Follow a few bloggers as they save and invest their way to financial independence if you’re on the road to financial independence. You’ve probably come across an investment vehicle that keeps showing up in unexpected places.
ETFs (Exchange-Traded Funds)!
Most experts in this field consider it to be the holy grail of investment. Other forms of investment classes, such as real estate (I can just hear the boos and hisses), have more appeal to me, and I believe that each asset class has its own set of strengths and flaws. But, to be honest, ETFs are endorsed by so many individuals (including Warren Buffett) for a solid reason:
- Management costs are quite minimal (one of my ETFs charge 0.04 percent )
- Diversification to the max
- Low entry and exit costs ($20 each transaction, depending on the amount you buy/sell)
- Can begin investing with a small amount of money (investment properties, on the other hand, require considerable start-up costs)
- There’s more, but you get the picture.
ETFs are fantastic, right? But how does one go about getting one of these tiny packages of investment goodness?
Buying ETFs vs. Directly through Vanguard
This is the most perplexing aspect of the whole situation. So you decide to buy Vanguard ETFs because you’ve heard they’re great, so you do what any computer savvy person would do: you do what any computer literate person would do.
You look something up on Google.
You type in Vanguard, go to their website, expect it to be fantastic, and have them lead you through the process of purchasing their goods.
Muchachos, don’t go that fast!
Vanguard’s website is a shambles. Yes, it has all of the necessary information in the form of white papers. However, there is no way for a user to purchase their product through their website. You’ll have to find it out on your own in the end. Vanguard, on the other hand, doesn’t really require a nice website or app (they don’t even have one, ffs). They don’t waste time or money on promoting and marketing because their product is so outstanding.
Let’s get back to the point. When it comes to purchasing a Vanguard product, you have two options. You can either buy it directly from them (called managed funds) or through a broker (called ETFs).
Cost is most likely the most important aspect. Because the frequency with which you will make donations will determine which technique is best for you. On the Betterment website, there is an excellent article that compares the costs of investing directly in a mutual fund vs. ETFs.
I’ve never purchased Vanguard products directly because I prefer to invest in ETFs, so I can’t comment on them. However, I’ve seen videos and it appears to be a signup, get your information, and choose your fund type of offer. If you have any experience, please share it in the comments section below.
I have, however, purchased Vanguard products through a broker.
Buying ETFs: A Step-by-Step Guide
- Go to trading > on your broker’s website (I use SelfWealth). Place Purchase Orders
- Choose the ASX (Australian Stock Exchange) code you’d want to buy (a list of all Vanguard listed ETFs can be found here) alternatively, use the search function
- Set the order type to ‘Buy’.
- Enter the number of units you want to buy.
- Choose a price that is fair market value or a price that you are comfortable with.
- Set the transaction’s expiration date.
- Review your order before submitting it.
- Here’s an example of how mine seems.
That’s all there is to it. Continue to the following screen to confirm your order, and you’re finished. It will take a few days to process, after which the funds will be transferred to your designated account. You’ve now purchased some ETFs.
Please let me know if you have any specific queries, and I will do my best to address them.
Now go forward and don’t be afraid of the simple process of buying ETFs!