While big brokers TD Direct Investing, CIBC Investor's Edge, BMO InvestorLine, RBC Direct Investing and Scotia iTRADE are still going strong, they’re not the only brokers in town anymore. The increasing competition over the past few decades has transformed the way everyday investors access the stock market. There are now a number of online brokerages in Canada that offer user-friendly platforms, convenient features, faster trading and lower fees.
If buying and selling stocks still seems intimidating, you could consider using a robo-advisor. Robo-advisors are algorithms that invest in a mix of stocks (and bonds) according to your risk tolerance, financial situation and investing timeline. This passive investing approach saves time too, as you don’t need to research what shares to buy and sell and when to do so.
Brokers, banks and other financial services companies follow a regulatory process known as Know Your Client (KYC), which is a process to verify the identity and other credentials of customers. When you’re applying for a brokerage account, you’re taking part in the KYC process.
The exact steps for opening a stock trading account vary between platforms, but here’s how it generally works:
While you can open an account with most brokers without a minimum deposit, you can’t trade until you have sufficient funds in your account to cover the cost of the transaction.
One of the easiest ways to do this is to link your bank account and transfer funds via Electronic Funds Transfer (EFT). EFT transfers take between 1 and 3 business days to complete, but some brokers offer a feature called instant deposits, which allow you to trade before the funds have settled.
Other funding methods include wire transfer, cheque deposit and account transfers from other brokerage accounts. Credit cards are typically not permitted as a brokerage account funding method.
Where do you get investment ideas? In other words, how do you choose the best stocks to buy?
A good place to start is with an industry that interests you and then explore the different companies in that space. Identify key players and young companies with potential for growth but also figure out which companies are falling, or have fallen, out of favor. If you want to follow a Warren Buffett saying, “never invest in a business you cannot understand.”
Tools like stock screeners can help you narrow down stocks by sector, industry, price range and more. Search for companies by name or ticker symbol. If you’re on the fence about a purchase, add the stock to your watchlist to keep an eye on its performance. Analyst research reports can give you valuable insight into companies and guidance as to whether a particular company is a good investment.
At the end of the day, you should perform as much in-depth research as possible until you’re comfortable investing.
With a stock in mind and funding in place, it’s almost time to invest. But before you buy any shares, you should know how much money you want to invest in any particular stock.
Consider your budget, investment goals and your overall portfolio allocation. With the advent of fractional shares, you no longer need the entire share price to invest. Fractional share trading lets you invest specific dollar amounts in a stock instead of having to buy whole shares. Though not every broker offers this feature.
The ideal number of stocks for your portfolio depends on your investment goals and level of desired diversification. Renowned value investor Benjamin Graham put this number between 10 and 30 stocks. New investors may hold fewer stocks, while experienced traders may feel comfortable monitoring a wider range of securities.
| Response | Saskatchewan | Prince Edward Island | Ontario | Nova Scotia | Newfoundland and Labrador | New Brunswick | Manitoba | British Columbia | Alberta |
|---|---|---|---|---|---|---|---|---|---|
| Fees | 68.29% | 66.67% | 72.78% | 68.29% | 65% | 60% | 87.8% | 69.95% | 69.01% |
| Provider reputation | 51.22% | 50% | 41.62% | 39.02% | 30% | 40% | 48.78% | 44.81% | 41.55% |
| Minimum account balance | 39.02% | 33.33% | 34.91% | 34.15% | 55% | 55% | 43.9% | 37.7% | 37.32% |
| Investment types covered | 36.59% | 33.33% | 32.15% | 21.95% | 35% | 50% | 31.71% | 33.33% | 44.37% |
| Customer service | 29.27% | 50% | 36.88% | 34.15% | 35% | 35% | 31.71% | 34.43% | 30.99% |
| Trading tools and platforms | 29.27% | 16.67% | 32.54% | 48.78% | 20% | 5% | 26.83% | 30.05% | 28.17% |
| Number of investments | 24.39% | 50% | 25.84% | 19.51% | 35% | 25% | 9.76% | 25.14% | 26.06% |
| Whether commission free ETFs are covered | 21.95% | 23.27% | 34.15% | 25% | 30% | 19.51% | 24.59% | 22.54% |
There are two ways to purchase stock: placing a market order or a conditional order.
Once you’ve entered details like the type of order you want to execute and the number of stocks you’d like to purchase, submit the order.
Dollar-cost averaging is a strategy investors use to minimize losses from market volatility and maximize their long-term returns. Instead of investing a large sum of money all at once, investors gradually purchase stocks over time, often at regular intervals.
Say you have $1,000 to buy stocks online. Instead of investing the entire $1,000 at once, you dollar-cost average by investing $100 every month for 10 months. This means you purchase shares at various prices—some low, some high—which is better than buying at one time when the shares might be overpriced.
The cost to buy stocks depends on which trading platform you’re using, with trading commissions often ranging from $0 to $9.99.
Some online brokerages like Wealthsimple charge no fees or commissions to trade stocks, and some require a minimum deposit to open a trading account. Other brokers charge extra for specialized investment products. High-value trades are often charged as a percentage of the total trade value, rather than a fixed fee.
If you’re an active trader, you could qualify for discounted trading fees. Requirements vary between brokerages, but usually this involves placing around 150+ trades per quarter.
You can compare the fees and features of the best stock trading apps here.
Once the broker executes your order, you’re considered a shareholder. Congratulations! And now you can either hold the stock or sell it. Buy-and-hold investors hold on to stocks in the hopes that they will eventually increase in value. They may hold a stock for months or years before they decide to sell it — hopefully at a profit.
Active traders, on the other hand, may offload a stock quickly. Specifically, day traders engage in intraday trading, which involves buying and selling a stock over a single trading day. The aim here is to take advantage of sudden changes in a stock’s price. This type of trading is complex, fast-paced and requires a comprehensive understanding of the market. It’s not a suitable trading strategy for beginners.
Ultimately, what you do with the assets in your portfolio depends on your investment goals, strategy and risk tolerance. Make sure to check in occasionally on your investments to track their performance and ensure your portfolio still aligns with your investment goals.
The process of selling your shares is equally as important as buying them. But not every investor follows the same playbook.
Some experts say you should consider selling your stocks if the company’s fundamentals change for the worse or if the competitive landscape changes. For instance, you may decide to sell your stock in a company whose earnings continue to steadily decrease or whose performance has dramatically weakened compared to industry peers.
Another reason to sell might be that you need the money for a more attractive investment.
Ideally, investors want to sell when it will be the most profitable. But timing the market is incredibly difficult, if not impossible, and can be costly. This is why it’s important to develop a strategy and stick to it.
Generally speaking, yes, it’s safe to buy stocks from an online brokerage in Canada. Most trading platforms employ safety measures like 24/7 infrastructure monitoring and two-factor authentication as standard protocols along with maintaining a membership or good standing with the IIROC. But, like with anything on the internet, there are still some things to watch out for:
Yes, all of Canada’s Big Five Banks offer stock trading platforms and apps. Here’s a quick breakdown of the platforms each bank offers to help you narrow down your options for how buy stocks in Canada.
TD offers Canadians a stock trading platform and app where you can put your investments into a variety of registered or non-registered accounts. TD Direct Investing also provides users a host of learning resources and research tools to help you make smart investments. Trading comes with reasonable commission rates, but you may find cheaper options depending on the type of investments you plan to make.
RBC Direct Investing offers a robust investing platform and trading dashboard either online or through the RBC Mobile app. Active traders will save on commissions. RBC Direct Investing also offers margin trading and the ability to get real-time quotes for stocks and ETFs. One unique selling point for this platform is the option to use a demo account where you can practice stock trading in Canada without using real money.
Scotia iTRADE offers a highly rated stock trading platform and app for Canadians. Its commission rates decrease when you trade more. Scotia iTRADE also offers a practice account with a fictional portfolio of $100,00 so you can learn how to buy stocks in Canada with what is essentially play money.
BMO InvestorLine also provides users with both a web-based trading platform and app. You’ll only pay a fee per trade if you have less than a specified minimum in your account. A nice perk of using BMO InvestorLine is that it makes its investment research available to its users.
Unlike many other brokerages run by major Canadian banks, NBDB offers fee-free stock and ETF trades. But you’ll pay an exchange rate mark up when converting currencies to trade non-Canadian securities.
According to results from the Finder: Consumer Sentiment Survey Q1 (CSTQ1), more than a third (36.18%) of Canadians considered equities to be a smart investment in the first quarter of 2023. This dropped only slightly in the second quarter of 2023 to 27%, according to the Finder: Consumer Sentiment Survey Q2 (CSTQ2).
Men preferred stocks as an investment option, with 41% considered Q1 2023 a “good time to invest in stocks,” compared to 32% of female investors.(1)
Age also had an impact on an investor’s confidence in stocks as an investment opportunity. The youngest generation, Gen Z (investors up to the age of 24) had the most confidence in stocks as a good investment opportunity in the first quarter of 2023 with 53% believing “now is a good time to invest in stocks,” compared to 42% of millennials, 31% of Gen X and 19% of baby boomers.
In general, almost a third of Canadians investors (31%) held stocks outside of their registered accounts, such a retirement savings fund (RRSP) or Tax-Free Savings Fund Account (TFSA) and almost three quarters (72%) bought or sold stock through an online stock platform or app. This seems logical, given that 29% of respondents in the CSTQ2 stated they had never worked with and had no plans to use the services of a financial advisor.(2)
Not ready to open an account with an online brokerage in Canada? Practice your trades risk-free with a stock-trading game.
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