How to Buy Stocks in the US or Canada: Start Right with Stock Analysis and a Good Broker

If you’re looking for a guide to help you get started with investing in stocks, or if you’ve already started but want to learn how to find solid stocks without relying on those pesky articles with sponsored content disguised as stock tips, you’ve come to the right place. The US and Canada have two of the best brokers for beginners to get started, but if you’re from another country, don’t worry – this article can still teach you a thing or two about finding the right stocks to follow and buy. You’ll just need to put in a little extra effort to find the best broker in your country, and set up the right type of investment account for tax purposes.

For those who have a hard time managing their finances and are not able to save, please read out article on the Top 10 Investing Basics you Need to know. This article can help you think about your money in a healthier way.

Step 1: Finding the Right Broker

Finding the right broker can be a daunting process, especially when brokers tend to hide their fee structure in small print. These fees can eat away at your profits when you’re just starting out and discourage beginners by making them feel they’re in a casino and the house is trying to make their cut at your expense.

However, we’re not claiming that more expensive brokers don’t have value to offer, but you might not fully be able to appreciate the added value when the beginning of the journey can already be overwhelming to you. This is why it’s always best to find the closest thing you can to a zero-fee broker to get started with; so your mistakes will be less costly, and you can always switch to a broker that is better suited to your needs as you learn more about the process with time.

Best broker for the US: Robinhood

If you have an interest in investing in stocks, it’s highly likely that you’ve already heard about Robinhood. Known for its user-friendly platform and zero-commission trading structure, Robinhood has revolutionized the way beginners enter the stock market in the US. With its sleek and intuitive interface, investors can easily navigate through various stocks and make informed decisions. Robinhood also provides access to a wide range of investment options, including stocks, ETFs, and cryptocurrencies. Additionally, the platform offers helpful tools and features, such as real-time market data and customizable watchlists, enabling users to stay updated and make well-informed investment choices. Whether you’re a beginner or an experienced investor, Robinhood’s simplicity and affordability make it an excellent choice for buying stocks in the US.

For simplicity’s sake, we’re going to focus on the pros and cons related to investing in stocks, even though the list could be more extensive if we dive into the additional features brokers offer.

Best broker for Canada: WealthSimple Trade

When it comes to buying stocks in Canada, one of the best brokers to consider is WealthSimple Trade. With its user-friendly platform and zero-commission trades, WealthSimple Trade has gained popularity among Canadian investors. The platform offers a seamless and intuitive experience, making it ideal for beginners who are just starting their investment journey. Additionally, WealthSimple Trade provides access to both Canadian and US stocks, allowing investors to diversify their portfolios and take advantage of opportunities in both markets. With its low optional fees and easy-to-use interface, WealthSimple Trade is a top choice for those looking to invest in stocks in Canada.

Again, the list gets more expansive when you are looking for functionality such as access to options, margin, or crypto, but since the focus of this article is on buying stocks, we’re going to skip all that for now for the sake of simplicity.

If you use our referral code JXD4UA to sign up with WealthSimple Trade, you’ll get $25 when you fund your account.

Step 2: Deciding on your Investment Account Type for Tax Purposes

Many countries offer investment accounts with tax advantages to help you save for your retirement more effectively, or get higher growth in your portfolio through a tax shield. In most cases, there is also a limit to how much you can contribute toward these accounts, and conditions under which investments in these accounts become taxable, such as early withdrawal, or active trading. It is crucial to understand what investment account types are available to you by speaking with an investment professional so that you can make decisions that help you make the most of your savings.

In the US, you have the option to set up a 401(k), Traditional or Roth IRA, or a non-retirement account, among many others. In Canada, you have the option to set up an RRSP, TFSA, or a non-registered account, among others. The differences between these account types are essentially how income, withdrawals, and deposits to and from these accounts behave on your tax return. Other countries may have similar options available to you such as in Australia or the UK, but some countries may not offer any tax advantage accounts. It is critical to note here that many tax advantage accounts may have a limited contribution room available to you each year, so making mistakes here could cost you this advantage in the future if you engage in risky trading behavior and waste the contribution room.

If you’re going to use these accounts, it’s always best to stick to buying stocks with long-term growth potential and solid indicators of health so you make the most of the tax shield you’re being granted. We’ll discuss these investment account types in much more detail in a future article.

Step 3: Finding the Right Stocks with Analysis

The only tool you’ll need to get started in addition to your brokerage account is a platform that can provide you with data that you can use to drive your decisions. Most professional portfolio managers, traders, and other investment professionals use service providers such as Bloomberg or S&P’s Capital IQ that collect data from every quarterly, annual, or other report that publicly traded companies are required to publish. Access to these services can cost thousands of dollars a year and is only worth it for individuals who are managing a large portfolio of investments. Understanding this data is another headache altogether.

Luckily, simplywall.st solves this problem for beginners who would like to get started with investing, or individuals who don’t have the time to spend countless hours analyzing public company data. Simplywall.st gets its data from S&P’s Capital IQ and presents it to you in easily digestible charts and graphs, along with comparable data to help you make informed decisions.

We’ll link to another article with an in-depth explanation of how to use simplywall.st to guide your investment decisions when we’ve posted it, please subscribe if you would like to receive updates when we have posted new content that’s focused on delivering value to you.

Step 4: Diversifying your Portfolio

Stocks, like most investments, have various degrees of volatility, depending on their risk and return. Riskier stocks tend to provide more returns, while less risky stocks give lower returns. For this reason, it’s important to have a healthy balance of risk and return in your portfolio to make the most optimal and sustainable gains. Additionally, risk needs to be spread out between various industries, countries, asset classes, and even competitors to minimize the chances of your portfolio seeing massive losses each time something goes wrong with one of your investments.

One amazing option that is available to investors is ETFs. ETFs, or Exchange Traded Funds, are a group of stocks, traded on an exchange like a stock, but are comprised of a basket of stocks to add diversification into your portfolio. If you seem to be struggling with diversifying your portfolio or want to avoid the chances of losses from bad investment decisions in the beginning, it might be a smart idea to invest exclusively in ETFs until you have a better understanding of how to understand financial data.

We’ll link a much more in-depth article about portfolio diversification in the future. Please subscribe and stay tuned for more content to help you take control of your personal finances.

Conclusion

Getting started with stocks can be overwhelming and daunting with all the horror stories out there, but that shouldn’t be enough of a reason for you to write off one of the most powerful tools available to you to achieve financial freedom. If you take steps to limit your risk and practice healthy investing habits, you should start to see your portfolio grow with time, and feel more secure as your financial dreams start to become a reality. It’s important to speak with a financial advisor and educate yourself while avoiding engaging in risky investing behavior that could put you off investing completely or considerably set you back financially.

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