{"id":5496,"date":"2022-04-11T14:10:16","date_gmt":"2022-04-11T21:10:16","guid":{"rendered":"https:\/\/www.nerdwallet.com\/ca\/?page_id=5496"},"modified":"2023-03-02T10:42:35","modified_gmt":"2023-03-02T18:42:35","slug":"how-to-invest-in-stocks-canada","status":"publish","type":"page","link":"https:\/\/www.nerdwallet.com\/ca\/investing\/how-to-invest-in-stocks-canada","title":{"rendered":"How to Invest in Stocks in Canada: 5 Quick-Start Tips"},"content":{"rendered":"\n

Breaking into the stock market is easier than you might think, but you\u2019ll need to compare your options to find the ideal trading platform for your goals, even if you’re an investing beginner<\/a>.<\/p>\n\n

To invest in stocks in Canada, you\u2019ll need a brokerage account. As for what goes into your portfolio? That will depend on your strategy \u2014 and your stock research.<\/p>\n\n

1. Choose an investment platform<\/h2>\n\n

All of the major banks in Canada are equipped to offer investment services, and there are perks to opening an investment portfolio where you bank. One such benefit is a simplified application and funding process \u2014 your bank already knows who you are, and can easily access your deposit accounts for fund transfers.<\/p>\n\n

But don\u2019t assume your bank is the right choice \u2014 take some time to explore your options before you start investing<\/a>. You may find more competitive fees or better research tools offered by other investment platforms.<\/p>\n\n

Ways to compare investment platforms<\/h3>\n\n

As you narrow down your platform options, consider the following:<\/p>\n\n

  1. Account options.<\/strong> Make sure the brokerage you\u2019re considering offers the type of account you want to open.<\/li>
  2. Fees.<\/strong> Commissions and account fees eat into profits, so familiarize yourself with the actions that trigger a fee and at what rate.<\/li>
  3. Research tools.<\/strong> To make informed stock picks you may need research tools like stock screeners and charting software, and not all platforms offer these tools.<\/li>
  4. Investor feedback.<\/strong> Look for investor reviews of your potential broker on the Better Business Bureau, Trustpilot, Reddit and other online forums, and check to see if they are Canadian Investor Protection Fund (CIPF)<\/a> members.<\/li>
  5. Investment options.<\/strong> Most brokerages offer stocks, but you may want to see what other assets<\/a> your platform has in its lineup to diversify your holdings.<\/li><\/ol>\n\n

    Pay close attention to investment fees<\/h3>\n\n

    Most major Canadian brokerages charge between $4.95 to $9.99 per stock trade, with an average commission fee of $6.95 per trade. Here\u2019s why it matters: Let\u2019s say you want to invest $500 in a popular stock. After your trading platform takes its $6.95 commission, you\u2019re left with $493.05 to invest. Right off the bat, that\u2019s a 1.4% loss.<\/p>\n\n

    Seven bucks may not seem like much, but flat-rate commissions can seriously eat into your bottom line, especially when you invest at smaller dollar amounts. Had you invested just $100, the average Canadian stock commission fee of $6.95 per trade would snap up a tidy 6.9% of your initial investment. You\u2019d need your investment to gain at least that much just to break even.<\/p>\n\n

    2. Pick and fund an account<\/h2>\n\n

    Canadian investment accounts can be broadly grouped into registered and non-registered accounts.<\/p>\n\n

    Non-registered investment accounts<\/h3>\n\n

    Non-registered investment accounts don\u2019t have contribution limits or withdrawal penalties, but lack tax benefits.<\/p>\n\n

    Cash accounts<\/strong> are basic accounts that let investors buy and sell investments with the cash they have available in their accounts. Think of it like a debit card: you’re good to go as long as your investment account got the funds.<\/p>\n\n

    Margin accounts<\/strong> allow investors to borrow money from their brokerage to buy investments. You have to pay borrowed funds back with interest \u2014 sort of like a credit card. Margin accounts are typically best suited to experienced investors.<\/p>\n\n

    Registered investment accounts<\/h3>\n\n

    Registered investment accounts are offered through Canadian government programs. These accounts offer lucrative tax benefits, but limit how and when you can deposit and withdraw funds.<\/p>\n\n

    Don\u2019t let the name fool you \u2014 tax-free savings accounts, or TFSAs<\/a>, aren\u2019t just for savings. They can be used as investment accounts, too. TFSA contributions aren\u2019t tax-deductible, but investment gains are tax-free. The biggest drawback? You\u2019re limited in how much money you can put into your TFSA annually. The annual contribution limit for 2022 is $6,000.<\/p>\n\n

    Registered Retirement Savings Plans, or RRSPs<\/a>, are designed to help you save for retirement. Funds deposited into an RRSP can be used to reduce your taxable income, but you can only contribute 18% of your income up to the annual RRSP limit, which is $29,210 in 2022.<\/p>\n\n

    A Registered Education Savings Plan, or RESP<\/a>, helps Canadians save for a child\u2019s higher education. Money in an RESP grows on a tax-deferred basis. Funds are released when the beneficiary attends post-secondary education. Taxes are owed on RESP funds when they\u2019re released, but if the beneficiary is in a lower tax bracket, the money may be tax-free.<\/p>\n\n

    \u00bb MORE:<\/strong>\u00a010 RRSP benefits you shouldn\u2019t ignore<\/a><\/p>\n\n

    How much do I need to start investing?<\/h3>\n\n

    Many brokerages in Canada don\u2019t have account minimums, which means you can start buying stocks with as little as $1 if your broker offers fractional investing.<\/p>\n\n

    Fractional investing lets traders buy portions of individual shares. This feature is handy for those who want to invest in popular stocks but can\u2019t afford to purchase a full share outright.<\/p>\n\n

    3. Research potential stocks<\/h2>\n\n

    There are many different types of stocks on the market, and nearly as many terms to describe them.<\/p>\n\n