How to Buy an ETF

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Ever wondered how to buy an ETF in Australia?

Because ETF's trade on the ASX, buying an ETF in Australia is exactly the same as buying any other Australian share.

If you have ever bought shares in Commonwealth Bank, BHP or Telstra then you already know how to buy an ETF.

Instead of purchasing shares of companies like CBA, BHP or TLS you simply purchase shares of ETFs like VAS, VGS or VGE.

If you have never bought shares on the ASX before then read on and I will show you how to go about it.

Open an account with a broker

For most Aussies the easiest way to open a new account to buy shares with is to open a brokerage account with whichever bank you use for your everyday banking:

Alternatively you can consider opening an account with one of the non-bank brokers.

SelfWealth is the leading non-bank broker in Australia and they currently offer Australia's lowest flat-fee brokerage.

Choose which ETF you want to buy

If you don't already know which ETF you want to buy, have a read of my article about the Best Aussie ETF's.

How to Buy an ETF

For this example let's assume you want to buy shares in VAS which is the ETF for the ASX-300.

Also let's assume you have opened a brokerage account with CommSec as they are the largest broker in Australia.

Here are the steps you need to take:

  1. Log in to your brokerage account
  2. Search for VAS
  3. Select BUY
  4. Enter the number of shares you want to buy
  5. Enter the price you want to buy your shares OR
  6. Select market order if you want to buy the shares at any price
  7. Click Proceed

If you sent a market order you will purchase shares in VAS immediately.

If you entered the price you want to buy shares at your order will be sent to the marketplace and you will have to wait for someone to sell their shares to you at the price you chose.

Assuming you entered a reasonable price it shouldn't take too long to fill your order.

And now you are the proud owner of an Australian ETF!

Keep an eye out for the postie who will be bringing you a 'welcome letter' from your new ETF provider. This letter will have instructions on how to register for the Distribution Reinvestment Plan if it is offered by that particular ETF.

If you don't want to register for the dividend reinvestment plan then there is nothing left to do. Well, nothing except reporting your dividend income to the tax man when the time comes!

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Categories Investing