• October 1, 2022

How to trade ETFs on the Norwegian stock market?

 

When I first started trading Norwegian stocks, the most significant barrier was accessing the stock market.

 

To invest in Norwegian companies, you need to be a brokerage member, which costs somewhere around $3,000 – $5,000 depending on who you choose and how much money you give them as a fee. Luckily there is an alternative: ETFs (Exchange Traded Funds).

 

Trading ETFs doesn’t require any more knowledge than buying average shares online. The same terminology applies, and it’s also possible to buy fractional shares. We’ll explain how to do both things.

 

How exactly does an ETF work: An ETF is a wrapper around several stocks from different companies. It is a collective investment fund, which means that anyone can buy a part of the fund, and the pool of money from everyone else’s investments is used to purchase the stocks included in it.

 

How to start trading?

This guide is for you if you want to trade ETFs on the Norwegian stock market. It will explain how to open a brokerage account and fill it with stocks.

 

The process of setting up an account and buying shares can be pretty tedious, but we’ll try to make it as simple as possible. Here’s what you’ll need to do:

 

  • Fill out an online form: information, including your social security number (or company registration number);
  • Choose the account you want: a savings account, a trading account, or both.
  • Once you have completed these steps and received your login information, you can start trading ETFs on the Norwegian stock market.

 

Please keep in mind that there may be some differences between Norwegian and international brokerage firms. Be sure to do your research before opening an account.

 

Benefits of trading ETFs

There are a few reasons why you might want to trade ETFs rather than buy stocks from individual companies:

 

Diversification

If you only invest in one company, your entire investment is at risk if that company goes bankrupt. However, the risk is reduced if you spread your money to several different companies. Even if one goes bankrupt, you still have money invested in the others. The same principle applies when investing in an ETF – your money is spread out over many different stocks, so even if one of the tanks, you’re not going to lose everything.

Low fees

ETFs are bought and sold at the market price, just like stocks. This means that you don’t have to pay extra fees when buying or selling them. Buying individual stocks can lead to high costs, but there are usually lower trading fees for certain ETFs on the stock exchange.

Transparency

This information is available online, so it’s straightforward to understand how well these companies are performing. If you’re interested in investing long-term, it might be beneficial for you to follow several different stocks daily on sites like Yahoo Finance or Google Finance.

Time-saving

You only need to buy one product rather than several different ones – this will save you both time and effort if your only goal is to invest in the stock market.

Liquidity

ETFs are highly liquid investments and can be sold at any time. This is because they’re traded on the stock exchange, which means that somebody always wants to buy or sell them. This liquidity is a significant advantage over other types of investments, such as real estate or venture capital.

Tax efficiency

When you sell an ETF, you only have to pay taxes on the profits that you’ve made – not on the entire value of the investment like you would with stocks from individual companies. For this reason, it’s often a more tax-efficient way to invest your money.

Low risk

This goes hand in hand with diversification – if you spread your money across different ETFs, the risk of losing it all is reduced.