With an investment in SEA, you are positioned to make money if the overall value of the stocks in the shipping index increases. This page will show you how to buy the SEA Shipping ETF in a stock brokerage account or Individual Retirement Account. Note that not all IRA's are set up to handle investments in common stocks and exchange-traded funds.

You can easily enter your order instructions yourself if you have a self-directed online account with a brokerage firm or bank. Or, you can give your order instructions to a broker. Either way, in this example you are buying shares in the Claymore Shipping ETF using ticker SEA. To understand how much money you are investing, multiply the latest share price by the number of shares you intend to buy. So if SEA is trading at $12.17 and you buy 1,000 shares then your total outlay is $12.70 x 1,000 = $12,170 plus any applicable commissions, exchange fees, and order charges.

Limit Orders

Since the price of the ETF fluctuates, you may want to set a certain price which is the absolute highest price you want to pay for shares. This would be a "limit" price, and your order might be something like "Buy 500 shares SEA at limit $12.22" meaning you will only buy shares at or below the price of $12.22. The trade-off with limit orders is that you are assured of the price, but you are not assured of getting your order completed.

If the shipping companies can charge higher prices for their services, it gives them a better chance to show an operating profit and a better chance that the price of their stocks will trade up. If an ETF owns shipping stocks that are increasing in price, then the price of the ETF should rise also.

Historically, SEA has paid a quarterly dividend (every three months) which may be re-invested to buy more shares of the ETF. Reinvesting the dividends isn't precisely a dollar-cost-average method since the declared dividend fluctuates from quarter to quarter, but it still affords long term investors the benefit of cost-averaging their invested shares over time.