Aussie Firebug

Financial Independence Retire Early

If you’re on the path to financial independence and follow a few bloggers as they save and invest their way to freedom. You no doubt have come across an investment vehicle that just keeps on popping up everywhere you look.

 

Exchanged Traded Funds (ETFs)!

 

ETF meme

 

The holy grail of investing, according to most in this space. I’m more open to other types of investment classes such as real estate (I can almost hear the boos and hisses) and believe that each asset class has its strengths and weaknesses. But honestly, ETFs are recommended by so many people (Warren Buffett included) for very good reason:

  • Extremely low management costs (one of my ETFs charge 0.04%)
  • Great diversification
  • Low buy in and exit fees ($20 a pop depending on how much you buy/sell)
  • Can start investing with little capital (investment properties, on the other hand, require considerable start-up costs)

And there’s more but you get the idea.

 

So ETFs are awesome right! But how does one actually go about purchasing these little bundles of investment goodness?

 

Thinking

 

 

Directly through Vanguard vs Buying ETFs

This is the most confusing part of the whole thing. So you decide that you want to buy Vanguard ETFs because you’ve been hearing how awesome they are so you naturally do what any computer literate person would do.

 

You go to Google.

 

You punch in Vanguard, head to their site expecting it to be awesome and have them basically walk you through buying their product.

 

Errrrrr not so fast muchacho’s!

 

Vanguard’s site is crap. Yes, it has all the information you need on there in the form of white papers. But they have absolutely no funnel for a user to purchase their product. You sorta have to figure it out on your own. And to be honest, Vanguard doesn’t really need to rely on a fancy website or app (they don’t even have an app ffs). Their product is so good they don’t waste time and money on advertising and marketing.

 

Back to the point. You have two choices when it comes to buying a Vanguard product. You can either buy it directly from them (called managed funds) or you can purchase an ETF through a broker.

 

In a nutshell:

ETFs
  • Good if you make large or irregular investments
  • Requires trading flexibility
Managed Funds
  • Good if you make ongoing, small contributions
  • Does not require trading flexibility

 

The biggest factor is probably cost. Because depending on how often you’re going to make contributions, will dictate which method is right for you. There is a really good article that goes into detail about the costings of investing directly through a mutual fund vs ETFs on the Betterment website.

 

I have never purchased Vanguard products directly from them because it works out better for me to buy ETFs, so I can’t comment. But I have seen videos and it’s basically a signup, get your details, pick your fund type deal. If you have experience please comment below.

 

I do have experience buying Vanguard products through a broker though (see the video below to see me literally buying some).

 

Buying ETFs Walkthrough

  1. Log into your broker (I use SelfWealth) and head to trading > Place Orders
  2. Select the ASX (Australian Stock Exchange) code that you want to purchase (a list of all Vanguard listed ETFs can be found here) or use the search function
  3. Set order type as ‘Buy’
  4. Enter in how many units you wish to purchase
  5. Select at market value or list a price you’re happy with
  6. Set an expiry for the transaction
  7. Review your order and hit submit

(If you’re thinking about signing up with SelfWealth Get 5 free trades when you sign up using this link!)

Here’s an example of what mine looks like

SelfWealth Confirm Order

It’s that simple. Proceed to the next screen and confirm the order and you’re done. It will take a few days to process and the money will then come out of your nominated account and boom. You have now bought some ETFs.

 

If you have any specific questions please let me know and I’ll answer them to the best of my abilities.

 

Now go forth and fear not the simple process of purchasing ETFs!

 

 

 

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