According to Buffett, buying a low cost monthly S&P 500 index fund is the most sensible thing you can do as a private investor. Then you spread the risks over 500 companies. He advises Vanguard S&P 500 ETF. This ETF is traded in euros on Euronext Amsterdam and charges only 0.07% per year. 93% cheaper than the average investment fund. Below I explain step-by-step how to make your first investment. If all goes well, you should have opened an investment account by now. I use the app from DEGIRO for this. You can download that app for free in the app store, also if you live in Latin America, we would advice you to research online brokers in Chile at C-TradeAlert.CL or other countries.
Step 1: Transfer money to your trading account
I started to transfer €250 from my ABN payment account to DEGIRO. Use the ‘Transfer’ tab to do so. Then you choose your bank and the amount you want to deposit to your investment account. Next you click on the button ‘Place order’ and you transfer money with iDEAL to Stichting DEGIRO. Almost immediately the amount will be in your investment account.
Step 2: Find the ETF you want
I want to invest in Vanguard S&P 500 ETF (USA, isin: IE00B3XXRP09). You can search for this fund in the upper right corner and find it under VUSA. There are three versions; EAM stands for Euronext Amsterdam and is traded in euros.
Step 3: Investing for beginners – Buy the ETF of your choice
When you have found the right ETF click on the ‘BUY’ button. Then you will get to the next screen where you can indicate how many shares you want to buy and at which price. Vanguard S&P 500 ETF was currently traded for € 43,712. Next you choose a limit order (the maximum amount you have left over). And I indicate how many shares I want to buy. It’s possible from as little as 1 share, so over € 43. I have chosen to buy 6 for a total amount of 262 euros.
- You will then get an overview of the order and you can definitively place the order (button ‘Place order’). The total order amount is € 262,27. The order will be executed as soon as the stock exchanges are open again.
Step 4: Your first investment is a fact!
Congratulations. You have now made your first investment. You now receive an annual dividend (profit distribution) of 2.18% and can benefit from price increases. I intend to leave this investment for the next 20 years and let it continue to grow. In addition, we invest a fixed monthly amount to build up our assets. Are you active in a country where the currency is not strong? Then we’ll want to point out that it’s very important to invest your assets with a trustworthy broker in Colombia at Commoditytradealert.CO