investing basics

[forreal]

hey guys i was wondering if someoen could fill me in on the basics of online trading and buying of stocks...

does anyone know what the minimum investment ($) has to be?
also is it better through one bank comapred to the other??
thanks

im sorry im a newbie

[Road Runner]

Re: investing basics

I'm not too sure about what brokerage firms are the best. I've heard a lot of good things about e*trade but maybe its just good marketing on their behalf. In the past I've done all my trading through WebBroker with TD Waterhouse Discount Brokerage (mostly because I work at TD part time). Unless you really know your stuff you'll probably be trading in a cash account (where you have pay cash in full for each purchase) rather than a margin account (where you borrow $ to trade and hope the stocks go up.

Depending on who you go through, minimum amounts may be required to open a trading account, it could range from $100 to $1000 or more even for discount brokerage. Then each time you trade you pay a commission (could be as a % of the amount you are trading, or a fixed amount like $30 per trade, sometimes a combinatin, depending on a couple of factors). Furthermore, if you are buying and selling stocks you will only be able to buy them in even lots (multiples of 100 shares or units).

Check with whomever you bank with as they probably have a brokerage arm. I wold strongly urge you to compare the comissions and features of major banks vs online brokerage such as e*trade, as people generally have greatly differing needs when it comes to finances.

Check these links out maybe
http://www.tdwaterhouse.ca/services/asglac.jsp
https://www.canada.etrade.com/pages/home/main.shtml

I've got pretty limited experience when it comes to online trading since I've only traded through CIBC and TD but I can definetly answer plenty of questions (between online trading and Finance 317 in third year...). Anyone else have some recommendations?

[Billip]

Re: investing basics

hey guys i was wondering if someoen could fill me in on the basics of online trading and buying of stocks...

does anyone know what the minimum investment ($) has to be?
also is it better through one bank comapred to the other??
thanks

im sorry im a newbie

I'm assuming that you're totally new at investing all together... so I'll start from the beginning...

1. You need to identify your goals for investing. Do you want to invest for the long term (for retirement), or for a shorter term? This will determine the kinds of securities and other instruments you'll want in your portfolio. If this is long term, then you'll probably want to put your money into a registered account (RRSP) so that you can defer tax.

2. Identify how comfortable you are with risk. Investing is all about calculated risk... if you're the kind of person who won't be able to sleep at night worrying about your investments, then invest in less risky investments. If you're balls-to-the-wall, then you invest in riskyer stuff, with the knowledge that you might lose your shirt. Time is your friend when determining risk, as risky securities tend to be volatile and jump around in value, but in the long term they may appreciate.

3. Once you have an idea of those things, then you can look at opening accounts. One of the first things you'll need to determine here is do you want to fully control your trades (choose your investments), or do you want help from a professional? If you want to do things yourself (the cheapest way), then just open a self-directed account somewhere. I personally don't think it really matters where. If you want help from a professional, then you'll need to look at full service brokerages. Perhaps your parents, family or friends have a recommendation on somebody who has worked well for them? If you are wanting to invest for retirement, you'll open a Registered account. If not, just open a non-registered cash account.

4. All trades cost money to execute (with the exception of some trades in an RRSP). Costs typically start in the $30-$40 range for self-directed accounts, and can be many hundreds of dollars for full service accounts (usually a percentage of the trade). This will all be determined by the bank/brokerage you use. I have found that, usually, buying mutual funds is cheaper than buying stock.

That's all I can think of right now, but if you have specific questions, just post 'em up.

[liquid]

Re: investing basics

Looks like Bill & Road Runner have the basics covered. In all honesty, if you are not a person who is willing to spend some decent time analyzing stocks, it would perhaps be in your best interest to stick with something simple.

I'm so busy right now I do not deal with my own stocks at all. I have my RRSP's done through a pre-set portfolio at TD Bank.... which is actually working out fairly well. That may be a direction you want to head, however you have to make sure the fees are not all back-loaded.

If you want to be conservative, a GIC might be your bet as well.

[forreal]

Re: investing basics

alrighty thanks guys for the insight

[Tromping_Maniac]

Re: investing basics

Buy low, sell high. Sorry I couldn't resist