How to invest in ETFs | A step-by-step guide for European investors
These days, buying a first ETF takes less time than opening a bank account. The process is short, the minimum investment on most platforms is low, and the mechanics are no more complicated than placing an online order.
What takes longer is everything that comes before it: how much to start investing in ETFs with, which type of fund to pick first, and whether to go self-directed or fully managed. There is no single right way to do it, either. ETF investing looks different depending on the amount, the time horizon, and how hands-on an investor wants to be.
This guide does not prescribe one path. Rather, it lays out the practical decisions that every new ETF investor will face, so that by the end, anyone learning how to invest in ETFs can move forward with a plan that fits their financial goals and risk tolerance.
Questions to ask before a first ETF investment
→ What is a realistic amount to start investing in ETFs with as a beginner?
→ What is the difference between picking individual ETFs and using a managed ETF portfolio?
→ What ongoing costs should a new ETF investor expect?
→ What are the advantages of investing in ETFs, and what are the real risks?
Disclaimer
This is a marketing communication and in no way should be viewed as investment research, investment advice, or recommendation to invest. The value of your investment can go up as well as down. Past performance of financial instruments does not guarantee future returns. Investing in financial instruments involves risk; before investing, consider your knowledge, experience, financial situation, and investment objectives.
In this guide to understanding ETFs
- Five steps to a first ETF investment at a glance
- The right starting amount for investing in ETFs for beginners
- Regular contributions and passive investing in ETFs
- Common beginner mistakes to avoid
Five steps to a first ETF investment
The path from decision to first purchase is not rigid, but most investors move through five stages in roughly this order.
Step 1. Set a starting amount
The amount matters less than the habit. An investor who contributes a modest, regular amount and stays consistent over years can build meaningful exposure, because postive returns may generates further returns over time, though returns are not guaranteed, and the value of an investment can fall below the amount contributed. That compounding effect is what can turn small, repeated contributions into a larger sum.
For example, €100 per month at an average annual return of 7% could grow to roughly €17,400 over 10 years, of which over €5,400 comes from compounding alone, not from money the investor put in.¹
¹ Illustrative example only. Assumes a constant 7% annual return with monthly contributions of €100 over 10 years, before fees and taxes. Projections are not a reliable indicator of future performance. Actual returns will vary, and the value of an investment can fall below the total amount contributed.
What shapes the right starting amount is not a universal number but the investor’s own financial goals. An investor saving for retirement in 25 years and an investor building a shorter-term reserve will invest different amounts at different frequencies, and both are valid.
The one principle that does apply regardless of amount or timeline: only invest money that can stay invested for the medium to long term. ETF values fluctuate, and an investor who may need the capital back within months could be forced to sell at a loss.
Step 2. Pick a route: Self-directed or managed
Before selecting any specific fund, the bigger decision is the approach. There are two main routes into investing in ETFs, and the right one depends on how much involvement an investor wants.
Individual ETFs | Managed ETFs | |
Who selects the ETFs | The investor | The platform |
Who rebalances | The investor | Automatic |
Minimum investment | From €1 | From €50 |
Fees | Commission-free: €0 to buy or sell² | Commission-free: €0 to buy or sell² |
Level of involvement | Hands-on | Hands-off |
Suited to | Investors who want full control over every holding | Investors who want diversified ETF exposure without ongoing management |
² Each ETF carries its own annual fee (Total Expense Ratio) charged by the ETF provider, built into the ETF price.
Neither route is inherently better. This comparison of individual ETFs vs Mintos Core ETF walks through the trade-offs in full. Many investors start with a managed portfolio and move to self-directed as their confidence grows, or use both at the same time.
Step 3. Select an ETF or portfolio
For self-directed investors, this is the step where the practical questions multiply. With thousands of ETFs available in Europe, narrowing the field can feel overwhelming. Four guiding principles make it manageable.
- Start broad: Starting broad rather than betting on a narrow sector reduces the risk of concentrated losses and is one of the key advantages of investing in ETFs over picking individual stocks.
- Check the ongoing cost: Every ETF carries a total expense ratio (TER), an annual fee charged by the provider and deducted from the fund’s returns. For broad index ETFs the TER is often below 0.25% per year, but it compounds over time and is worth comparing.
- Accumulating vs distributing: An accumulating ETF reinvests dividends automatically, which can be more tax-efficient in some countries, depending on local tax rules, and allows returns to compound without the investor needing to act. A distributing ETF pays dividends out as cash.
- Look at what is inside: The holdings of any ETF are publicly disclosed. Checking the top positions, the geographic split, and the sector breakdown confirms whether a fund actually delivers the exposure its name suggests.
For investors using a managed portfolio, this step is handled by the platform. A managed ETF portfolio will select and combine funds based on the investor’s risk level, and rebalance automatically as market conditions shift.
Step 4. Open an account and place the first order
With the approach chosen and the fund or portfolio identified, the remaining steps are mechanical.
- Register on a regulated investment platform
Identity verification under EU regulation is standard and protects the investor’s account. The process includes a short suitability questionnaire that helps match the investor to the right product. The questionnaire assesses knowledge, experience, and, for managed portfolios, financial situation and objectives, as required under EU investor-protection rules.
- Deposit the starting amount
Most platforms accept bank transfers, and some support instant payment methods.
- Place the order
For self-directed investors, this means searching for the chosen ETF, entering the amount, and confirming the purchase. For managed investors, the platform allocates the deposit into the portfolio automatically. Most regulated platforms support fractional trading, so the starting amount does not need to match the full share price.
Step 5. Automate contributions and review periodically
The first purchase is a milestone, not a finish line. The real power of ETF investing comes from consistency over time, which is the foundation of passive investing in ETFs.
- Set up a regular contribution: Automating a fixed monthly amount removes the temptation to time the market and can help capital enter steadily, buying more units when prices are low and fewer when prices are high. This discipline, sometimes called euro-cost averaging, can smooth out the impact of short-term volatility and lets compounding do its work uninterrupted. Euro-cost averaging does not guarantee a profit or protect against loss in declining markets.
- Review periodically, not constantly: Checking a portfolio once a quarter or twice a year is enough for most long-term investors. The goal is to confirm that the holdings still match the original plan, not to react to every market movement. Over-monitoring tends to encourage over-trading, which adds cost and reduces returns.
Advantages and risks of ETF investment
Understanding the advantages of investing in ETFs alongside the real risks is essential before committing capital.
Advantages
- Instant diversification
A single ETF can hold hundreds or thousands of securities, spreading risk more effectively than buying individual stocks or bonds one at a time. Diversification does not guarantee against loss.
- Low ongoing cost
Because most ETFs are passive, their TERs are low compared to actively managed funds. That cost difference compounds meaningfully over a long holding period.
- Accessibility
Investing in ETFs for beginners is now possible from very small amounts, and the process is no more complicated than buying a share. Fractional trading and managed portfolios have lowered the barriers that once made diversified investing feel out of reach.
- Liquidity
ETFs trade on an exchange during market hours, so an investor can buy or sell at a live price rather than waiting for end-of-day pricing. This flexibility is one reason ETFs are often compared favorably to index funds in the liquidity dimension.
Risks
- Market risk
The value of an ETF rises and falls with its underlying basket. If the index or sector it tracks declines, the ETF declines with it. An investor can receive back less than the amount originally invested.
- Cost is low, not zero
The TER and any platform or brokerage fees still apply. Over long holding periods, even small cost differences compound, so checking fees before buying matters.
- Currency risk
An ETF that holds non-euro assets exposes an investor to exchange rate movements. Even if the underlying securities perform well, an unfavorable currency shift can reduce returns when measured in euros.
Capital invested in ETFs is at risk. The value of an ETF can fall as well as rise, and past performance is not a reliable indicator of future results.
Common beginner mistakes
A few recurring errors are worth naming, because avoiding them from the start saves both cost and frustration.
- Chasing past performance: An ETF that returned 30% last year will not necessarily do so again. Past returns reflect specific market conditions, not a guarantee of future ones. Selecting a fund based on its long-term track record and underlying index makes more sense than chasing a recent spike.
- Over-trading: Every buy and sell can carry costs, and frequent trading tends to erode returns rather than improve them. Passive investing in ETFs works best when the investor resists the urge to react to short-term noise.
- Ignoring fees: Two ETFs tracking the same index can have meaningfully different TERs. The cheaper one will compound more efficiently over time, and checking costs before buying is one of the simplest ways to improve long-term outcomes.
- Buying too many overlapping funds: An investor who holds five ETFs that all track large-cap global equities has not diversified, they have duplicated. Checking what sits inside each fund before adding it avoids this overlap.
- Panic-selling in a downturn: Markets fall. Selling during a dip locks in the loss, while staying invested preserves the chance of recovery. An investor who cannot tolerate seeing a temporary decline in value should revisit their risk level and allocation before investing, not after.
Commission-free ETF investing on Mintos
The infrastructure around ETF investing has changed over the past decade. Regulated platforms now offer the kind of provider range, transparency, and low entry points that were once reserved for larger investors.
Mintos is an investment platform, licenced by Latvijas Banka, that lets you invest in ETFs popular with European investors¹, your way. Commission-free ETF investing means €0 Mintos fees to buy, hold, or sell, whether investing in individual ETFs or through the Core ETFs portfolio.
Individual ETFs
Take full control and select your own ETFs from €1. With over 1,000 ETFs from recognized providers such as iShares, Vanguard, Amundi, and Xtrackers, you can build the ETF portfolio that fits your goals.¹
✔️Popular ETFs from recognized providers³
✔️Automated regular investing with Investment plan (coming soon)
✔️Commission-free: €0 to buy, hold, or sell²
Core ETFs portfolio
An automated ETF portfolio matched to your risk level, from €50. The Core ETFs portfolio builds a globally diversified mix of stock and bond ETFs, automatically rebalanced and reinvested so you do not need to manage it yourself.
✔️Globally diversified portfolio of ETFs, equities, and bonds
✔️Automatically rebalanced and reinvested
✔️Commission-free: €0 to buy, hold, or sell²
As with any investment, the value of ETFs can go down as well as up, and you may receive back less than you invested.
¹ ETF providers shown for illustrative purposes only. This does not constitute a recommendation or investment advice.
² Each ETF carries its own annual fee (Total Expense Ratio) charged by the ETF provider, built into the ETF price.
³ Based on frequently searched ETFs among European investors on justETF.com.
Developed by the Mintos Content Team, making investment knowledge accessible for everyday investors across Europe.
FAQ
How do I start investing in ETFs?
Decide on a starting amount, choose between self-directed or managed ETF investing, pick a fund or portfolio, open an account, and make the first purchase. Many investors then set up regular contributions to build their position over time.
How much money do I need to start investing in ETFs?
Investing in ETFs can start from as little as €1 on platforms that support fractional shares. Contributing a modest amount regularly is a common and accessible way to begin. Only invest money that can stay invested for the medium to long term.
How does investing in ETFs work?
An investor buys shares of an ETF through an investment account. Each share gives a proportional stake in the whole basket of assets the ETF holds. Capital can be invested as a lump sum or contributed regularly over time.
What are the benefits of investing in ETFs?
The advantages of investing in ETFs include instant diversification, low ongoing costs, accessibility from small starting amounts, and the ability to trade during market hours. These qualities make ETFs one of the more beginner-friendly investment vehicles.
What are the risks of investing in ETFs?
The value of an ETF can fall as well as rise, carrying the market risk of its underlying holdings. There are also ongoing costs (the TER), and currency risk on ETFs denominated in a currency other than the euro. Capital is at risk.
Can beginners invest in ETFs?
Yes. Investing in ETFs for beginners is one of the more accessible entry points because a single purchase gives broad diversification. Managed options remove the need to select individual funds, making the process even more hands-off.
What should I look for when choosing an ETF?
The key factors are what the ETF holds, how diversified it is, the ongoing cost (TER), and whether it reinvests or pays out income (accumulating vs distributing).
What is the difference between individual ETFs and a managed ETF portfolio?
With individual ETFs, the investor selects and buys each fund independently. With a managed option like Mintos Core ETF, a diversified portfolio is built and rebalanced automatically based on the investor’s risk level.
