How to Invest in ETFs (Exchange-Traded Funds)

How to Invest in ETFs for Beginners

By Matthew Frankel, CFP – Updated Oct 11, 2025 at 6:29 PM | Fact-checked by Frank Bass

Key Points

ETFs allow investing in multiple stocks or bonds together, simplifying stock market access.
Unlike mutual funds, ETFs trade like stocks with fluctuating prices throughout the day.
Investors can start with the price of one ETF share, making it accessible without high minimums.

Exchange-traded funds (ETFs) are an easy way to begin investing. They are fairly simple to understand and can generate impressive returns with minimal expense and effort. They are also easy to buy and sell. Here's what you should know about ETFs, how they work, and how to invest in them.

Loading paragraph...

An infographic defining and explaining the term exchange-traded fund (ETF). — Image source: The Motley Fool.

Loading image...

Loading paragraph...

A chart comparing ETFs and mutual funds. — Image source: The Motley Fool.

Loading image...

Loading paragraph...

Criteria to choose an ETF

There are literally thousands of ETFs available to invest in right now. In fact, the number of ETFs recently surpassed the number of publicly traded stocks for the first time ever. So, how do you find the right ETFs for you?

Here are some of the things to consider:

Investment objective - This is the most important consideration. Do you simply want passive exposure to the entire stock market? Do you want exposure to a certain sector? Do you want to invest in a specific trend, like artificial intelligence?
Active versus passive - Do you want to simply track an index's performance over time, or do you want fund managers who try to beat a benchmark index?
Fees - You can find a basic S&P 500 ETF that has a 0.03% expense ratio, or you can find a large-cap ETF that has almost the same portfolio and charges 1%. Of course, there are some good reasons to choose a higher-cost ETF, such as if you want to invest in a highly specialized index. But if you find an ETF that meets your needs, it's worth checking if there's another that does essentially the same thing for a lower cost.

Loading paragraph...

Ticker Information Table
Company name	Current price
Vanguard S&P 500 ETF	$615.73
Schwab Strategic Trust - Schwab U.s. Mid-Cap ETF	$29.75
Vanguard Russell 2000 ETF	$99.00
Schwab Strategic Trust - Schwab International Equity ETF	$23.74
Schwab Strategic Trust - Schwab Emerging Markets Equity ETF	$33.82
Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF	$140.55
Schwab Strategic Trust - Schwab U.s. REIT ETF	$21.60
Schwab Strategic Trust - Schwab U.s. Aggregate Bond ETF	$23.65
Vanguard Scottsdale Funds - Vanguard Total World Bond ETF	$70.26
Invesco QQQ Trust	$608.38

Data as of Oct 23, 2025.

Loading ticker_table...

Expert Q&A on ETFs

Loading paragraph...

Loading faq...

About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelCFP

Matt Frankel has positions in Vanguard Russell 2000 ETF and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.

How to start investing in ETFs

Open your brokerage app: Log in to your brokerage account where you handle your investments.

Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.

Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.

Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.

Submit your order: Confirm the details and submit your buy order.

Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

10 of the best ETFs for beginners and their holdings

Vanguard S&P 500 ETF (VOO +0.29%): Large U.S. companies. (The S&P 500 is often regarded as the best benchmark for the overall U.S. stock market.)

Schwab U.S. Mid-Cap ETF (SCHM +0.61%): Midsize U.S. companies between those included in the S&P 500 and Russell 2000.

Vanguard Russell 2000 ETF (VTWO +0.62%): Smaller U.S. companies. (The Russell 2000 is the most widely followed small-cap index.)

Schwab International Equity ETF (SCHF +0.34%): Larger non-U.S. companies.

Schwab Emerging Markets Equity ETF (SCHE +0.73%): Companies from countries with developing economies, also known as emerging markets.

Vanguard High-Dividend Yield ETF (VYM -0.02%): Stocks that pay above-average dividends, mostly large-cap stocks.

Schwab U.S. REIT ETF (SCHH -0.73%): Real estate investment trusts (REITs), which own properties and tend to pay high dividends.

Schwab U.S. Aggregate Bond ETF (SCHZ -0.21%): Bonds of all different varieties and maturity lengths.

Vanguard Total World Bond ETF (BNDW -0.08%): Includes international bonds and U.S. bonds of various lengths and maturities.

Invesco QQQ Trust (QQQ +0.48%): Tracks the Nasdaq-100 index, which is heavy on technology companies and other growth stocks.

You might notice that this list is heavy on Vanguard and Schwab. There's a good reason: Both are dedicated to offering easy access to the stock market at a minimal expense, so ETFs from both tend to be among the cheapest in the business.

How to Invest in ETFs for Beginners

Key Points

Criteria to choose an ETF

Related investing topics

7 Best ETFs to Buy in October 2025

ETF vs. Index Fund: What Are the Differences?

Best Index Funds and How to Invest in Them

The Largest ETF Issuers

Expert Q&A on ETFs