How To Buy Index Funds/ETFs For Beginners | Charles Schwab Tutorial 2022 (Step By Step)

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If you're looking to buy an ETF I'm Going to show you how step by step in This live demo what I'm not going to do Is give you an affiliate link or any Kind of sponsored link or any other like that this is just going to Be a simple presentation with no Affiliate or sponsor now while ETFs are The best option for most investors out There even before you buy your first one You really do want to make sure you are Familiar with the stock market as a Whole so your very first step here Should be to learn the basics of Investing and this will allow you to Answer the following questions what is The stock market what exactly is an ETF And how do you make money in the stock Market if you want to answer all of Those questions and you should be able To before you buy an ETF I do have a Full one hour video I put together Earlier this year on the stock market For beginners I will put the card up in The corner and it's going to answer all Of those questions and then some and get You fully prepared before buying your Very first ETF now since ETFs are very Different than their counterpart which Is stocks there are some important Things to note first of all while ETFs Are similar to stocks in that they trade Like stocks on the same exchanges they Also track an underlying asset and they

Have yearly fees so that is why it's Very important to be familiar with Something called the expense ratio of an ETF now I just did another video too on The top five ETFs to own for life so if You want to check that out as well That's going to be in the corner and we Get into some of the fees and breaking Down how to actually analyze an ETF and Whether or not it is an Investment-worthy product for you now in Order to buy an ETF you are going to Need somewhere to trade and this is Called your brokerage platform I'm going To have you fully make your own decision Here this is normally where most people Would blast you with an affiliate link Or sponsored offer offer I personally do Most of my stock trading over on Charles Schwab these days and I'm not paid by Them endorsed by them in any way so I'm Going to show you how to purchase an ETF Using Charles Schwab step by step now Before we get into the actual purchase Tutorial I do want to talk about order Types because while there are many out There there's four primary options for Order types available on Charles Schwab But I really only use two of them so I Want to teach those to you now that is The market order and the limit order First of all the market order is the Easiest to understand because it's Essentially an order at the best

Available price at an instantaneous Point in time it's saying I want my Stock I want it filled right now at the Best price you can get me your priority In this situation is getting your stock Not necessarily getting a desired price In mind if you have a price in mind that You're trying to pay for a stock or Better well that's where you would want To use a limit order a limit order is an Order that triggers at a specified price Or better in both market and limit Orders are applying to the buy side of Things and the sell side of things so You could do a market buy a market sell A limit buy order and a limit sell order And they're all essentially going to be Doing the same thing just the difference Being on the buy side or the sell side Of the transaction so let's look at the Visuals now just to make sure you Understand on the left looking at the Yellow X that indicates when the market Order is placed and it's filled Immediately in a millisecond and you're Going to get the best possible order Execution on the right there you have a Limit order and you can see the yellow X Indicating when the order is placed However the buy order isn't triggered Until the share price reaches our Specified price or better indicated by The arrow on the right where the buy Order is triggered if we didn't reach

That price level the order would not Execute so limit orders are something You use when a desired price is the Number one priority not necessarily Getting immediate order execution that Is the difference and those are the two Most common order types you will be Using with an ETF you may not find these To be as useful but they do trade Intraday and so you may be using Technical analysis or something to be Getting best possible price execution Um just by trying to somewhat time the Market intraday maybe using limit orders And look if all of that sounds confusing Don't worry guys it's a simple process To buy an ETF if you're just looking to Use Market orders that's what I use Ninety percent of the time but I did Want you to understand the difference Now one benefit that investors have Today that wasn't there before is the Use of fractional shares because in the Past you would have to buy an entire Share of a given stock or ETF to Purchase ownership and that could be Problematic with stocks like Berkshire Hathaway that have a share price north Of 440 thousand as of August 26th well With fractional shares you can buy that In dollar amounts meaning you don't Really have to worry so much about the Underlying share price and I did want to Mention that Charles Schwab does offer

This with a feature called Schwab stock Slices so you are able to buy fractional Shares with that brokerage so in order To buy an ETF you're going to follow Four steps number one you're going to Search for the ETF by name or by ticker Symbol in your brokerage platform after That you're going to specify the order Type and then indicate the amount you're Looking to purchase whether it is a Share value or perhaps a dollar value And then you're going to review your Order details before finally submitting The order so let's see in action let's Jump into my phone and into my Charles Schwab account and I will show you how To buy an ETF okay so here we are inside Of my Charles Schwab app on my phone so The very first step is to click on the Search icon in the top right corner and This is where you're going to search for Your ETF so we're going to be looking at A Charles Schwab ETF and no it's not Because that's the broker I use they Actually have some of the lowest fee ETFs out there and I'm going to show you How you can find that information as Well but we're going to be looking at The Schwab U.S dividend Equity ETF and That trades under the symbol schd so We're going to go ahead and type in SCH And this if you just do SCH it gives you A list of a lot of the Schwab ETFs but Schd is the Schwab us dividend Equity

ETF that we're going to be looking to Buy one share of so this right here is The quote page for the ETF on this Particular day we had a Fed uh rate hike Decision so you can see how that Impacted the ETF and this would be a Good example of where you might use a Limit order because if you wanted to get It at 70 exactly and let's say you Thought there was going to be a dip Around the mid reading well you could Have you know possibly done a limit Order and taken advantage of that now I Do want to show you a bit more Information about this ETF because there Is more info than just a given stock Because you have to look at things like The expense ratio among other things so We're going to scroll down here and take A look at distribution and yields as Well as fund profile since this is a High dividend yield ETF it does pay a Dividend and I'm going to show you how To enable dividend reinvestment for that All-important compound interest and then Of course there's also the expense ratio Here which is .06 percent that is very Low based on the averages out there but It is important to be aware of what that Expense ratio is for context on a Hundred thousand dollars that would be Sixty dollars per year as the annual Expense ratio so we're going to go up Top click on the green trade button and

Then we are looking at the order screen This is where we have to determine if We're going to buy sell or sell short we Are of course looking to buy and since There are dividends at play we are going To click this and enable dividend Reinvestment and since we have Fractional shares every dollar should go Back in now at this point we have to Figure out the quantity that we are Looking to buy and so here we are going To type in one because we're looking to Buy one share of this particular ETF now This is actually an interesting Situation and I didn't plan it out this Way but I only have seventy dollars and 44 cents sitting in my Charles Schwab Account right now so because of that a Share price for this right now is 70.88 But if the market takes a dip this Afternoon there's a chance that I might Actually be able to get that order to Execute so we are actually going to use A limit order in this case and then we Will check back at the end and see if The order executed at the end of the Trading day but I will show you how to Execute the market order too just in Case you want to ensure that your order X executes so with the market order you Would scroll down here and Select Market But if I review the order you're going To see it prompt me here saying that I May not have enough money so it's saying

It's going to be 70 78. I might have Margin enabled here as a default so I'm Not going to place that order because it Might put me a couple of pennies into Margin and I don't want to do that Because it would just be a pain in the Butt but this is what you would do for a Market order you would ensure you have Enough cash to cover the order and then You would click on the place order Button but in our case we are going to Use the limit order so we're going to go To limit we are still doing a buy order And we're at 70 88 so let's just say Since we have 70 44 we're willing to pay A limit price of seventy dollars and uh 30 cents we're going to click done We have a limit order and we're going to Do Um day only which is going to be up Until 4 pm Eastern Standard time we Click on review order and we're doing a Buy limit for one share of schd at 70.30 Or better day only so if it doesn't Reach that price by the end of the day The order will not fill but what we're Going to go ahead and do now is click on Place order and then it says order Received now at this point you click on The order status button to see if the Order closes and if we go ahead and Refresh we can see the order is still Open we're going to have to check at the End of the trading day and see if the

Price comes down enough for our order to Execute okay so it's been a few minutes Let's go ahead and check my Schwab Account and see if our limit buy order Actually executed so if we go in the app And click on order status you can see That my buy order for schd did in fact Close so if we click into this we can Get more information so I ended up Buying one share of schd at a limit Price of seventy dollars and 30 cents Per share which ended up being the exact Price that I paid because at some point In time schd dipped below that level now As of right now it is trading at seventy Dollars and 42 cents per share so I'm up Somewhere around like 12 cents or Something like that so there is some Level of you know price Improvement There using this limit order so it is Something to be aware of and this is a Good example of how you can use limit Orders to get the best possible price For your ETF purchases but do keep in Mind that there is a chance that your Order just doesn't get filled and that's All based on what whether or not your Limit price is met but anyways guys that Is going to wrap up this video here on How to buy an ETF Helpful to you and I really just didn't Win the traditional thing here of having Sponsors or Affiliates or All That Jazz Just because that has just really played

Out these days uh the one thing I do Want to mention here at the very end is For those of you who are more familiar With me and my time here on YouTube I've Actually been doing this full time since 2017 and I started this channel back in 2016. well I actually have a book coming Out in January about my side hustle Journey called from side hustle to main Hustle to millionaire and it walks you Through step by step this process that I Went through but more importantly how You can do the same so if you are Looking to launch a side hustle or scale Your side hustle into a full-time income Or leverage your side hustle into Becoming a millionaire that is going to Be a really solid book for you it is Available for pre-order now via the link On my shirt so be sure to visit scroll down to the Middle and then you can select major Book retail trailers and then you can Pre-order it on Amazon or multiple Different sources so if you are Interested in that that is one way you Can give back to me for this valuable Video and if not just your views alone Are perfectly fine so I do appreciate You sticking around to the end if you Want to check out the book the link is Down below thank you for tuning in and As always I hope to see you in the next Video

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