Stock trading Canada is an economic activity that has been around for a very long time. Right from when the New York Stock Exchange was formed, Canadians have always crossed the border to trade stocks in the US. Subsequently, trading floors were set up in Canada and regulated by the authorities, eventually leading to local stock trading in the country.
However, trading witnessed an explosion with the introduction of online stock trading in Canada and the leverage opportunities offered by trade brokers. No longer did traders have to visit a central location or have a hefty budget to invest in stocks. The introduction of online trading made it possible for small time investors to sit in the comfort of their homes and trade stocks.
If you would like to grow your wealth, engaging in stock trading Canada is a smart move to make because of its long term benefits. Many families in Canada have grown generational wealth by buying and holding different stocks in their portfolio until their value appreciates and they sell for a profit.
This is especially true for beginners who use online brokers to buy stocks. These brokers have liberalized the process by removing limitations so traders can buy as many stocks as they want at a cheap price for free or for a relatively low broker commission fee.
Stock trading Canada is not the only way to grow your wealth, as there are other assets like equities. One popular option is Exchange Traded Funds, better known as ETFs. ETFs can be bought through an online robo advisor or an online broker, and they hold future value.
A stock or stocks are known by many names, like equities or shares, representing percentage ownership of a company. If you buy a stock issued by a company, it means you are now a part owner of the business, which includes all its tangible and intangible assets. Your ownership status allows you to have a claim over its profits to the percentage of stocks you own.
Holders of stocks are also allowed to vote at shareholder meetings and can sell their existing holdings at any time, which may result in gains or losses depending on how much they bought the stocks for and the price they sold them.
In Canada, stocks are one of the main investment instruments that attract a lot of investment from Canadians and foreigners. Besides company stocks, Canadians also invest in GICs, ETFs, cash savings and bonds. Of all these assets, stocks are considered the riskiest because they produce the highest return or losses over time.
Starting stock trading Canada is not difficult, with so many online brokers offering traders opportunities to access the market from their platform. Beginners don’t need a ton of cash to start buying stocks for keeps; with an online brokerage account, you can start trading in stocks with $100 if that is what you can afford. Consistent investment in stocks over a long period of time can result in massive windfalls.
The first thing you have to do is choose an online broker. There’s no harm in buying stocks yourself if you use a very good broker. All you need is to do your research to pick a very good licensed and reputable broker. We advise you to pick a broker that charges very low fees, so you don’t accumulate too many liabilities each time you buy stocks using their platform.
The next move will be to pick the right investment account, which may be a registered or non-registered investment account. Here are some popular investment accounts available to Canadian stock investors.
Tax Free Savings Account: TFSA accounts allow investors to enjoy tax-free returns in their earnings forever, making it the best type of account for long-term savings. If you want to trade stocks as a long term retirement plan, this is the ideal plan for you.
Registered Retirement Savings Plan: RRSP is for saving taxes until you withdraw from the account. This is also a retirement plan for long term benefit. It allows the investor to contribute up to a maximum of 18% of the previous year’s income.
Registered Education Savings Plan: An RESP plan is an account meant for saving toward your child’s education. The government of Canada grants up to $7,200 per child, which their parents or ward can continue to invest.
There are other types of stock trading Canada, but these three are the most popular, especially for brokers with long-term plans.
What are your investment goals? Determine them before you buy your first-ever stock. If you are a beginner, your goal should be to increase the amount you have in your trading account, and as you get older, you may want to generate even more income and protect the wealth you have already garnered. Do you want to fund your retirement? Buy a house or save for your children’s tuition? Let your goals determine how you invest and what you invest in.
Also, make sure you define how much risk you can tolerate. Understand the possibility that you may lose money, so defining your risks will minimize potential losses should they occur.
Stock trading Canada is easier than ever, with online brokers offering investors access to local and international stock markets.
No, you don’t need a license to trade stocks in Canada. Stock trading is a free entry and exit investment.
There isn’t a fixed amount. You can start investing with as low as $100.
You have to in some cases. However, there are stock trading accounts that are partially or completely tax-free.
No, there are no limitations. You can buy as many stocks as you want.