You buy ETFs from an investment dealerInvestment dealer A securities firm that buys and sells a wide range of investments. They are likely a member of the Investment Industry Regulatory Organization of Canada (IIROC).+ read full definition through a full-service or online trading platform. Here’s how it works:
- You can buy or sell ETFs any time the stock marketStock market The collection of markets and exchanges where stocks, bonds and other securities are issued or traded.+ read full definition is open. ETFs are traded throughout the day at the current market priceMarket price The amount you must pay to buy one unit or one share of an investment. The market price can change from day to day or even minute to minute.+ read full definition.
- ETFs have tickerTicker A record of the current or recent trading activity on an exchange.+ read full definition symbols, just like stocks.
- There is no minimum investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition amount.
- An ETF’s market price during the day will usually not be the same as its net asset value (NAV)Net asset value (NAV) The amount that a single mutual fund unit is worth in dollars. It is based on the value of the assets of the fund, less the fees, expenses and taxes, divided by the number of units in the fund.+ read full definition because of changes in the underlying prices of the ETF’s assets and the demand for the ETF throughout the day. However, at the end of the day, an ETF’s market price should be close to its NAV. If the NAV and market price are very different at the end of the day (when NAV is updated), this could be a sign that the ETF is less liquid than those with market prices close to their NAV.
- Since ETFs are bought and sold like stocks, investors must pay a trading fee (commission) to buy and sell them. These fees vary depending on the dealer and the type of accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition you have.
ETFs tradeTrade The process where one person or party buys an investment from another.+ read full definition like stocks. You need to open a trading account with a full-service or online investment dealer to trade them. You can open a full-service brokerage account where an advisor gives you advice and makes trades on your behalf, or a discount brokerageDiscount brokerage A brokerage firm that charges lower fees to buy and sell investments, as opposed to a full-service brokerage. Does not provide investment advice.+ read full definition account, where you do the buying and selling yourself without advice. Learn more about trading ETFs.
Learn more about opening a trading account.