look for a link labeled "Deposit," "Fund Account," or "Add Money." The brokerage will ask how much you want to deposit and which method you want to use.

Most brokerages accept bank transfers (also called ACH transfers), which pull money directly from your checking or savings account. A bank transfer typically takes three to five business days to complete, though some brokerages offer faster transfers for a fee. You can also deposit by check or wire transfer, though wire transfers usually cost money. Some brokerages allow you to link your bank account once and then transfer money instantly in the future.

There is no minimum amount you must deposit, though some brokerages require a minimum to open the account (often $500 to $2,500). Once your deposit clears, the cash sits in your account and you can use it to buy ETFs.

Search for the ETF and review its details

Every ETF has a ticker symbol — a short code of letters that identifies it. For example, SPY is an ETF that tracks the S&P 500, and QQQ tracks the Nasdaq 100. You need to know the ticker symbol before you can buy. You can find ticker symbols by searching the ETF's name on the brokerage's website, on the ETF provider's website (such as Vanguard or iShares), or on financial websites like Yahoo Finance or Morningstar.

Once you have the ticker symbol, log into your brokerage account and search for it in the "Trade" or "Buy" section. The brokerage will show you the ETF's current price, the number of shares outstanding, and the trading volume (how many shares trade each day). Review this information to make sure you have found the right ETF. If the trading volume is very low — fewer than 100,000 shares per day — the ETF may be difficult to buy or sell without moving the price significantly.

Most brokerages also show the ETF's expense ratio, which is the annual fee the ETF charges as a percentage of your investment. For example, an expense ratio of 0.05% means you pay $5 per year for every $10,000 invested. This fee is deducted automatically from the ETF's value, so you do not pay it separately.

Enter your order and confirm the purchase

Once you have found the ETF, click "Buy" or "Trade." The brokerage will ask you to enter the number of shares you want to purchase. If you want to invest $1,000 and the ETF is trading at $100 per share, you would enter 10 shares. Some brokerages let you enter a dollar amount instead of a share count, which they will convert to shares automatically.

Next, you will choose an order type. A market order buys the ETF immediately at whatever price it is trading at right now. A limit order lets you set a maximum price you are willing to pay; if the ETF reaches that price, the order executes, but if it does not, the order sits open until you cancel it or the market closes. For most people buying ETFs for the first time, a market order is simpler and more reliable.

Review the order summary, which shows the ETF ticker, the number of shares, the estimated cost, and any fees. If everything looks correct, click "Confirm" or "Submit." The order is now live and will execute within seconds during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). If you place an order after market hours or on a weekend, it will execute when the market opens the next trading day.

Understand settlement and what happens next

Once your order executes, the ETF shares are yours, but the transaction does not settle immediately. Settlement is the process of transferring the shares to your account and deducting the cash from your balance. For ETFs, settlement takes two business days. This means if you buy an ETF on a Monday, the shares appear in your account on Wednesday and your cash is deducted on Wednesday.

During the two-day settlement period, you own the shares but cannot sell them. You also cannot use the cash you spent to buy something else. Once settlement is complete, you can sell the shares anytime the market is open, or you can hold them indefinitely.

Your brokerage will send you a confirmation email showing the trade details: the date, the ETF ticker, the number of shares, the price per share, and the total cost. Keep this email for your records. You can also view all your holdings and their current value by logging into your account anytime.

Frequently Asked Questions

Can I buy an ETF with less than $100?

Yes. ETFs trade in individual shares, and you can buy as few shares as you want. If an ETF costs $200 per share and you have $100, you cannot buy a full share, but some brokerages offer fractional shares, which let you buy a portion of a share. Check whether your brokerage supports fractional shares before opening an account if this matters to you.

What happens if I place an order after the market closes?

Your order will not execute until the market opens the next trading day. If you place an order on Friday after 4 p.m., it will execute on Monday morning at the market open price, not at Friday's closing price. You can cancel the order anytime before it executes.

Do I have to pay taxes when I buy an ETF?

No taxes are due when you buy. Taxes are owed only when you sell the ETF at a profit, or when the ETF pays a dividend. The amount of tax depends on how long you held the ETF and your income level. Consult a tax professional for details about your situation.

Can I set up automatic purchases of an ETF?

Many brokerages offer automatic investment plans that buy a set dollar amount of an ETF on a schedule you choose — for example, $500 every month. This is called dollar-cost averaging. Set this up in your account settings once your initial deposit clears.

What if I want to sell my ETF shares?

Log into your account, find the ETF in your holdings, and click "Sell." Enter the number of shares you want to sell, choose a market or limit order, and confirm. The order executes immediately during market hours, and the cash settles in your account two business days later.