ETF Beginner’s 10‑Minute Guide: What to Buy, How to Start

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ETF Beginner’s 10‑Minute Guide

Short version: ETF = a basket you buy at once. Easy diversification, low fees, simple trading. Just master costs, taxes, risks.

• Concept: one basket tracking indices/sectors/assets
• Costs: TER + spread → lower is better (vs same strategy)
• Taxes: domestic/foreign, dividend/capital gains differ

What & Why

• Pros: diversification, lower costs, transparent holdings, intraday trades
• Cons: falls with the market, FX/interest/liquidity risks
• Good for: simpler selection, steady contributions

Checklist when buying

Purpose	Index / Dividend / Bond / Cash‑like	Pick 1–2 core pillars
TER	Total expense ratio	Lower vs same strategy
Tracking	Index vs ETF gap	Smaller is better
Spread	Bid‑ask gap	Prefer higher liquidity
Taxes	Dividend/Capital gains	Differs by market/account
FX	USD exposure	Hedged vs unhedged

3 Types you’ll likely pick

• Broad index: S&P 500 / KOSPI200‑type market trackers
• Dividend focus: higher payout or dividend growth baskets
• Bond cushion: gov/IG corporates for drawdown control

7 Steps to start

1. Write goals & horizon (e.g., 5 years / monthly DCA)
2. Choose 1–2 core pillars (index/dividend/bond)
3. Compare TER/liquidity/tracking within same strategy
4. Set account & FX (fees/withholding if foreign)
5. Define rules (DCA & rebalancing frequency)
6. Record buys/dividends/weights
7. Review annually (goals/risks update)

Risks (know before buy)

• Market/sector drawdowns: even indexes fall
• Rates: bond ETFs drop when rates spike (duration!)
• FX: foreign ETFs move with currency
• Liquidity: thin volume → wider spread (cost ↑)

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Info only, not investment advice. Do your own research.