Brokerage commissions

You buy and sell ETF shares through a brokerage account when the markets are open. And, if you have an online account, you can give your broker an order at any time to be filled when the markets reopen or the price reaches the level at which you wish to buy or sell. The commission your broker charges will generally be in line with the amount you pay on other stock transactions. Alternatively, you may have a fee-based brokerage account that covers the cost of your transactions or an account that allows a certain number of transactions for a fixed charge.

As with other investments, the larger your purchase, the less the commission may be as a percentage of what you spend. And the longer you hold an ETF, the smaller the impact the cost of buying has on your return.

If you pay a commission on each transaction, you may want to evaluate whether or not dollar cost averaging (DCA), or investing a fixed amount of money on a regular schedule, is an economical way to purchase ETFs. Say, for example, you make an initial investment and plan on adding $150 to your account each month. That may cost more than making less frequent purchases of larger amounts. On the other hand, if you buy when prices are down as well as when they're high, you could end up paying less per share than the average share price over time. But remember, dollar cost averaging doesn't guarantee a better return than other ways you invest and won't protect you against losses if the markets drop.

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