You don’t need to be a seasoned investor to buy stocks.
Stock investing in Canada can help you build wealth by putting your money to work for you. And you don’t need to be a financial whiz to do it. While you can eventually deep-dive into complex strategies if you like, getting started just takes some time, thought, and knowledge of basic concepts.
In this article, we guide you through the step-by-step process to begin investing in stocks, including defining some key terms you should know.
How to start investing in stocks
Investing in stocks doesn’t have to be hard. Follow these steps to get started today.
1. Choose an investment approach
The first step is deciding how you want your investment to be managed. How much time do you want to spend on investing? How hands-on do you want to be? You have three options to choose from:
Managing your own portfolio: Also known as active investing, managing your own portfolio leaves all of the choices up to you. You decide which stocks to buy and when to trade them. This method is best suited for experienced investors willing to devote significant time to their investments, so beginners are better off choosing one of the two options below.
Using a broker: This is a form of passive investing. You rely on an experienced portfolio manager who chooses the best investments for your goals, monitors your portfolio and adjusts it as needed. If you’re new to investing, a broker can be a great way to get started.
Using a robo-advisor: Robo-advisors are another form of passive investing. You identify your investing goals and risk tolerance, and the service automatically manages your portfolio for you. Robo-advisors tend to be less expensive than human advisors and are a great option if you’d like to “set it and forget it.”
2. Create an investment budget
The next step is to decide how much you want — and can afford — to spend on investing. Review your monthly budget to make sure you have enough to spend on day-to-day expenses, putting money toward savings and investing. You don’t need to invest a huge amount. The important thing is just getting started so your investments have more time to grow.
Once you’ve identified your investing budget, you also want to consider asset allocation. It’s important to include a mix of asset classes (such as stocks, bonds and gold) in your portfolio to reduce risk. When it comes to what percentage of your portfolio you keep in stocks, the rule of thumb is to aim for 100 minus your age. So, if you’re 40, stocks should make up 60% of your portfolio.
Whatever amount you decide to invest, you have plenty of options, from individual stocks (which can cost anywhere from a few dollars to a few thousand dollars) to exchange-traded funds (ETFs) (which can cost less than $100).
3. Open an investing account
Next, it’s time to open an investing account. If you want to actively manage your portfolio, an online brokerage account will allow you to hand-pick your investments. If you want to use a broker, a managed broker account will let you leave the work to an investment advisor.
A robo-advisor is a more affordable alternative to a human investment manager. Like traditional brokers, robo-advisors collect information from you to identify your needs and goals, then create and adjust your portfolio. Because their services are automated, their fees are lower than human brokers, and they don’t charge commissions. However, if you prefer speaking to someone for more nuanced advice, a broker might be worth the cost for you.
4. Choose what to invest in
Note: This step is only for DIY investors who choose to actively manage their portfolios.
If you’re going the hands-on route, you’ll need to know the different investment types available to you:
Individual stocks: When you buy individual stock shares, you’re investing in the success of the company in question. Your success depends directly on the company’s success. For this reason, it’s essential to research each company you’re considering investing in. This is better left to experienced investors.
Mutual funds: Mutual funds are pooled investment funds that allow you to invest in a collection of stocks, diversifying your portfolio across industries, regions and more. Mutual funds are usually actively managed by a professional manager who buys and sells stocks based on their expertise.
Exchange-traded funds (ETFs): ETFs work similarly to mutual funds but are typically managed passively by tracking a major stock index. They can be a great way for beginners to get involved in the stock market because they’re usually less expensive and more tax-efficient than mutual funds.
5. Review your portfolio periodically
Whether you’re actively managing your portfolio or using a broker or robo-advisor, it’s important to keep an eye on your investments to ensure you’re on track to reach your goals. For example, you might decide you want to invest more, diversify into a new industry or sector or transition to more conservative investments as you near retirement. So, periodically review your portfolio’s performance to make sure it’s achieving what you want it to.
The bottom line
Stock investing doesn’t have to be intimidating. Start slow, continue educating yourself and don’t be afraid to ask questions as you go. There are plenty of resources to tap into to build your knowledge. Consult a financial professional for customized guidance on building a portfolio that meets your needs.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
