How to Buy Stocks in Canada

Hey everyone, this post is on How to Buy Stocks in Canada.

I’ve been getting lots of questions lately from readers who are just beginning their investing journey. So I thought I’d write a basic how-to post on the subject.

Full disclosure though, I’m not a financial advisor and what I offer here is my own opinion. Readers should do their own research before investing in anything. Also, this post contains affiliate links where the blog may receive a small commission on any sign ups for Questrade.

Now with that stuff out of the way, let’s begin.

Is Now A Good Time to Invest?

I heard a saying once that goes like this: the best time to invest was 5 years ago, the second best is Now!

5 years from now I think we’ll all be glad we stayed the course and continued to not only hold on to our investments, but to buy more when prices were cheap.

With the recent market crash now is a great time to consider investing in the stock market since a lot of quality stocks are trading near their 5 year lows.

So yes, I think now is a good time to invest and if you read my monthly reports and recap posts, you’ll see that I’m still buying.

In fact, I’ve stopped paying extra on my mortgage and funneled all that money into the stock portfolio.

Paying back my mortgage debt can wait, I want to build my passive income and grow my wealth. So that’s why I’m taking action today.

Why Invest At All?

We all know why we invest or want to start investing. Here are some common reasons why people choose to invest: for a secure financial future, to save for retirement, to save for early retirement, to build financial independence etc. etc.

We all have our reasons but my big reason is that I don’t want to depend on anyone or anything for my financial well-being.

Let’s face it. The reasons to save and invest have never been more apparent than they are today. Tens of millions of people are unemployed, laid-off, furloughed…whatever. Now they have to depend on a government subsidy just to get by.

What if there was no government money coming to the rescue? I don’t ever want to find myself in that position.

So yes, we all have our reasons for investing, and assuming that you have some money saved and are eager to start investing, here’s how to buy stocks in Canada.

For those of you who just want to get on with it and start buying stocks move on to step 3 and 4. For some friendly advice based on my own experience read steps 1 and 2.

Step 1 Invest don’t Gamble

A lot of new investors view the stock market as a casino. This idea can cause a lot of financial pain so I’d recommend thinking about any investment as a long term thing.

Sure you may get lucky once in a while but a lot of studies show that the big winners on the stock market are the people who buy over the long term and don’t try to beat the market.

In fact, the legendary investor Warren Buffett offers an interesting way to think about owning stocks. He says to think of it as buying a piece of a business (which you are) and to think about how you’d feel if the market closed for 10 years.

Would you still be happy owning that business and not being able to sell it? Would it continue to be profitable through good times, and in bad?

These are things to think about when buying individual stocks.

Step 2 Make a Plan and Stick to It

This ties into step 1. You need to have some kind of plan for your investing approach. The easiest and simplest approach for new investors is to start with some low cost index ETFs that track the S&P 500, the TSX, and the International EAFE index. Add a bond ETF for safety and diversification so you can sleep at night.

Indexes are baskets of stocks and this helps with diversification so you don’t put all your eggs in one basket.

As you build confidence and grow your funds in those ETFs then you might want to do some research and branch out into owning individual stocks.

Step 3 Open a Questrade Account

To buy stocks you need to first open a discount brokerage account. Banks offer these but charge high fees, that’s why I chose Questrade. My Step by Step guide on how to open a Questrade Account will walk you through the process.

Use This Link to Get $50 in Free Trades With Questrade

Step 4 Choose Which Stocks You Want to Buy

Every company that is listed on a stock exchange has ticker symbol. For example, Amazon’s symbol is: AMZN, Facebook is: FB, Google is: GOOG. You get the idea.

You can search stock symbols on Yahoo Finance by typing in the company’s name in the search field.

What you do in Questrade is type in the stock symbol or company name in the symbol lookup field and click the buy/sell button.

A new window will open and you can fill in the quantity that you want to buy and whether you want to buy at market (ie. the current price) or set a limit (set the price you want to pay). Remember that you’ll pay a $5 fee to buy and sell stocks so subtract that amount from the total money you have to invest.

Alternatively, if you’re buying ETFs through Questrade, then it’s free to buy. You only pay when you sell.

All that’s left to do is hit the Buy button. It’s really that simple.

Thanks for reading How to Buy Stocks in Canada happy investing!