Choosing a Broker, Opening an Account and First Purchase
The difference between knowing what you want to invest and actually doing it comes down to three practical steps: choosing the right broker, opening an account, and buying your first ETF. Less complicated than it seems — but the details matter.
6.1 Choosing the Right Broker
A broker is the platform through which you buy and sell ETFs. For European retail investors there are dozens of options, but they differ significantly on a few crucial points.
The costs of a broker — beyond transaction fees: transaction costs are visible, but there are more costs to watch out for.
| Cost type | Explanation | Watch out for |
|---|---|---|
| Transaction costs | Per buy or sell | Fixed amount vs. percentage — for small amounts this counts heavily |
| Custody fees | Annual fee for holding your investments | Some brokers charge % of assets — becomes dominant with large portfolios |
| Inactivity fees | Costs for extended periods of not trading | E.g. eToro: $10/mo after 12 months of inactivity |
| FX margin | Markup when converting currencies | Can be 0.1–1.5% — often hidden in the spread |
| Dividend processing | Fee on dividend payments | Usually low or free with major brokers |
For a long-term investor with monthly contributions low transaction costs matter most. For a buy-and-hold investor with a large portfolio custody fees and FX margins can exceed transaction costs.
6.2 Opening an Account
Opening a broker account is nowadays entirely digital and typically takes 10–30 minutes. There are, however, a few steps and things to watch out for.
The investor profile — why it matters
Every regulated broker is required under MiFID III to draw up an investor profile for you. This is not a formality — it determines which products you can buy and which warnings you receive. They ask about your experience, risk tolerance and financial situation.
- Be honest: if you indicate you're an expert when you're just starting out, you may miss potentially useful warnings.
- If you're assessed as too conservative, you may not be able to buy certain ETFs.
- The profile can be updated afterwards.
6.3 First Purchase
Actually placing an order is the point where many beginners become unsure. There are a few different order types and the choice matters.
For a liquid MSCI World ETF a market order is fine. For certainty about price: use a limit order slightly above the current ask price.
Common mistakes with the first purchase
Searching by name instead of ISIN
There are dozens of MSCI World ETFs from different providers. Without an ISIN number you may buy the wrong one — with a higher TER, wrong replication method or unfavourable tax treatment.
Buying outside trading hours
Some brokers let you place orders outside trading sessions. These are then executed at the opening — with wider spreads than during the day.
Starting too small out of fear
Your first purchase doesn't need to be perfect. €200 in an MSCI World ETF is a better starting point than waiting months for the ideal moment. The right moment doesn't exist.
Immediately investing all your savings
For large amounts it's sensible to spread your entry over 3–6 months (dollar-cost averaging) to spread the entry timing risk.