She's On The Money - ETFs Explained: Everything You Need to Know Before You Buy Your First One

Episode Date: May 19, 2026

Spoiler: ETFs aren’t that deep. So why are so many of us (okay, you) still so intimidated by them when it comes to investing? On this week’s Deep Dive, Bec and Victoria cover the acronym that’s causing a stir in our comments section.  Exchange Traded Funds or ETFs are just one of the ways that many Aussies are investing, and for good reason too. They’re a bundle of shares that give you some healthy exposure to a range of companies, industries and asset classes that you mightn't have otherwise.  In this episode, we’ll cover what ETFs are, how they work, and why they’re such a compelling investment option. Thanks to our episode partners Sharesies, we’ll show you how to get started on their platform, as well as which ETFs have risen in popularity in recent times (and why!). From percentages to performance, common mistakes and money tips, learn how to make your money work harder for you with ETFs. CHECK OUT THE SOTM INVESTING HUB: Full of our best investing freebies, resources, courses and podcast episodes here. INVESTING FOR BEGINNERS: All our best beginner's investing podcast episodes in one place here. SHARESIES CODE: Sign up for the investing platform Sharesies, use the code SOTM10 and deposit any amount and Sharesies will give you a bonus $10 to invest.  NEW HERE? Join our Facebook Group (Search for: ShesontheMoneyAUS) AKA the ultimate support network for money advice and inspiration. Ask questions, share tips, and celebrate your wins with a like-minded crew of 300,000+. And follow us on Instagram @shesonthemoneyaus for Q&As, bite-sized tips, daily money inspo... and relatable money memes that just get you. Acknowledgement of Country By Nartarsha Bamblett aka Queen Acknowledgements.The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 4451289See omnystudio.com/listener for privacy information.

My name is Natasha Bamblett, I'm a proud First Nations woman, and I'm here to acknowledge country. Tii, gilinyan ganya, nianakaka yao yambina waka, nianakai nianbina yakarumja, duminyagumiga dumiga ithawaka nirawaman daman imelan, mumabangada boma ininyalan waka, gaunan yakarumja, wutunarana. Hello beautiful friends. We gather on the lands of the Aboriginal people. We thank, acknowledge and respect the Aboriginal people's land that we're gathering on today. Take pleasure in all the land and respect all that you see. She's On The Money podcast acknowledges culture, country, community and connections,

bringing you the tools, knowledge and resources for you to thrive. She's on the money. She's on the money. Hello and welcome to She's On The Money, The podcast that is going to make you feel like the smartest person in the room the next time someone brings up investing at a dinner party. Sounds like fun. Very fun dinner party.

Hey, that's what happens at my house. Sorry. Oh my God. Sit down. Oopsie. I'm Bex Side and today we're tackling the word that the entire internet has decided is the answer to every single money question. Just buy an ETF.

They do. They do. And you know what? It could be. Could be the answer. If I had a dollar for every time I've seen that in a comment section, I would have enough money to buy a very confusing ETF that I don't fully understand. Because here's my problem. Everyone says it. Nobody explains it. What is an ETF? What is actually inside one? How do you buy

it? What happens after you buy it? Do you just wait? Today we are answering all of it. Here's what we're covering. What an ETF actually is in plain English. Why ETFs have become the investing tool of choice for everyday Australians. A proper look at two of the most popular ETFs in the She's in the money community, and what is actually inside of them, how to physically buy your first one, and what to do and what not to do once you have. With me, as always, is Victoria Devine. Hi, Victoria Devine. Hello.

I'm very excited about this. I've tested out a new model, so someone messaged and was like, I really wish that you would explain at the start of an episode exactly what you're covering before getting into it. And I was like, oh, I don't know how to tell you this, but that's what the show notes are for. Oh, yes. But I tried it. you just summarised everything we're going to go over.

So if people like that, slide into our DMs and let us know. Because, like, we're open to feedback. Absolutely. Contrary to popular belief, I actually don't know what I'm doing. I have just been making it up and so far so good. Well, you're a money girl. Yeah, I'm not a content girl. No, exactly.

We need feedback. If you guys have anything that you want me to change my hair or my voice, I can do that. No, no, we can't. We used to get feedback of people saying, oh, my God, Victoria's voice is so annoying. It's a choice to listen to my podcast. That's true.

And unfortunately, voices aren't choices. Yeah, voices aren't choices, Bec. Sorry, guys. Well, I'm really excited for this one because ETFs are obviously one of my favorite topics because they've made investing incredibly accessible for our community in a way that just was not possible 20 years ago. I mean, the fact that you can invest in 300 different Australian companies for as little as you want from your phone in like five minutes is actually remarkable yeah that's so true like

if you go back I know that you weren't in the investing world then but like 10 15 years ago which is kind of scary because I was working then isn't that scary you're like three it just wasn't an option for me and it wasn't an option for anyone in our community I mean I remember selling managed funds as a financial advisor or not selling them but like setting clients up into them. And even me as the advisor being like, one day I might have enough money to be able to access that investing option because it was a minimum investment of $10,000. And not only did I not have that money, I also would have, if I did have that money, been really scared to make the jump of just dumping 10 grand into one thing at one time. Whereas being able to chuck five bucks in

shares use, that feels pretty reasonable. Yeah. From little things, big things grow. Exactly. And when you say it like that, it does sound remarkable, but also something that's within our realm of possibility. So where do we actually start? So we start with the name and we have done this before. So this ain't our first ETF radio. We have done a whole mini investing series. We've done, you know, what ETFs are, how they work before. But this time I've collated all your questions from the Facebook group. I've been deep diving into like, why are people still confused? Like, not only why are we still confused, why have we got analysis paralysis over buying our first ETF if that's a decision

that we've made? So we're just wiping the slate clean. This is your ETF episode. Let's go. We're going to start with the name. What does ETF actually stand for? ETF is an exchange traded fund. Okay. It doesn't sound that exciting. No. I'm not here to pitch that. But if we break those three words apart, it really tells you everything that you need to know, Bec. Okay. Exchange, traded fund. I'm struggling to figure out how it relates here, but break it down for me. Okay. So let's start with fund first. So a fund, big pool of money, Bec. And it's from lots of different investors. It's not just from you or I. There's thousands, sometimes hundreds of thousands, sometimes millions of people's money used to buy a

collection of investments. So think of it kind of like, I always use the Coles and Woolies example, so we're going to still keep along the road of that analogy. Think of it like a giant shared shopping trolley. And instead of going to the supermarket to buy like one item, you've called all your mates and you've asked them, do you need anything while I'm at Woolies? Like, what do you need? You're going to see it as everybody has pulled all of their money together and they've filled the trolley with hundreds of different things. And the idea is that you're not just going to the shopping center and buying flour you're going and buying a whole heap of things and getting a bigger more diverse experience beck than just popping into the shops getting your

flour and leaving you're going to go to every single aisle you're going to go to the frozen food you're going to the fruit and veggies like you're going to get everything and you're going to put it in your bucket or in your trolley right and so the idea is to get exposure to all of those things but maybe you only had money for flour but if all your mates have put money in yeah maybe we could bake some cookies together because they could afford the different ingredients and maybe like we could have some fruit before our cookies and have a more balanced diet because you wouldn't just eat flour would you hey some of us would put it don't put it past us that does make a lot of sense okay okay okay so instead of buying one company's shares i'm buying a little bit of

lots of companies exactly yes and i say all the time i would prefer a smaller piece of a bigger pie. Just give me a sliver. Just a little bit. Yeah, yeah, yeah. Like I prefer like a little slice instead of a whole teeny tiny pie that's not that good. Yeah. Give me a slice of the good one, you know? Yep, yep, yep. I hear you. Okay. Now let's talk about the word traded. The fund is traded on a stock exchange. And I feel like exchange traded fund, when you put those together, it just feels kind of overwhelming. You're like, oh, well, hoolidooly. That's not for me. But a fund is traded on a stock exchange, just like a regular company is. So you can buy and sell it during market hours. You can see the price move in real time. And it's literally

the exact same process to buy a direct share as it is to go and buy an ETF. Like it doesn't take you more time. It doesn't take you more energy. It doesn't take you more research. Like you literally just tick a different box, if that makes sense. Absolutely. And exchange? So exchange just means that it lives on the share market. Okay. So it just lives on the ASX. And I mean, in Australia, it lives on the asx which is called so it's as cross like as in x yeah but it actually means the australian securities exchange oh so instead of ase it's asx and they take the second letter of the last word because like x exchange does that make sense and i feel like lots of people get a little bit like well what's the x stand for exchange so when you see something listed

it might be like and i'm going to use these two examples throughout this episode just because they are the two most popular ETFs with our community. So VAS and VDHG, which are two Vanguard ETFs that are listed on the Australian Securities Exchange. And that is kind of like your address for finding them. So like, you know where your mates live, like you remember where they live, but it's like the address that you put in the map. Yeah. Does that make sense? Absolutely. Absolutely. Okay. So it's literally a fund that is traded on an exchange.

Yeah. And the name is the description. Yeah. Yes, understood. Yeah. So the name is the description. And the reason ETFs, I would say, have become so popular more recently is they like combine two of my favorite things. I don't know.

I shouldn't get as excited about this. I'm like, girl, I love an ETF. But they combine diversification. So the diversification that you get from a managed fund with the ease and the transparency of buying a share. So like it's the same, but you get diversification. And before ETFs existed, if you wanted to get like a broad exposure to the Australian market and you were like, I want lots of shares, you would have needed to go and purchase what they called a managed fund. And that was just a fund that was similar to an ETF, but it had like a head honcho who was really smart and charged lots of fees to manage your fund. and you might have gone and seen a financial advisor who might have picked like individual

shares to make up your personal fund or your personal portfolio but they often had high fees and then as I was mentioning before really high minimum investment amounts like 10 grand sometimes which obviously is not that accessible. Yeah. And now you can do it basically with the price of one unit on a lot of platforms which you know VDHG and VAS are trading just over $70 dollars a share at the moment but if you're on a platform and this is not promo but like it is promo in a way if you're on a platform like sharesies who offer fractional investing you can buy five dollars worth of that totally okay this has saved me because i tell you what that's the only way that some of us are investing well yeah and that's kind of helpful right because you get

the thing that you want yeah but if i said to you back well to get you know vas which is just like the vanguard very stereotypical like exposure to the top 200 companies in Australia you go sexy uh the minimum investment's $70 for a lot of people in our community not only is that not something that they can do right this moment also it feels like a lot of money for the first time that you're investing you're like oh well you know we all feel like the share market's gonna lose us money so you're already apprehensive about putting it in and then yeah I just feel like five bucks so much easier that's so true and it just feels like cleaner or something like that coffee costs more these days yeah that genuinely is quite a big deal beck we've done a real quick

recap on what an etf is but why has everyone from your i guess financially savvy best friend to every money podcast decided that etfs are the big dog move like everybody has and girl i have three very compelling reasons. Okay. Do tell. All right. So one, you're not going to be surprised. I already touched on this. I've spoiled my own surprise. It's diversification. And I would say this is the biggest one. This is like, if anyone is like, quick V, why are ETFs so important? I'd be like diversification. So if you buy shares in a single company and that company has a really awful year, your investment takes the full hit. Like they have the most awful year ever back and they lose 20% of their share price, cool, that's what your portfolio lost too.

That gives me the ick. But if you bought or you owned a broad ETF that holds like let's just say like two or 300 different companies and one of them has a terrible year, it barely moves the needle on your overall investment because the other wins of the $299, they kind of cushion it. So instead of you feeling a 20% drop, which does happen to some companies and you cannot predict, unfortunately, this is what people, I guess, mean when they say don't put all your eggs in one basket. So don't take your 300 eggs that you might have and put them all in, you know, West Farmers

basket. Because if West Farmers has a bad year, you're going to feel the wrath. Yeah. But an ETF is basically a basket that has 300 different eggs in it. and like if one breaks we've still got 299 eggs right oh my god so true it's a drop in the ocean well i feel like that's just the analogy that everybody in this industry uses i love it okay it's such a good way to put it that makes a lot of sense reason two yeah money cost like literally most etfs are what we call passively managed so you know how i was saying before oh you would have

to buy a managed fund they are what's called actively managed that's expensive i see passively managed on the other hand is a little bit cheaper. So instead of having a really expensive team of fund managers who are trying to pick winning stocks, an ETF will track an index. It's simply just a list of companies who meet certain criteria. Like it's actually not that deep. So for example, you've heard me say, hey Bec, the S&P 300 or the ASX 300. Every time you hear ASX or S&P and a number, that is just the top number of companies on a particular exchange. So ASX 300 is the top 300 companies in Australia. S&P 500 is the top 300 companies in America. And that is just how it works. So the ETF's job is just to buy every single 300, like one of those

companies in proportion to their size. So there's no guessing. They just follow a list. There's no like oh should we trade this for that and make active decisions and have some really expensive like research analyst who goes out and does heaps of research and like you know digs deep and goes I think this is a good investment for these really valid reasons yeah that's expensive no no no just buy the top 300 companies and we'll work it out later like it's not that deep and because there's little active management because we're not asking someone to go out and do a heap of grunt work they don't have a whole team being paid hundreds of thousands of dollars a year the fees are really low so vas they charge 0.14 percent per year okay that's reasonable what's that actually mean

if you made a ten thousand dollar investment your investment fees are fourteen dollars okay that's not bad actually so a traditional managed fund though beck would charge one to two percent And so 1% of $10,000 is a lot more than $14. Yeah. So that difference over, you know, the life of your investment, so over decades, is enormous. Yeah. So $14 versus potentially $200 a year.

Yeah. That's big. That's big. And don't get me wrong, some people will be like, oh, well, $200 might be worth it. But the performance is about the same. The same. But then on the flip side, $200 consistently is a really huge deal over time.

Like that stuff compounds. So then the other thing that I really like about them and the other reason I think every man and his dog thinks this is a good idea, they're pretty simple. Like there's actually, when you start digging into it, they're kind of boring. And we love that in the investment world. We do. Simplicity is key. how many times have you heard teachers when you're at school being like, keep it simple, stupid, use the kiss, kiss method. And you'd just be like, okay, cool. Like it has been drilled

into us that simplicity is key. And the same thing exists here. Like ultimately buying an ETF means that you back don't have to go out and research individual companies or watch the news for quarterly earnings or read market reports or, you know, read people's annual reports. You ultimately end up owning the whole market and let the overall growth of the economy just do the work like the economy is growing great no worries things will start popping off the data consistently shows and this annoys me because like as somebody who used to work as a financial advisor who would pick individual stocks maybe i should just put all my clients in etfs but the data consistently shows that the most professional fund managers fail to beat a simple index over the

long term is that right so the boring approach arguably is actually the smartest approach okay Okay, so that makes me feel a lot better about not understanding individual companies. Yeah, like you didn't have to do the work. You don't need to. You just get an ATF. Exactly. Like, keep it simple, stupid. Yeah, hell yeah.

That was pretty good from, you know, my year nine English teacher. She knew. She? She? They? They knew what they were talking about. I can't even remember who was my year nine English teacher. That's, oh, actually.

No, I can, I can. Oh, yeah, okay. I can. If you went to school with me, it was Mr. Gavin. Mr. Gavin. Hi, Mr. Gavin. Hi, Mr. Gavin. Anyway, let's get into, I guess, the two ETFs that our community actually love the most because I feel like we always talk about get an ETF, get an ETF, and then you guys are like, but what one?

And we cannot give that advice. That would be giving you financial advice, and you need to look into these things yourself. But what I can do is I can deep dive into our Facebook group. I can deep dive into everything that I've surveyed you guys on, and I can tell you the two most popular ETFs that our community invests in. okay so this is not a recommendation and i feel like i have to like disclaimer it just because i don't want you going up being like well that's the one victoria recommended i did not recommend it no we are just talking about it to give you a well-balanced education and you're going to go out and you're going to do your own research aren't you exactly yes yes absolutely and beck's like

yes i'm just going to buy it i will and the first one i'm going to buy is v-a-s vast vast vast you're not going to buy it. You're going to go research it. Go research it. Yes. Yes. You would never. So VAS is the Vanguard Australian Shares Index ETF. So VAS, it literally just has a tiny slice of the top 300 companies in Australia and it trades on the Australian Stock Exchange like everything else that is issued in Australia. And it has the ticker code. Like if you're looking it up on your Sharesies app, you would key in VAS and it would come up and a ticker code is basically like their postcode. It's like their address. Every single ETF and every single direct share and every single bond that is traded on the Australian Stock Exchange will have its own

ticker code and it's just basically its address, right? So when you buy VAS, as I said, you are buying a teeny tiny slice of 300 of Australia's biggest companies. So that would include all the names we've already heard and walked past on the way to work this morning. CommBank, BHP, CSL, Westpac, NAB, Woolies. So Westfarmers, I mentioned Westfarmers before. They're in it as well, all of them. And when you make that purchase, you're buying all of those in that one purchase. So I'm not betting on any one of those companies doing well. I kind of own a bit of all of them. Yeah. It's kind of like making no decision at the same time. It's kind of like being like, oh, I'm not going to make a decision. I'm not going to bet on anybody. I'm agnostic. I'm just

going to believe in everybody. I'm so nice. I'm going to believe in everybody. It's like you're like, you can't decide what to eat on Uber Eats. You just get a bit of every single thing. That would be expensive though. And an ETF. ETF cheap. Yeah, exactly. But good analogy. And the companies are weighted by their size in the market. So I feel like now we're getting into the like nitty greedy of it you get all 300 but different percentages got you so the bigger the company the larger slice of the etf bhp alone makes up 10 of vas oh wow they really have a big dog company it's not about faith it's just about how big that company is in our market okay got you therefore the etf has picked 10 as being the right amount and then stepping back combank for example has

8% of that ETF, but then there's another 290 companies that make up the rest. Oh, they squeeze it all in. So not every single company's bad day is going to ruin your day, but you squeeze it in by even having like 0.1% of a company inside that ETF. Okay, got you. So what does it actually cost to own it, like the management fee? So VAS specifically has a management expense ratio, which we call an MER, so management expense ratio of 0.14%, which I mentioned before.

So on $10,000 a year, you're paying $14. That's so good. Or $10,000 investment, to be more clear. You would pay $14 in management fees. So you also don't get like a bill. They're not going to be like, hey, back yours, $14. That's just kind of factored into the fund's performance. Yeah.

So when they're making money, they kind of take it out of that before you get your profit. I see. Okay. Money wins. That's good to see. You never see it leave your account. That's just kind of what they take off the top before you get it.

And I really like when people make it simple for me. I know. Absolutely. Me too. And it's quite cheap. Less bills, more better. Yeah. And one thing I guess worth knowing about with VAS specifically is that I would say it's quite concentrated in two sectors.

So financials. So you've got all the big banks in there. And then resources. So then you've got all of the big miners. So those two sectors make up a very, very, very large chunk of the Australian share market. So VAS actually gives you great Australian exposure, but it's quite tied to how banking and mining is performing, if that makes sense. Yeah, definitely.

Okay. Is that a problem? I don't think it's a problem and not necessarily a problem, but it's also why a lot of investors will go, oh, I'm definitely going to buy VAS. That makes sense. Yes. But I also don't want exposure just to Australian. I want some international exposure and they might go, I'll do some VAS and I might also purchase some international shares as well to give me even further diversification, not just on companies you hold, but on economies.

So instead of just having access to Australian economies, you also have access to like America or China or whatever you're picking, right? Okay. Which I think is the perfect lead-in to the community's other favourite ETF, which is VDHG. VDHG. VDHG, which I really like. Victoria Divine High Growth. High Growth. Which is not Victoria Divine High Growth, but how sick would it be to one day have my own ETF?

That would be cool and also kind of cute. Nobody else would care, but I'd be like, I've made it. Oh my God. Didn't you think that you made it when you wrote a book? I'd be like, no, I got my own ETF. Big dog. So, VDHG is not Victoria Devine Diversified High Growth Fund. It's actually the Vanguard Diversified High Growth Fund, and it is often called an ETF

of ETFs. Okay, okay. So, it's not like VAS, which holds the top 300, but when you purchase VDHG, you're buying a fund that itself kind of holds a whole collection of other Vanguard funds in Australia. It also holds internationally developed markets and emerging markets and a really small slice of bonds because it lacks a little bit of stability. Hell yeah. And all of it is sitting inside one investment that is like automatically rebalanced for

you. Okay. So an ETF that owns other ETFs. Yeah. Something very, there's something very satisfying about this. Like it's feeling nice. So we explained diversification. It's like, oh, we took your diversification and we doubled it and passed it on to the

next person. Yeah, yeah, yeah. so think of it like this vas is ordering a really good meal from one restaurant this goes back to like i don't know your uber eats okay but vdhg is like a meal delivery it's like uber eats that sources dishes from different restaurants but from all around the entire world and then it like brings them to your house and puts them on the table as like an entire spread so you're not just ordering from one restaurant and different recipes and different like meals like you get global diversification without having to do any of the sourcing yourself and you get to stay on your

couch. Okay. That sounds great. Yeah. You didn't have to do much. Perfect. Okay. And so I just buy one thing and I get all of it. Absolutely. Yeah. You do pay a bit more for it. I'm not saying it's expensive, but we've obviously just explained that it's a bit more complex than VAS. So it's more expensive, but you know, sometimes you get what you pay for. And I've said before, and I think I wrote in my book, you pay peanuts, you get monkeys. Yes. So the management fee for VDHG is 0.27% per year, which is a little bit higher, but it's literally because there's more going on inside, more decisions. There's more people that work on this, but still, I would say incredibly cheap in comparison to other managed funds. And when I say in comparison to other managed funds,

I would say the average of managed funds is about 1%. So 0.27%, that's pretty good. So it's kind of like the truly hands-off, really carefree hands-off. I know everything about it option yeah and a lot of people do pick it for that reason sure the way that vanguard has designed it is so that it's like a complete set and forget portfolio all in one etf which is why it's literally so popular with our community and with people who are starting out and just go i really want something simple i want something that gives me an instant portfolio that you know hypothetically if i didn't want to go shopping for any other etfs like that one would be enough and they pick that. I would say the trade-off here though, is that you don't have any control over the specific

mix. You just get what VDHG gives you and they can make decisions on what they pull out of and put into that portfolio. But for most people, they don't care and they're like, that's absolutely fine. Sure. I'm happy for you guys to make those decisions for me. Sure. Okay. So VAS versus VDHG, how do you choose how do you choose so i get asked that all the time and i cannot tell you which one to choose but i can tell you the thought process and why you would pick one over the other and this then extrapolates out to other like investment houses right so when i talk about vanguard vanguard are an investment house but you would have like a beta shares as well so there's like lots of different other investment houses and they're kind of like the brand of etf

if that makes sense so honestly neither option is bad okay like i don't look at any etf on the australian stock exchange and go oh that's terrible like i think all of them have their purpose and their reasoning and good reasons behind why people might purchase them but vas i would say has been seen to be a good decision when you just specifically want australian shares Yeah. When you're just like, give me Australian shares. I want a really cheap fee and I'm really happy to, you know, talk about international exposure later or buy something different later and, you know, manage that in a different way. You're kind of starting with Australia first. So a lot of people, if they're entering their like investment journey, they might go,

oh, I just really like the AS because like, it's just Australia and I'm just going to buy home And I'm just going to buy that and then I'll see what I add later. Yeah. Kind of makes sense. Absolutely. But then VDHG is a great choice if you want global diversification immediately and you want to keep it relatively simple. And when I say simple, I don't mean VDHG is simple.

I mean, the decision to buy it is simple because you don't have to lift a finger. Yeah. But you're also happy paying a slightly higher fee for the all-in-one convenience. Yeah. Okay. Okay. And a lot of people in our community actually own both and mix it and change it and, like, they go, oh, yeah, I really want both and that's a really good idea. Personally, I own both.

I like both. Okay. I'm not saying that that's my entire portfolio, but, like, you don't have to just pick one, if that makes sense. And I think a lot of people go, oh, which ETF did you pick? I don't know. I dabble. Yeah. I dabble.

Well, it's good to know there's no, like, one right answer because you don't want to regret. You don't want to get to, like, end of your life and be like, I should have done this. Exactly. And there genuinely isn't one right answer. I feel like everyone comes to us, Bec, and goes, oh, what's the right answer? What's the best ETF? There isn't one. It's just what's aligned to your goals and your values and what you want to achieve. What matters more than which ETF you pick is actually just picking one and starting. So let's take a really quick break because I feel like I have yapped about ETFs for a while. And when we come back, I want to walk you through exactly what happens when you do go to buy an ETF

for the very first time, I would say the practical steps and the kind of like what you're going to see on screen and what that means and the very common mistake I want you to avoid. So please don't go anywhere. Welcome back, Bec. Before the break, you and I covered, again, exactly what an ETF is, why passive index ETFs beat most active funds on cost and then on long-term performance, and we chatted specifically about VAS and VDHG. So I thought we would get into the practicalities because a lot of people start asking questions about like, well, how do you buy it?

What does that mean? And I feel like knowing what an ETF is is good, but actually buying one is a different story. Like I can educate you back till the cows come home. I could be like, oh, and this is what this holds and this holds and rah, rah, rah. But like analysis paralysis kicks in. It's why so many of us have taken so long.

to make the jump into purchasing our first etf totally but also you're like you might give someone all the tools on how to farm and then you're like okay how do i get to the farm yeah yeah yeah how do i like cool i've done all of this research i even did an agriculture degree yeah where farm though where is it has got cow yeah yeah that's so true so let's talk about actually buying an etf okay in australia specifically because spoiler we're australian So you need a brokerage account, Bec. You need to pick a brokerage account and that is just an account on a platform that lets you buy and sell things that are listed on the Australian Stock Exchange. There are so many different options in Australia at a lot of different price points with

a lot of different options. Everybody already knows what I'm about to say. The most popular investing platform in the She's On The Money community is Sharesies and there's a number of different reasons for that the biggest one is accessibility so they do fractional investing they allow you to invest with as little as like one cent if you really wanted to we obviously work with them as well but we work with them because they are the most popular yeah like does that make sense I'm kind of like how lucky we've made friends with the most popular investing platform and now they help us bring the show to life but then also everybody loves them so it's a win-win totally but there are lots of different options in Australia and I'm not saying oh you

have to pick the one that's most popular some are designed more for beginners for example a sharesies but then a sharesies is also set up for you to manage millions and I know a number of people who are managing millions on sharesies and some I would say are for more I hate the term more experienced investors yeah it's just like a more technical platform so for example if you went to like a self-wealth. I'm not saying they're bad. I still have a self-wealth account because that's what I used to use as my primary investment platform. But they have a minimum investment of $500. They're very like, I don't know, you go to the website and immediately you just go, that is a Finance Bro website. It's just giving Finance Bro, like they're very technical. It's

a bit more clunky. Like it's just not the user experience of, you know, having a really nice overlay that helps make it pretty. Like getting your graphs, getting your performance is a lot more finicky. Does that make sense? I'm not saying it's bad. And if you prefer that, hop off, go do that. I still use mine because I'm not going to remove something from a platform that I already own. Like I was just like, I'm just going to leave that there for a while. I might make a decision one day. But the main thing here is that you need to find a platform that works for you personally. And we've done a lot of comparisons on our website, done blogs, et cetera. So you can go find them we'll even link them in the show notes okay and so the term brokerage account sounds so

scary but really it's just like setting up an account that you would anywhere else netflix whatever yeah netflix account mecca account like you're just setting it up so that you can purchase stuff from them and all your info is saved so that when you're ordering from mecca online they just ship it straight to you like absolutely you just need an account i promise it's not scary but they will ask you for like a lot more information than mecca would yes they're gonna want access to your like id and your tax file number and stuff and that's actually completely okay totally so okay now we have an account set up what comes next the next is you've got your account set up you've put some cash in it because you just direct debited it from your account i want you to then search

the etf by its ticker code okay i mean on something like sharesies because they've got their AI search. I feel like I'm such a like Chezzy Stan. This party isn't sponsored, I promise. Yeah. But you could just type in Vanguard high growth and it would come up because like that makes sense. But you would usually just search for the company's ticker code. So you would type in VAS or for VDHG, you would type in VDHG and you'll see the current price. And then you'll literally be able to tap or purchase this or purchase that. And I want this many shares or I want this many dollars of this asset.

And then you place an order. In the same way you would click play on a Netflix movie or on the same way that you would hit order on your Mecca account, it is not complex. Yes. And I guess like this maybe depends on the platform, but is there a minimum amount you have to invest for specific ETFs? Yeah. So that's where it starts to get important as to what platform you picked.

So like if you picked a self-wealth bank and then you're like, I'm so excited to start investing. well they have a minimum investment amount of $500 and yeah like I remember when you started you started with like the first $10 you got with the SOTM code so that wouldn't get you any investments on that platform whereas with Sharesies like yes that gets you minimum investments something like a VAS is roughly 90 to 100 bucks a unit if you're buying a whole unit and VDHG right now in my brain I think it's like as of recording $72 because I checked my portfolio so you genuinely could start with less than a hundred dollars on most platforms but check

their minimums okay got you got you and then you could just buy like an eighth of that seventy dollars if you wanted to invest less okay amazing so that is so different to i guess like what i assumed i thought you needed like a significant lump sum so it is really good to know that you can just go in with whatever or depending on the platform yeah and going back to the example that I used at the very start of the episode, like no longer do you have to have $10,000 to get into a managed fund that then also had ridiculously high fees. What about brokerage fees? So again, important one, we've talked about the fees on the actual fund. Most platforms are going to charge you brokerage. Well, they have to charge you brokerage because that's how the platforms make

money. And they charge you brokerage when you buy something or sell something, which is separate it from the ETFs management fee. So for smaller purchases, this is where I start to go, guys, this really, really matters. Because if you're paying a $10 brokerage fee, you might go, whatever, it's $10. But a $10 fee on a $100 purchase immediately wipes out 10% of what you could invest. If I said to you, babe, 10% returns, you'd be like, yeah, great. So let's care about our brokerage fees and compare platforms before you actually open an account looking at their like fee structure for regular smaller purchases specifically especially if that's your plan okay and so once i buy my etf what does it actually look like does anything

happen it depends if the market's open or closed when you purchase it if you try and purchase it when the market is closed it'll be put through as an order and it will be fulfilled once the market opens again and it's open monday to friday 10 till 4 p.m yeah and then you'll see the units appear in your account, usually within two business days, because it's like a little transaction that still has to happen, which is standard. So that's the standard settlement period in Australia. And the prices will go up and down day to day, depending on the underlying company's share pricing movements. And you'll receive what's called distributions pretty periodically, which are basically just your share of the money that those companies have made over

that period of time. And then you just mostly, I would say, this is where it gets boring. You leave it alone. You just leave it alone. No touchy. Okay. Okay. We can do that. You just leave it alone. And I cannot stress this enough, Bec. That's where it gets complicated because no one wants to leave their stuff alone. No. The single best advantage of an ETF buying strategy is the power of it being able to compound over time. And every distribution you receive, every dollar that you add, every year that goes by with your money invested and growing is really important because compounding only works if you know touchy. It only works if you let it work. If you sell and buy and sell, you're not helping yourself. If you're checking obsessively,

you're probably just weighing heavily on your mental health. If you're reacting to news, if you're seeing stuff online and going, oh, maybe I should sell, that is all chipping away at the very thing that is making your portfolio powerful. Yeah. Okay. Stop it. It's so hard. If you take one thing from this segment of the podcast. Yes. No touchy. No touchy. Okay. No touchy. We'll try. All right. Now let's really quickly touch on strategy. Okay. Because buying an ETF once, it's not really the point. Like don't go in and just buy one ETF and be like, ta-da. Like my two-year-old, every time he does something and I go, wow, you're done. He goes, ta-da. That's so cute. It is really cute. But so you're not done. All you did was put your socks

on. You have to get dressed completely. But the strategy of buying doesn't stop the second you've purchased your first one. Buying your ETFs regularly over a long period of time is what's going to create you wealth. This is called dollar cost averaging. So you pick an amount and you commit to it. I don't care if it's $5 a month, $500 a month, $200 a fortnight. I don't care what your plan is, but make a plan and try and stick to it because the plan with dollar cost averaging is you invest regularly regardless of what the market is doing. I do not care what the market is doing, Bec. I don't care what your friend said. I don't care what you saw on the news. I do not care, you are still investing. Markets bad, invest. Markets good, invest. Markets bad,

invest. When do we not invest, Bec? Never. Exactly. That was a trick question. You passed with flying colors. That scared me. But over time, your entry price is going to even out. I can't predict when the market's going to be good. I can't predict when the market's going to be bad. But if I buy it consistently and then average it out over time, it completely removes the temptation to time the market which literally nobody can do reliably anyway yeah that's so true on every other podcast i'd be so rich if i could and i've tried i've tried and if you can't do it no one can and it's not because i think oh if i can't do it no one can like literally no one can and i was told no one can and i thought i was smarter than everybody else and i thought i'd

have a crack and then i couldn't she couldn't i even tried like if you try and you work it out let me know. Okay. Call me up. I'll try. If you call me up and say, I can time the market, I will pay you a significant amount of money. Okay. Well, just know that's going to be my new hyper fixation. Yeah. Go for it. So no one can do it. Okay. Literally no one can do it. What are the mistakes you see people make? Big mistakes, huge mistakes. Massive. No. The biggest mistake is not understanding what your ETF is made up of. And so you go and buy a few different ETFs and then you find out they're the same. So you and I were talking before this episode.

You were like, oh, V, what's the difference between like a VAS? Yes. And like an A200. Yeah. Or an A300. And the answer is nothing. Nothing. It's shocking.

The investment house that has released it, and this goes back to my supermarket analogy of it being like a Coles versus Woolies. So you go to the supermarket and you've got blueberry muffins on your list of things that you need to buy because your toddler's obsessed with them. You go to the bakery section and you pick up the packet of blueberry muffins. The Coles ones, fantastic. You could go to Woolies, probably exactly the same price, five bucks, four muffins, money win. But the ingredients, the way they've baked it, slightly different, same product, same exact ingredients. They might have put a little bit more flour here and there, or maybe like there's an extra egg in one, or like

maybe you really like the Woolies ones because they have slightly more blueberries. yeah but like it's the same product it's the same exact ingredients it's just put together slightly differently and that's where you know I said before you know people in Australia or people in our community really like Vanguard probably because they just have a really strong reputation they've been around for a really long time they also really like beta shares they're cooking the same stuff yeah but they have slightly different fees sometimes slightly different methodologies of putting different percentages of things in but if something says A300 and then you've got VAS and that's the top 300 companies in Australia but you're cooking

the same ingredients I see that's where I see people go wrong because if someone says oh I bought VAS and A200 well why are we buying the same blueberry muffins from two different supermarkets yes like you're not actually creating the diversification that you think you are and And more ETFs doesn't mean more diversification if they all hold the same thing. Yep. Okay. So you might think you're diversified, but actually just have a lot of the same thing. Yeah.

You need to actually understand what's inside each and every single one of them. The other thing that I would say people make a mistake with is like being scared of the news, being scared of what happens when the market drops. Oh my goodness, should I sell? And I talk about this all the time. And it is so tempting when everything is red and your portfolio is down and you're like, oh my goodness, what have I done? The instinct is immediately going to be, don't invest more.

Like, I don't want to lose more. But we should be reframing that into, it's on sale. It's on sale. Money win. It's time to buy. Because stopping means you're going to miss the recovery. Stopping means you're kind of shooting yourself in the foot. Yeah.

Keep on keeping on. Yeah. Stop listening to what Trump is saying. It's not advice, but don't sell while it's like less than what you paid for it. Feel the fear, keep going. We have a whole episode on that, by the way. Exactly. And we have also on Spotify a whole playlist of all of our investing episodes.

So if you're like, oh, V, I kind of don't want to listen to your Friday drinks or your money stories or whatever, I just want deep dive on investing, we pulled it together for you. Okay. So what are our takeaways? Okay. So first things first, you are, and I'm going to give this to you as kind of like a list of stuff that you're going to do this week.

Okay. Yeah. Because I can almost guarantee that a lot of people listening haven't done this and they're listening to this because they're like, I just really need to get it together. And if you're listening and you have got it together, pop off queen, maybe you want to buy another ETF. Maybe you want to look at whether your ETFs are overlapping, what your strategy is moving forward. But first things first, you're going to research brokerage platforms this week. You're going to look at their fee structures, pick one. Okay. Do you know what? Who cares if you picked the wrong one who cares if you went with the wrong one and you invest for a year and then you're like

this one's not the one for me and you change you're allowed to change so fine picking is putting you ahead of most people yep that's where people don't go that's like the gateway open the gates just download an app pick one i don't care if you change later we're allowed to make mistakes we're allowed to change our minds and what's number two and then the next is where are you going to put your monies are you going to just get pure australian exposure is the plan to go with a vas or something similar or do you want global diversification like what's that look like maybe you pick both maybe like i really liked the idea of like having two etfs cool buy two i don't care just buy something back get in the market because the wrong answer here

is actually not buying. The wrong answer is not starting. It's not, oh, hey, we go to brunch. And at the start you said, oh, I'm going to be the coolest person at the dinner party. Yeah, you are. No one's going to go to a dinner party and be like, oh, Beck, what ETF do you own? And then they go, oh, that's the wrong one. Like nobody ever says that. They will be like, oh, why did you pick that one? I want you to be able to tell me why you picked your ETF. Not, oh, I just picked it. Be like, oh, I really liked its holdings or I really liked the company or, you know, to be honest, I just heard a lot about it. I don't care. Pick. I'm just going to push you off the edge. Oh, now jump. Yeah. Okay. We can do that. And then you're going to pick a regular contribution

amount back. So we're going to commit to something, something that you can genuinely afford. And it's actually okay in this economy to not be able to afford much. Even if you're investing two bucks, I don't care. I just want you to set up the behavior to put yourself in the best possible position payday comes money comes in done take the decision out of your hands entirely I can almost guarantee that you won't miss it obviously if you were picking something like 500 bucks you're gonna miss that we need a bigger strategy there but we are making a strategy and sticking to it I feel like I need to disclaimer that more because like people are gonna be like but I can't afford to invest because you know I'm like back and I don't have a solid job right now that is

okay but we're making a plan yeah that is more than okay yeah and then the last thing you know what i'm gonna say yeah no touchy oh it's really hard this one touching leave it alone leave it alone you can set like quarterly check-ins and check your calendar but like let compounding do its thing i don't want to ruin this for you but this is actually about delayed gratification and the magic of compound interest beck yeah takes at least seven to ten years to really kick in god so many of us have never committed to anything for seven to ten years and i get it but you have to commit to this the self-control right the magic of an etf is almost entirely yeah in leaving it alone and no touchy it's a gorgeous lesson i tell you what that's all i've got i i've been putting

it off for a little bit because i didn't fully understand it but now i now i can and hopefully the people listening is they're also ready let's do it together go do it and then no touchy because right now so many of you are no touchy haven't done it okay so like let's slip that anyway that's That's everything from us. If this episode finally got you going and ETF is for me or I really want to start investing, please share it with one of your friends who is also in the same position as you

and we'll see you back here on Friday for a Friday Drinks with all the fam. Bye, guys. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD

and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of MoneySherpa PTY LTD ABN 321 649 27708 AFSL 451 289. Thanks for watching!