How to buy stocks

March 15, 2021

Buying stocks is a great way to make your money work for you over time, but the world of investing can be intimidating and confusing for first-timers. When you invest in stocks, you’re purchasing a portion or share in a company; the more shares you own, the more potential there is for your money to grow – or disappear.

If you’re new to the world of personal finance and need some guidance on investing in the stock market, here are four steps to get you started.

How to buy stocks

[Photo Credit: NicoElNino]

Step 1: Determine your financial goals

Before buying any stocks, ask yourself a few key questions about your future investment goals and risk profile. Are you looking for short-term gains or long-term growth? If you’re starting out young and saving for your retirement, you’ll have a longer investment runway and can afford to take on more risk. If you’re saving for an upcoming expenditure like a down payment or a child’s education – or if you’re worried about stock market fluctuations – focus on low-risk, low-volatility assets.


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Step 2: Decide how you want to buy stocks

When considering how to buy stocks in Canada, there are three main ways you can invest your money.  The approach you take will depend on whether you want to take a hands-on role in managing your money or if you’d prefer to work with an expert.

  • Self-directed investing: If you’re wondering how to buy stocks in Canada without a broker, self-directed trading sites are a popular option for individuals who want to buy and trade assets on their own. User-friendly online brokerages offer low fees but require investors to operate independently and conduct their own research on market trends. Many major banks also operate their own online brokerage platforms for do-it-yourself investors.
  • Robo-advisors: Not ready for a do-it-yourself approach? Robo-advisors are another option for buying stocks without working with a broker one-on-one. Available through select major banks and third-party platforms, automated robo-advisors will manage your portfolio on your behalf based on your risk tolerance, investment objectives, and time horizon.
  • Financial advisors: If you want a professional to help you buy stocks and manage your money, it’s best to work with a financial advisor. These trained experts can assist with a full spectrum of financial services and products – including retirement planning, educational funds, and life insurance.

Step 3: Diversify your investments to reduce your risk

The stock market can be volatile, so a good way to reduce your risk is to diversify your portfolio by investing in a range of assets across a broad variety of industries. Instead of buying individual stocks, opt for exchange-traded funds (ETFs) or mutual funds, which are professionally managed portfolios of stocks, bonds, and/or commodities that are invested in a diverse and strategic manner.

Step 4: Start investing regularly

It’s never too early to take control of your financial future, and no amount of money is too small when it comes to investing. Set up automatic contributions for investment accounts on a monthly basis to ensure you’re building up your portfolio. The sooner you start mastering how to buy stocks – either on your own or with help from a financial planner – the more your money can grow over time.

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