Investing

how to start investing for a new investor?

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  • Jun 16th, 2013 10:00 am
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Newbie
Apr 11, 2012
29 posts
3 upvotes
Victoria

how to start investing for a new investor?

Hey guys,

I'm looking to start investing, rather than just dump my money into mutual funds where I get dinged by fees etc.

I own stock at my own company through SPP, with an amazing discount + bonus + no fees, but that's it.

I'm looking at starting some DRIP's, pushing some onto my kids for their future, and also for myself for my future.

I don't know where to start. How does one actually go about getting stock? I've heard some say that I should take a course on brokerage and try to become my own, but I'm not sure about the risk of that.

I understand that every purchase for shares usually comes with a fee (which is where being my own broker would help with that...?)

So any help on that would rock. (I'm not looking for stock advice, I know where I want to invest, just not... how...)

Thanks,
15 replies
Member
Feb 20, 2011
460 posts
92 upvotes
So you're looking for the process of actually acquiring stock?? If that's the case you need to open a brokerage account with the financial institution of your choice. The big 5 banks all offer discount brokerage accounts with commissions <$10/trade if you have $50K+ in assets, otherwise you might be paying $30/trade. Other discount brokerages like Questrade offer $4.95/trade commissions. Do research and find which brokerage suits your needs

[QUOTE]In Canada, a stockbroker is called a "Registered Representative" or an "Investment Advisor". To be licensed as a Registered Representative and thus qualified to offer investment advice and trade all instruments with the exception of derivatives, an individual employed by an IIROC member firm must have completed the Canadian Securities Course (CSC), the Conduct & Practices Handbook (CPH),and the 90 day Investment Advisor Training Program (IATP). Within 30 months of becoming licensed, the registrant is further required to meet the post-licensing proficiency requirement by passing the Wealth Management Essentials course (WME). A Registered Representative is also required to complete 30 hours of professional development (product knowledge) and 12 hours of compliance training every three year continuing education cycle as set out by the Investment Industry Regulatory Organization of Canada (IIROC).[/QUOTE]

Seems like alot of work and cost to become your own broker to save on commissions, plus you must be employed by an IIROC member firm, so not sure what your friend is actually suggesting there
Newbie
Feb 10, 2013
55 posts
6 upvotes
Mississauga
If you cert your share with the broker, don't forget to add another 50$ fee.
Or you can look on dripprimer.ca for some share starters, you pay closing price + 10$.

I've got some BNS, BMO, SU, IMO, REI.UN that I got from those websites, contact me if you want more information/interested
Deal Fanatic
User avatar
Dec 14, 2010
7113 posts
9300 upvotes
Onimall wrote: Hey guys,

I'm looking to start investing, rather than just dump my money into mutual funds where I get dinged by fees etc.

I own stock at my own company through SPP, with an amazing discount + bonus + no fees, but that's it.

I'm looking at starting some DRIP's, pushing some onto my kids for their future, and also for myself for my future.

I don't know where to start. How does one actually go about getting stock? I've heard some say that I should take a course on brokerage and try to become my own, but I'm not sure about the risk of that.

I understand that every purchase for shares usually comes with a fee (which is where being my own broker would help with that...?)

So any help on that would rock. (I'm not looking for stock advice, I know where I want to invest, just not... how...)

Thanks,
For the how:
1. Choose the type of account you want. You might want to populate your TFSA first, before using an investment account. If you never had one and were 18 in 2009, you can put $25.5K on it. Then $5,500 (or whatever gets approved) every year after. Depending on the tax bracket you are, or if you are planning to purchase your very first home, you'd use an RRSP, besides TFSA. For the kids, open an RESP, to invest a max of $50K and get 20% grant fom government on first $2,500 per year. The RESP can stay open for 36 years, if kids decide to go to University later. Then the remaining can go to an investment account. If you know where you want to invest, you might want to consider leveraging, if you are comfortable with this.

2. Choose the self brokerage you want. For TFSA, RRSP and RESP, Questrade (I don't like it), Virtual Brokers (I like it) or any of the big 5 offers self-brokerage account are very popular, with reasonable fees. For investment account, I use Interactive Brokers, very cheap and robust. Obviously there are others out there, but stick with good / big companies, check for reviews here and on the net.

All of them can setup DRIPs if you ask for it, some stocks offer discounts doing that, some don't.

Rod
Newbie
Apr 11, 2012
29 posts
3 upvotes
Victoria
rodbarc wrote: For the how:
1. Choose the type of account you want. You might want to populate your TFSA first, before using an investment account. If you never had one and were 18 in 2009, you can put $25.5K on it. Then $5,500 (or whatever gets approved) every year after. Depending on the tax bracket you are, or if you are planning to purchase your very first home, you'd use an RRSP, besides TFSA. For the kids, open an RESP, to invest a max of $50K and get 20% grant fom government on first $2,500 per year. The RESP can stay open for 36 years, if kids decide to go to University later. Then the remaining can go to an investment account. If you know where you want to invest, you might want to consider leveraging, if you are comfortable with this.

2. Choose the self brokerage you want. For TFSA, RRSP and RESP, Questrade (I don't like it), Virtual Brokers (I like it) or any of the big 5 offers self-brokerage account are very popular, with reasonable fees. For investment account, I use Interactive Brokers, very cheap and robust. Obviously there are others out there, but stick with good / big companies, check for reviews here and on the net.

All of them can setup DRIPs if you ask for it, some stocks offer discounts doing that, some don't.

Rod
Hey Rod,

Regarding the TFSA, the highest rates one can find are usually 2.5%-3%. For stocks that show a dividend of 3-4%, why would one put money in a TFSA when you'd the same money back from dividends and stock growth (for good companies)?

IT seems investing in a bank is more profitable than storing money in a bank.
Newbie
Oct 10, 2011
17 posts
6 upvotes
Kingston
Because you can own stocks inside a TFSA. You have to be careful with how you allocate your portfolio between non-registered account, TFSA and RRSP though to make it as tax-efficient as possible. Marginal tax rates differ for capital gains and dividends. If own foreign dividend paying stocks, there is foreign tax withholding. For US dividend paying stocks, It is better to hold them in your RRSP (avoid the withholding as the US recognizes the RRSP as a tax-sheltered account) or your non-registered account (get a tax credit from the CRA for the tax paid to the US), but not inside your TFSA (where you pay tax in the US and there is no way to get it back).
Newbie
Apr 11, 2012
29 posts
3 upvotes
Victoria
frederict wrote: Because you can own stocks inside a TFSA. You have to be careful with how you allocate your portfolio between non-registered account, TFSA and RRSP though to make it as tax-efficient as possible. Marginal tax rates differ for capital gains and dividends. If own foreign dividend paying stocks, there is foreign tax withholding. For US dividend paying stocks, It is better to hold them in your RRSP (avoid the withholding as the US recognizes the RRSP as a tax-sheltered account) or your non-registered account (get a tax credit from the CRA for the tax paid to the US), but not inside your TFSA (where you pay tax in the US and there is no way to get it back).
The biggest reason to put your portfolio into the TFSA is to save on capital gain taxes right? Or is there a better reason?
Sr. Member
Mar 19, 2010
918 posts
106 upvotes
Markham
Onimall wrote: The biggest reason to put your portfolio into the TFSA is to save on capital gain taxes right? Or is there a better reason?
Yes, the main objective of the TFSA is to take advantage of tax free capital gains. If you buy a stock today and it grows 20 fold over the next 10 years, then the gains will be tax free.
IMO, the dividend is an added bonus, whether the stock is Canadian, U.S. or Global, it doesn't matter as far as I am concerned.
“Benign neglect, bordering on sloth, remains the hallmark of our investment process." —Warren Buffett
Banned
Nov 27, 2006
2200 posts
445 upvotes
Toronto
Onimall wrote: Hey guys,

I'm looking to start investing, rather than just dump my money into mutual funds where I get dinged by fees etc.

I own stock at my own company through SPP, with an amazing discount + bonus + no fees, but that's it.

I'm looking at starting some DRIP's, pushing some onto my kids for their future, and also for myself for my future.

I don't know where to start. How does one actually go about getting stock? I've heard some say that I should take a course on brokerage and try to become my own, but I'm not sure about the risk of that.

I understand that every purchase for shares usually comes with a fee (which is where being my own broker would help with that...?)

So any help on that would rock. (I'm not looking for stock advice, I know where I want to invest, just not... how...)

Thanks,
LOL I love when people say " I dont want to invest in MF's becuase I dont want to pay fees" then the same person opens up a trading account at Itrade or TDwaterhouse and places a trade to buy 10 shares at $25-$30 commission.

Hilarity ensures.
Deal Addict
Jul 31, 2004
1490 posts
40 upvotes
GTA
Onimall wrote: The biggest reason to put your portfolio into the TFSA is to save on capital gain taxes right? Or is there a better reason?

TFSA vs. non-registered account: you'd save on capital gain and dividend taxes in the TFSA.

TFSA vs. RRSP: you can withdraw money from the TFSA and get the contribution room (the amount you withdrew) back on January 1st. With the RRSP, except in certain circumstances (e.g. home buyers plan), you lose that contribution room forever once the money is withdrawn. You'd also save more compared to the RRSP for the same amount invested if you are in a lower tax bracket. If you're opening a TFSA for the first time you'd start with $25,500 in contribution room, so if you have more than that to invest you'll have to put the rest elsewhere (e.g. RESP for the kids, your RRSP, etc.)
Sr. Member
User avatar
Feb 25, 2012
627 posts
180 upvotes
SCARBOROUGH
sirex wrote: LOL I love when people say " I dont want to invest in MF's becuase I dont want to pay fees" then the same person opens up a trading account at Itrade or TDwaterhouse and places a trade to buy 10 shares at $25-$30 commission.

Hilarity ensures.
+1 Penny wise... pound foolish.
Deal Fanatic
Jun 27, 2007
5507 posts
1956 upvotes
Are you looking to INVEST or SPECULATE?
Former means you have the dough and can afford someone to do it for you (like Antony). Latter implies you buy low and sell higher as fast as you can.
To speculate successfully, you need time and a little bit of money - refer to tastytrade.com
Sr. Member
Jul 29, 2004
622 posts
136 upvotes
Calgary
What about some books on investing (stock market)? What are some good ones for that?
Deal Addict
Feb 15, 2013
2445 posts
573 upvotes
I started in high school with "One Up On Wall Street" by Peter Lynch
Deal Fanatic
User avatar
Jun 19, 2009
6135 posts
1981 upvotes
Scarborough
The millionaire teacher by Andrew Hallam is also good

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