Here at TradingBrokersView, we only recommend brokers that are regulated by at least one top-tier financial authority. Please note that some global brokers operate via several legal entities, each regulated by a local authority – so for example, US clients would be overseen by a US regulator, and UK clients by a UK financial authority. Some regulators also run investor protection schemes, making you eligible for compensation if your broker goes bankrupt.
If you want to invest in stocks from Canada, it’s worth checking if the broker is overseen by the Investment Industry Regulatory Organization of Canada (IIROC) and is a member of the Canadian Investor Protection Fund (CIPF). The latter comes with up to CAD 1 million protection if your broker goes bust.
2. Open your account
Opening an account at an online broker is usually easy and straightforward, and takes place fully online. Most of the time, you just need to provide your name, address and other basic information, and maybe answer some questions about your wealth/income status, financial knowledge or trading experience.
Make sure you have your documents at hand, as
- copies of a photo ID
- some recent bank statements
- or utility bills
are usually required to verify your identity and residency.
Once you have completed your registration, it normally takes another day or so for your account to be verified, although at some brokers this process can take up to three days or even more. Some locally-focused brokers may even require overseas clients to send documents by mail, making the process more cumbersome. But once your account is verified, you’re all set to start investing!
Many brokers will offer several account types to choose from, such as individual or joint accounts, or various tax-free savings accounts. As a stock investor, you’ll be especially interested in the latter.
If you’re planning to invest in stocks in order to save for retirement or other long-term goals, a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) may be ideal for you. Putting stocks in these accounts will make you exempt from paying taxes on price gains and dividends. Investments into an RRSP are tax deductible, and you pay taxes when you ultimately withdraw funds; whereas contributions to a TFSA are not tax-deductible, but withdrawals are not taxed. If you think these account types suit your long-term investment goals, consider choosing a Canada-based broker that offers TFSA or RRSP accounts.
3. Fund your account
So your trading account has been verified; the next step is to fund it – in other words, to deposit money that you will then use for buying stocks. Some brokers require a minimum deposit when you open your account, but most brokers do not have such a requirement, allowing you to take your time before committing any funds.
All brokers will allow you to deposit or withdraw funds via bank transfer; an easy, usually free, though not always super-fast method. Withdrawing money to your bank account can take as long as three days.
Many brokers also let you deposit (though not withdraw) funds using credit or debit cards. A few will also accept so-called electronic wallets such as PayPal, Apple Pay, Skrill or Neteller. The biggest benefit of cards and e-wallets is that transactions take place instantly, allowing you to start investing – or reap the proceeds of a successful stock sale – right away.
4. Find and buy stocks
You may already know which stock(s) you want to buy; if not, it’s worth checking out the research section of your broker, which often includes trading ideas and recommendations by in-house experts or third-party analysts. Alternatively, you can do a bit of research on your own, and check the selected stock’s earnings multiples, or read up on industry news.
Once you have settled on a stock, it’s easy – just
- select it from the broker’s search menu
- enter the number of shares you want to buy
- press “Buy”
Most trading platforms will offer several order types – such as a “Market” order to buy at the current price, or a “Limit” order to buy later at a specific price. To learn more about various order types, read this article.
5. Stock trading and non-trading fees in Canada
Now let’s check in detail the trading and non-trading fees charged by the best brokers for investing in stocks from Canada. All spreads, commissions and financing rates are for opening a position, holding for a week, and closing.
