ETF prices change throughout the day, just like stock prices. But does that mean long-term investors should steer clear of them? No. Here’s how to make ETFs a valuable part of your buy-and-hold strategy.
For more answers to common ETF questions, visit vanguard.com/etfanswers.
Are ETFs, or “exchange-traded funds,” just for active traders?
No. Just because you can buy and sell them day by day and hour by hour doesn’t mean you should. ETFs are great long-term, buy-and-hold investments. In fact, research shows that the vast majority of ETF investors hold them for years―rarely trading them during that time.
So how do you buy them?
First, you’ll need a brokerage account (like a Vanguard Brokerage Account), just like you’d use for stocks. You can place trades anytime the U.S. markets are open (9:30 a.m. to 4 p.m., Eastern time).
Keep in mind that ETF prices vary throughout the day, just like stock prices. So you may want to avoid buying during the first and last 30 minutes of the trading day (9:30 to 10 a.m. and 3:30 to 4 p.m., Eastern time). That’s when the markets could be either reacting to overnight news or experiencing a late-day surge in trading.
You can buy whatever number of ETF shares as you’d like—even if it’s just one share. Share prices can range from around $50 to a few hundred dollars depending on the ETF.
When you buy ETFs, you’ll need to choose an order type. A “market order” is the fastest. That’s because it usually goes through right away, at or near the current market price. If you want more control over the price you pay, consider a “limit order,” a “stop order,” or a “stop-limit order.” You can read more about each one at vanguard.com/ordertypes.
Before you place your trade, make sure you know how much you’ll pay in commissions. That’s the fee that the broker will charge you for making the purchase. You can always buy Vanguard ETFs® through your Vanguard Brokerage Account, commission-free. (Commission-free trading of Vanguard ETFs applies to trades placed both online and by phone. All ETFs are subject to management fees and expenses; refer to each ETF’s prospectus for more information. Account service fees may also apply. All ETF sales are subject to a securities transaction fee.)
Once you own an ETF, it’s OK to check it from time to time to see how it’s doing. However, try to resist the urge to sell based on short-term price swings. Market-timing is a losing game with few winners. You’ll be better off with a simple buy-and-hold strategy.
So remember: ETFs are suitable for any investors who want a diversified, long-term route to achieving their investment goals. Your success ultimately comes down to your asset allocation—having the right mix of stocks and bonds for your time horizon and risk tolerance.
Select from more than 75 Vanguard ETFs that cover nearly all areas of the U.S. and international bond and stock markets.
(Vanguard ETF® ticker symbols: VTI, VOO, VWO, VEA, VTV, BND, VUG, VNQ, VIG, VEU, BSV, VO, VB, VYM, VCSH, VGK, VCIT, VGT, BIV, VBR, VV, VXUS, VT, BNDX, VOE, VFH, VHT, VBK, VNQI, VXF, VPL, VOT, VSS, VMBS, VTIP, VDE, VDC, VIS, MGK, VCR, VPU, VAW, BLV, VCLT, VTEB, VOOG, MGV, VGSH, VGIT, VONG, MGC, VONV, VTWO, VOX, VWOB, VIGI, VOOV, IVOO, VYMI, VONE, IVOG, VIOO, VGLT, IVOV, EDV, VTHR, VIOG, VIOV, VTWG, VTWV, VTC)
You can either create an entire portfolio or fill gaps in your existing portfolio by focusing on specific asset classes or market sectors. To learn more, visit vanguard.com/chooseetfs.
*Commission-free trading of Vanguard ETFs applies to trades placed both online and by phone. All ETFs are subject to management fees and expenses; refer to each ETF’s prospectus for more information. Account service fees may also apply. All ETF sales are subject to a securities transaction fee.
You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules at investor.vanguard.com for limits. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.
Visit investor.vanguard.com to obtain prospectuses or, if available, summary prospectuses for Vanguard ETFs. The prospectus contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.
© 2018 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds.