buy / sell etfs

WHAT YOU NEED TO KNOW ABOUT BUYING AND SELLING ETFs

ETFs can be bough during regular trading hours (9:30 AM EST and closes at 4 PM EST).

You will buy shares (small chunks) of your ETF. For example, if you have $1,000 to invest and the price is $27.50 per ETF share:

If you paid no commission on "buy" transactions (purchases), you'd be able to buy 36 shares (1000 divided by 27.50) for $990 (36 times 27.50). You'd have $10 left, uninvested.
Let's say you paid $6.99 in commission on the trade above - it would be taken from the leftover portion (10$ in this case).

The price to buy an ETF is slightly higher than the amount you would receive if you sold it at the exact same time.

You buy at the ‘ask’ price (also called 'offer' price).
You sell at the ‘bid’ price.
The difference between two is called the ‘bid / ask spread’ and reflects the cost of trading. Find out why the bid / ask spread exists.
Key takeaway:Tight (small) spread is better than wide spread. A spread that widened to more than 5 cents is suspicious – hold off transacting.

The price at which ETFs trade is usually slightly different than its NAV (net asset value) - the combined value of every securities it holds

NAV is the sum of prices of every security in a particular ETF and all payments those securities are due to receive (like interest or dividend payments), minus any payments they're due to make, divided by the number of ETF shares you own.
An ETF trades at a premium if its share price is higher than its NAV.
It trades at a discount if its share price is lower.
Key takeaway: Check the discount/premium amount for your ETF today, and compare it to past values. You want to avoid transacting on days when the discount / premium for your ETF seems higher / lower than normal.

When you buy / sell ETFs (as well as stocks and bonds), there are two different dates to keep track of: transaction and settlement.

The transaction date is when your order is filled and your transaction (buy or sell) is completed.
The settlement date is when money changes hands - when it leaves / enters your account. When making a purchase, the appropriate amount of money needs to be in your account before the settlement date.
Key takeaway: ETFs (and stocks and bonds) settle two business days after the transaction date (it's called "T+2"). GICs settle on the same day.

Make sure to use limit orders, instead of market orders. Make sure your online broker doesn't charge additional fees to place limit orders.

A limit order allows you to choose the price at which you want to buy or sell the ETF. Your transaction won't be completed unless your ETF reaches that price. Limit orders are good until cancelled.
Market orders are filled (completed) immediately, at the best available price.
The advantage of limit orders is they protect you from sharp moves in the market that could be quite unfavourable (like a ‘flash crash’).
The disadvantage of limit orders is that you may not complete your transaction. You need to check if your order has been filled and, if it hasn't, adjust the price and try again.
Key takeaway: Normally you should set your price 2-3 cents above the ask/offer price you see being quoted (when you buy) or below the bid price (when you sell) - to ensure your tran

If you opened a taxable account, avoid buying ETFs in december.

ETFs include any capital gains / losses they've made over the past year in their final distribution (they usually reinvest them in the fund so you won't receive a cash distribution).
You don’t want to be allocated such gains and pay income tax on them without having benefited from the ETF's performance during the year.
It's a good habit to develop, even if you invest only in passive ETFs, which don't produce many capital gains / losses.