The concept of buying stocks is not difficult to grasp, but unfortunately it seems like most people is confused by the many terms and complicated terminology that the financial system has been using for the most part of its existence.
Online brokers and bank are not helping to the cause, with their complicated systems, they are pushing Canadians to forget about the subject before even trying.
If you are like most of Canadians, you’ve probably never had the chance to buy shares before.￼ we will help you pursue that purpose and show you how companies like Questrade can help you by your first chairs
Buying a stock, is not really that hard
A stock is a piece of a company, a small piece that gives you ownership. It also gives you all the benefits of an owner, like if you’d buy into a private company. Let’s say like if you’d invest in the corner store or a small grocery store.
If you do so, you hope that the grocery store will give you any net earnings at the end of the year so they can pay you in the form of dividends, or the growth of the company.
In the case of stocks, what we’ll do is that we profit of their annual revenue, and possibly of dividends.
Talking about grocery stores. The stock market itself behaves like a grocery store, where you can go in and buy any company you want for any price. Once you have a brokerage account, it’s like entering to the store, walking to the shelf where the products are, and grab one for yourself.￼
Buying a stock is that simple. Just go in and grab any one you like from the shelf, pay to the cashier and off you go!
How can I start buying my own stock
If you like the idea of buying in stock in your favourite companies, then you will need to open a brokerage account.
The first step to buy stock is to have a brokerage account. In Canada, Questrade offers brokerage accounts with the lower fees in the market for any Canadian residents or Citizen.
You can open an account with Questrade at any time, there’s no need to make an initial deposit. You will only need to confirm your identity with them and thats it! You can start familiarizing yourself with their platform, the stock prices, and the way you make an order without the need of spending any money.￼
Then you can make a deposit anytime you want, once you’re ready to start buying shares of companies.
How to make my first deposit
Funding your account with Questrade is easy, you will be able add them as bill providers and pay a bill from your bank account to Questrade.
Just add them as a bill provider in your bank account, and then you can transfer as much money you want. Note that when we say as much money you want, we truly mean it. You can transfer five or 20 bucks to your account, and go and buy anything trading below those amounts.
Or if you’re a more seasoned investor, you can transfer a few thousand dollars and start creating your own portfolio.
How do I make my first purchase
The Questrade platform allows you to purchase anything you want in the Canadian market or the American one.
After you fund your account you can go to the trading tap to start making purchases.
There’s a small search bar where you can find any company you like to buy. Let’s say you’re a fan of McDonalds, then just type it at the search bar.
When you click on search you will be presented with a screen that shows all the McDonald’s activity in the market. If you know you want the stock and you like the price then, it is just a matter of placing an order with your broker.
When you click the Buy/Sell button you will be prompted with a form to indicate the quantity, how many shares you would like at a given price; the order type, if you want to buy them at the market price or if you have a limit amount you would like to pay for each share.
If you select limit, you will also need to indicate the limit price. For example if McDonald’s is trading for 219, you can set a limit price of 220, so you get sure you don’t spend more than 220 per share.
The other boxes are the duration, which is normally set to a day, which means that your order it’s going stay open in the market for the full day (it will get filled almost immediately so this doesn’t matter that much right now). The last box being the account that you want to use, in case you have multiple accounts.
Whenever you are ready. just click Buy and confirm your order by clicking on “Send order”.
Then you will have placed your first order! Congratulations! Now it’s just a matter of time for your broker to find a seller for you. You will receive a notification when this happens and you will be the owner of those shares from now on.
Very nice! And then?
After you complete your purchase there’s really nothing else to do. It’s like buying into a private company where some other people is going to be doing the hard work.
You just have to sit and let them do their work, they will report back to you every quarter with the information of the revenue earned, and any possible dividend paiement, if any.
What not to do after you buy
Please, don’t start trading your stock. After a few days, if the stock goes up, you will may be tempted to sell it for a profit, don’t do this!
If you start trading (buying and selling the same stock multiple times) then you will not only miss on the dividends they pay, but also will be paying more fees than needed.
This is very important for a small investors, if you’re only buying the 50 bucks of a share, you don’t want to be paying 5 dollars each time you trade it (note that you pay fees any time an order gets filled, ergo, any time you buy or sell shares)
Ok, I’m in! Where do I start?
There are many brokers out there, private companies, banks, etc. All of them are offering the same service, placing your order in the market, and all of them are trying to earn fees on the activity you do.
In Canada we have great options for brokerage accounts, one of them really excels in the service they provided, and in how low the fees are: Questrade.
With Questrade you will be paying only $4.95 per order. Compared with the bank fees of about $10.
So, would you like to start investing with a Broker that gives you the lower fees in the market? Open your account with Questrade now.