Wondering how to open a trading account in Canada, so you can start investing? Online investment platforms make it easier than ever to start buying and selling securities yourself at a much lower cost than if you used a traditional full-service broker. Let’s walk through how to open a stock account in Canada.
The exact steps for opening a stock trading account vary between platforms, but here’s how it generally works.
There are 15 online brokers to choose from in Canada. Each offers its own fee structure, account types, trading options and platform features.
If you’re just starting out, look for brokerages with widely available customer support, low fees and simple, user-friendly apps. More experienced investors may want a trading platform that offers advanced features like options trading, margin trading and access to other securities besides just stocks and ETFs.
Before signing up, make sure you understand the cost of making a trade, any ongoing account maintenance fees and the requirements for opening an account. Usually, you must be at least the age of majority in your province or territory (18 or 19 years old), a resident of Canada and have a bank account.
Most platforms let you complete the entire application process online, although some may require extra steps like visiting a brokerage branch in person to verify your identity and complete the process. For example, some CIBC Investor’s Edge clients may need to visit a local CIBC branch to present ID and speak with a representative before their applications can be fully approved.
Create the username and password with which you’ll access your account. Many platforms will reimburse you for financial losses due to unauthorized account activity, provided you’ve taken reasonable steps to protect your password and personal information. So, avoid using an obvious password, and don’t share it with anyone.
Many platforms use 2-factor authentication, such as one-time codes sent to your phone via text or an authenticator app, to prevent unauthorized account access. You may have to confirm any devices linked to your trading account before your application can proceed.
Popular account types include Tax-Free Savings Accounts (TFSAs), Registered Retirement Savings Plans (RRSPs) and Registered Education Savings Plans (RESPs), although you may be able to open business accounts, trusts and other account types as well.
All brokers offer cash accounts that let you trade with funds you deposit into your account. Some also offer margin accounts that let you trade using funds borrowed with interest. Margin trading is risky and not suitable for new investors.
You’ll typically need to provide your full name, email address, residential address, phone number and Social Insurance Number (SIN).
You may be asked to provide the name of your employer and some basic financial information. This information is requested to help brokers comply with Canadian regulations designed to prevent fraud and money laundering. You’ll also need to provide bank account details to transfer funds to and from your investment account.
For security purposes, you have to send a copy of valid, government-issued photo ID 9such as a driver’s license or passport) to your broker. Usually, you can do this by email, fax or uploading a photo or PDF file to a secure online portal. Qtrade has a convenient system that lets you upload a copy of your ID and take a selfie to verify your ID in anywhere between 30 seconds and 10 minutes.
You can verify your residency by sending in a copy of a recent utility bill, bank statement, credit card statement or similar document that shows your name and address.
Once you’ve provided all the required information, uploaded your documents and verified your identity, submit your application. Approval often takes anywhere from 1-2 business days. There could be delays if you’re missing information or your ID is unclear.
Once approved, transfer funds into your investment account, so you can start trading. Usually, this can be done by electronic funds transfer (EFT), Interac e-Transfer, bill payment through your online bank portal, wire transfer or cheque. Some brokers may also accept debit card payments. You can’t fund an investment account via credit card.
Note that some brokers require a minimum deposit before you can start trading. Some, like Wealthsimple and Interactive Brokers, have no minimum deposit requirements.
Once your account is open and funded, you can start buying and selling securities. You can also open additional accounts. Most platforms offer both online and mobile app trading, making it easy to invest just about anytime, anywhere.
For the 2022 tax year, the contribution deadline is March 1, 2023. The maximum amount you can contribute is 18% of your earned income in the previous year, up to an annual limit of $29,210 for the 2022 year. Contributions are tax deductible – you claim your RRSP contribution as a deduction on your tax return. Savings grow tax-free within your RRSP, as you won’t pay tax on investment earnings as long as they stay in your RRSP.
To make comparing even easier we came up with the Finder Score. Trading costs, account fees and features across 10+ stock trading platforms and apps are all weighted and scaled to produce a score out of 10. The higher the score the better the platform - simple.
It’s easier than ever to open a stock account. Most self-directed investment platforms let you apply online in minutes and get approved in 1 or 2 business days. Once you’ve funded your account, you’re all set to start investing. Before you apply, make sure you’ve carefully compared trading platforms to find the right one for your needs.
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