Invest in SEC ETFs – Investing in SEC ETFs Beginners Guide 2021

Fact Checked by Gary McFarlane

Exchange-traded funds, or ETFs for short, are SEC-registered investment companies that offer you as an investor a way for you to pool your money in a fund that in turn invests in stocks, bonds, or other assets. Many of the ETFs available are professionally managed through SEC-regulated investment advisors. 

Through investing in SEC ETFs, you can take advantage of a lot of digital solutions that are available out there, and through this guide specifically, we will be going over some of the best SEC ETFs out there, so you can know exactly what to look forward to the very moment you decide to invest in SEC ETFs.

#1 Broker to Invest in SEC ETFs – eToro

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How to Invest in an SEC ETF – Step by Step Guide 2021

We have created a step-by-step guide as to how you can invest in SEC ETFs easily through using the cryptocurrency brokerage you end up picking. We will be using the highly recommended eToro brokerage; however, whichever option you choose should work similarly. 

  • Step 1: Open an eToro Account: Simply go to the official eToro website and click on “Join Now,” after which you can fill in the required information required in the registration form.
  • Step 2: Verify Your identity: To verify your identity, you will be required to provide a photo ID, such as a passport or a driver’s license, followed by your proof of address, which can be in the form of a bank statement or even a utility bill.
  • Step 3: Fund Your Account: Navigate to the page which will allow you to deposit your funds and then simply click on “Deposit Funds,” where you can select your preferred payment method, and select how much you would actually like to deposit within the exchange and finalize the transaction by clicking on “Deposit.”
  • Step 4: Invest in SEC ETFs: Type in “ETF” on eToro, and click on the relevant option that will pop up for you, then click on “invest” and enter how much you would like to buy, after which you can finalize the transaction by clicking on “Invest” again to confirm the investment.

Where to Invest in SEC ETFs – Choose a Broke

1.eToro – Best Overall SEC ETF Broker

 

eToro is by far one of the largest and most well-established cryptocurrency brokerages out there. eToro has been around since 2007 and has served over 23.2 million users thus far, making it a home for a lot of investors. The main way through which eToro has gained its reputation and high user count is due to the fact that it is easy to understand and use even by the most inexperienced investor and offers a wide range of investments alongside other features. This means that no matter who you are or how far your experience in investing is, you can pick up the eToro application or website with ease and navigate through it, conducting just about anything you want to.

Essential Security and privacy

eToro is a brokerage that is fully regulated by the Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC), which are tier-1 regulators. What this means is that you do not have to be worried about your data or money getting misused or compromised. To ensure the highest level of security when it comes to the maintenance of sensitive information, eToro is fully SSL encrypted. Users even get access to 2-factor authentication, which allows them to set up an additional layer of protection when it comes to securing their accounts.

Unique features that make it stand out

There are specific features that make eToro stand out a bit when compared to the competition. This includes the CopyTrading feature, which allows any user to earn passive income through investing without much prior knowledge or experience in how investing works. This means that any user can essentially just copy the trade of another trader that has set up their trading strategy and get the benefits from doing so. Then there’s a feature called CopyPortfolios, which works similarly, and you can even get access to plenty of indicators the moment you feel comfortable with trading. eToro has found a solid balance between ease-of-use and features, and as such, has created a platform that both beginners and advanced traders can take advantage of.

eToro Fees

Fee Type Fee Amount
Commission Fee 0$
Deposit Fee £0
Withdrawal Fee £0
Inactivity Fee £10 per month

 

Pros

  • Fully Regulated Brokerage
  • Has access to CopyTrading and CopyPortfolio features
  • Enables two-factor authentication
  • No deposit or withdrawal fees
  • It is fully SSL Encrypted

Cons

  • Lacks indicators that could come in handy to advanced traders

67% of retail investor accounts lose money when trading CFDs with this provider.

2.Hargreaves Lansdown – a premium SEC ETF broker

When it comes to investing in SEC ETFs, you also have a personal and premium way through which you can tackle the task at hand. This is the case when you decide to use Hargreaves Lansdown. It was initially founded all the way back in 1989, making it one of the oldest and most well-established options out there, and over time, it has been focusing on establishing a premium investing experience which is accessible to anyone.

Security and privacy options

Hargreaves Lansdown is fully regulated, which means that it is subject to regular audits. Additionally, it also follows specific and strict data protection rules, which means that you can have peace of mind while using it, knowing that your data is fully secured.

Another interesting aspect surrounding Hargreaves Lansdown is the fact that all UK-based investors are covered up to £85,000 by the Financial Services Compensation Scheme (FSCS) insurance. There’s even a specific security center that is designed to educate each customer on potential security issues, alongside how they can spot a threat and how to protect themselves. 

Noteworthy additional features

In regards to the features, Hargreaves Lansdown is not lacking in this aspect. For example, it has a reputation for providing a premium experience, and this is because they have an investment consultancy service through phone or face-to-face meetings. They have made this an availability across all of their customers. They also offer a high level of customer support through email or a dedicated phone line. Keep in mind that the phone line specifically works Monday to Saturday. You have a high number of options available to you. However, each of these features comes at a cost and makes it one of the more expensive options out there.

Hargreaves Lansdown Fees

Fee Type Fee Amount
Commission Fee £11.95
Deposit Fee £0
Withdrawal Fee £0
Inactivity Fee £0

Pros

  • Convenience consultancy services
  • There are many analytical tools
  • Users get access to educational content

Cons

  • High commission fees
  • Supports GBP as a currency that could incur conversion fees

67% of retail investor accounts lose money when trading CFDs with this provider.

What is a SEC Exchange-Traded Fund?

The Securities and Exchange Commission is a federal government agency that was created by Congress back in 1943 as the first federal regulator of the U.S. securities markets, with the mission being to protect investors, maintain fair markets and facilitate all capital formation.

ETFs are a type of exchange-traded investment product that has to register with the SEC under the 1940 Act as either an open-end investment company, known as “funds,” or as a unit investment fund.


When compared to a mutual fund, the main difference here is that ETF shares are traded on a national stock exchange and at market prices, and as such, may not be the same as the net asset value of the shares. 

The fund provider essentially owns the underlying assets, which designs a fund to track their performance and then sells shares in that fund to the investors. Then, shareholders own a portion of an ETF. However, they do not own the underlying asset within the fund.

While ETFs are designed to track the value of the underlying asset or index, it can be a commodity, such as gold or a basket of stocks, that they trade at market-determined prices, which typically differ from that asset.

This means that an ETF provider considers all assets, including stocks, bonds, commodities, or currencies, and then creates a basket with a unique ticker. Then, investors can buy a share of that basket, similarly as the case might be with buying shares within a company, and then buyers and sellers can trade the ETF throughout the day on a brokerage, such as they would a stock.

Is investing in SEC ETF a good investment

ETFs are not mutual funds, and as such, are known for combining features of a mutual fund that can be purchased and redeemed at the end of each trading day. Retail investors can only purchase and sell ETF shares in market transactions, and ETFs do not sell individual shares directly to or redeem their individual shares directly from retail investors.

SEC ETFs can be a solid investment if you want to get into the world of investing efficiently.

Investing in a SEC ETF- What are the Positive Sides

Diversification

ETFs, let investors diversify across horizontals. This is due to the fact that it would take a lot of money to buy all of the components of a particular basket; however, with a single click, an ETF delivers benefits to your portfolio. This allows you as an investor to invest in stocks, bonds, and a particular commodity with ease.

Transparency

Anyone that has an online connection can access and search for the price activity of a specific ETF on a brokerage. And as such, a fund’s holdings are disclosed each day to the public, which leads to a high level of transparency/

Convenience

You can access the brokerage you end up picking with the goal of investing in SEC ETFs from just about anywhere. This means that you can have consistent, 24/7 access to just about everything that interests you and get specific alerts that are tailored to your specific preferences. This provides you with a high level of convenience when it comes to investing in SEC ETFs.

Investing in a SEC ETF- What are the Risks

Trading costs

ETFs costs might not end with the expense ratio due to the fact that they are brokerage-traded; they might also be subject to potential fees. Keep in mind that many brokers out there have dropped their ETF commissions to zero; however, not all of them.

Potential Liquidity Issues

ETFs that aren’t traded as frequently can be a lot harder to unload. This is also the case with any security; however, the current market prices will define everything when the time comes to sell.

Risks of the ETF Closing

The primary reason this can occur is due to the fact that the fund has not brought in enough assets to cover potential administrative costs. The largest inconvenience in this case of a shuttered ETF is that investors have to sell sooner than they might have anticipated, which could result in a loss. There is also the risk of reinvesting money and receiving an unexpected tax on top of that investment.

How to Invest in a SEC ETF with eToro

If you were looking for a detailed guide as to exactly how you can start your investment in SEC ETs, you’ve come to the right place. To make things easier on your end, we’ve created an in-depth guide that will go over everything you need to know when it comes to investing in eToro’s SEC ETFs. This is one of the easiest ways through which you can begin your investment today, so if you follow closely, you’ll learn everything you need to quickly and efficiently. 

Step 1: Open an account with eToro

The first step you will need to make in this case is to register with a trusted brokerage to facilitate all of your trading. In this case, we recommend eToro due to the fact that it is regulated by the Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC), which are tier-1 regulators. Furthermore, this will provide you with peace of mind knowing that your funds are in good hands. That said, to start with the account creation process, you will need to go to the official eToro website and click on the “Join Now” button that you will find there. You will be required to fill in the required information on this menu.

Step 2: Verify your Account

Being fully regulated, eToro will require additional documentation from your end so you can get your account fully verified. This means that you will have to go through regular audits and comply with strict regulations which surround money laundering. This means that you will need to verify your identity before you can start investing with eToro or any other reputable brokerage.

With this in mind, you will only require a few documents, such as your photo ID, passport, and proof of address.

Step 3: Fund your account

At this point, we assume that you have successfully created and then verified your account. With that in mind, the next step you will need to complete is to fund the account in question. To complete this step, you will need to click on the button that is marked as “Deposit Funds,” after which you can enter however much you want to invest. Once you do so, you can click on “Deposit,” and you will be able to see your available funds in the “Portfolio” section once you do so. You need to keep in mind here that eToro supports a wide range of payment options, such as credit cards, debit cards, bank transfers, and e-wallets such as PayPal and Skrill, which will easily allow you to complete your deposit.

Step 4: Invest in SEC ETF

Within the fourth and final step, you will need to invest in SEC ETFs. To do so, all you really need to do is go to the eToro official search bar and type in “ETF.” Click on the relevant option, after which you should see a blue button marked as “invest,” click on it, and type in the amount of money you would like to invest before confirming it.

Conclusion

SEC ETFs are truly an interesting option for a lot of new investors who wish to diversify their investment portfolio and are looking for something new and interesting to invest in. They also appeal to investors who are experienced and just want something new. 

After reading this guide, hopefully, you now have a full level of understanding when it comes to getting started with SEC ETF investments. All you really need to do is pick your favorite brokerage, look up ETFs and start investing immediately. 

Suppose you are still curious and undecided as to which brokerage you will be choosing for the fulfillment of this task. In that case, we highly recommend eToro due to the fact that it is regulated and easy to get into.

eToro – Best Platform to Invest in SEC ETFs

Where can I invest in SEC ETFs?

What are SEC ETFs?

What is the future of SEC ETFs?

Are SEC ETFs safe in the long term?

About Milko Trajcevski PRO INVESTOR

Milko Trajcevski is a truly determined content writer with a passion for the crypto industry and has a successful track record of researching and effectively writing articles about cryptocurrency, non-fungible tokens, and blockchain covering the fields of crypto-asset regulations, wallets and exchanges, liquidity, altcoins, DApps, forks, mining, laddering, security and enterprise blockchain technology.