Stock trading is a fantastic way to grow long term wealth, and luckily for us, it has never been more accessible or cost effective. 

There are now a variety of ways you can get into the stock market with as little as a few dollars by using one of Canada’s best online brokers. With all of the options currently available, like robo advisor services and low cost ETFs, you don’t need to risk it all to make a return, and you don’t need to sift through a bunch of financial statements of companies you are thinking of investing in.

Nonetheless, stock trading for beginners still requires a bit of a leap of faith, so before you download that mobile trading app, read through our guide below to find out what you need to know to get started, and to start earning. 

We’ll be breaking down the process, introducing the lingo, telling you how to do it for free, how to keep the tax man happy, and other key details you need to know to get started on your journey to wealth.

Instant, Friendly and Cheap Ways to Buy Stocks Today

Presenting a short overview of your best ways to buy stocks in Canada for 2022 below:

star rating4.9 / 5
Trading Fees

$6.95 - $8.75

ETF Fees

Free buying AND selling of 100+ ETFs

Best broker in Canada, great service, most beginner friendly and offers the best welcome bonus.
star rating4.6 / 5
Trading Fees

$4.95 - $9.95

ETF Fees

Free BUY of ETFs (full prices for ETF sales)

Excellent broker with low trading fees. Advanced data streams and customization options - better for more experienced traders.
Star Rating4.2 / 5
Trading Fees

Free on Wealthsimple Trade

ETF FEES

Free to Buy And Sell

Best Robo Advisor in Canada. Commission free stock trades. Stock trading app (Wealthsimple Trade) is very basic - bad mobile app and nonexistent customer service.
star rating3.8 / 5
Trading Fees

$9.95

ETF Fees

Free buying and selling of 80+ ETFs

Best Big Bank Brokerage - 80+ Free ETF Trades, Big Bank Convenience, High Fees.

What is a Stock?

Before we get into the nitty gritty, let’s get down to basics-what exactly is a stock anyway?

We are constantly inundated with news about the financial markets with words like “stocks”, “shares” and “securities” being tossed out as if we all know exactly what that means. You might have searched for “stock market for dummies” to try and wrap your head around it, but in the end you still felt confused. 

Rest assured, you are not alone.

A stock is simply a piece of a company. When you purchase stock in a company, you are purchasing a share, or shares, of the company. Think of it like a pie sliced up into many, many pieces. When you buy a share of the company’s pie, you own a tiny fraction of that company.

When the company’s profits are high, you will be rewarded with things like dividends. A dividend is a small share of the profits delegated to all shareholders. Some shareholders will even be rewarded with voting rights. If that seems scary, don’t worry, most of us will not have that much responsibility, but still reap the rewards of a company’s success.

For beginners, it’s best to start by understanding the types of stock investments you can make, as there are so many options nowadays.

Types of Stocks You Can Invest In

In Canada, we have access to stocks on the Toronto Stock Exchange (TSX) and others such as the TSX Venture Exchange (TSXV) and the Canadian Securities Exchange (CSE). 

There are also a wide range of types of stocks you can invest in within those stock exchanges.

Stock trading beginners will usually start with common stock and preferred stock holdings.

Common stocks are those you are likely already familiar with. Common shares usually end up producing some of the highest investment returns you can get, as well as the possibility of dividends and voting rights. Common stocks are not without risk of course, as if the company fails, you can lose most, if not all, of your investment.

Preferred stocks are different from common stocks as they usually don’t offer voting rights. On the plus side, they give you automatic dividend payments for the life of your investment. Also, if they happen to go belly up or are involved in a merger, they’ll repay shareholders. 

There are a number of other options to choose from within the two main categories of stocks, including:

In general, beginners should take a simple approach and start out small with the basics, which we’ll outline below. Keep reading to find out more about the best ways to buy stocks in Canada. 

Best ways to Buy Stocks in Canada

The last decade has leveled the playing field when it comes to finding easy to use, low cost brokerages in Canada. Stock market trading for beginners is easily done through an online brokerage app or online platform. 

Let’s check out some of the best online brokerages for buying stocks in Canada for beginners. These have been chosen as our top picks for first time traders for their ease of use, low fees, and other great features to help you get trading quickly. 

Trading FeesAccount MinimumBest Features for Beginners
Qtrade$8.75 per trade when making less than 150 trades per quarter$0Special Young Investor pricing of $7.75 per year and no quarterly fee for investors aged 18-30. Excellent customer service as well as offers a trial account to help new investors learn the ropes.
Questrade$0.01 per share ($4.95 minimum, $9.95 maximum)  $1,000A wealth of educational resources to help beginners understand how to invest and trade, plus more advanced trading tools for when you are ready to level up your trading game. They offer a great promo of $50 in free trades when you fund your account with the minimum requirement of $1,000.
Wealthsimple Trade$0$0This is literally the lowest cost option out there. For beginners, saving on fees means you’ll have more money to invest and grow your nest egg more quickly. It also offers penny stock and crypto trading so that you can dip your toe in those if you want to discover more about how they work.
CIBC Investor’s Edge$6.95 per trade  with a special rate of $5.95 for students$0 As this is one of the big banks, you can be assured of the safety and quality of this brokerage. For young investors aged 18-24, the annual account fee and trade for free. They also offer a variety of research tools to help you learn more about the companies you are interested in investing in.
CI Direct Trading$1.99 minimum, $7.99 maximum per trade$1,000You can automatically reinvest your dividends, helping to grow your wealth more quickly and saving on taxes. If you want to invest in ETFs as well as stocks, you will do so for free. If you are interested in purchasing US stocks, you can do so with your CI Direct Trading account, which can hold USD and CAD.
TD Easy Trade $0 for the first 50 trades per year $0The super simple app makes stock trading for dummies possible. It also has a future to allow you to easily set and track investment goals, which can be very motivating for beginners. Free TD ETFs are also an added bonus.

By choosing one of these options, you will find completing your very first trades a piece of cake.

Should You Invest in Stocks With a Broker or Robo Advisor?

So, we’ve covered stocks and stock brokerages. Great start!

Now you might be asking yourself how you can possibly know what stocks to buy as a novice stock investor.

In the past, you would likely work with a broker from a bank who would try and sell you on investing in a mutual fund. The fund managers would choose the stocks for you, so you would not need to worry at all about what stocks to choose. Easy? Yes. But inexpensive? Definitely not. Mutual funds are notoriously expensive and not something we would recommend. 

Luckily, there is a relatively new way for you to use a DIY trading platform without you having to choose the stocks yourself. Enter the robo advisor. 

A Canadian robo advisor service offers you an AI assisted managed ETF portfolio. With the help of automated investing, you will not have to worry about choosing stocks, and still have a chance at making decent returns. Note that it won’t be as cheap as doing it yourself, as the fees will be a bit higher, but for brand new stock market investors, this could be the perfect solution to help get you started.

For more on robo advisors, read our Wealthsimple review (Canada’s best robo advisor) or how comparison between Wealthsimple and Qtrade.

How to Buy Individual Stocks in Canada for Beginners (Not Dummies!)

So, you now know the stock market basics and what brokerages there are out there to help you start trading. The next step, and the most important, is to choose the brokerage best for you and start investing! 

Above we have outlined our favorite brokerages, their offerings, and some of their fees. We hope that has made you feel more confident and comfortable in choosing a brokerage. 

The best thing is that you can use some of the tools offered by online brokers such as Questrade’s free 90-day practice trading account. This will help you get comfortable with the process and understand how it works so you can feel confident when you start investing real money.

Ready to get started? Follow these 3 simple steps.

Step #1: Open Your Brokerage Account

If you want to cut costs to the bone and decide to go with the discount brokerage route here’s how you would get started with one of our top online brokerage picks, Qtrade.

Head over to Qtrade to create a new account.

stock broker signup

After a few easy steps, including setting up funding for your first trades, you will be ready for step 2!

Step #2: Choose the Account Type

We recommend that you first max out your tax advantaged registered accounts first, as long as you qualify. Here are the different types of registered accounts.

In Canada, you can choose from:

  • Tax Free Savings Account (TFSA)
  • Registered Retirement Savings Plan (RRSP)
  • Registered Education Savings Plan (RESP)

We have all the details you need to know to invest using registered accounts. Head over to our TFSA vs RRSP article to start learning more.

If you don’t yet qualify for a registered account, no problem! You can choose to open a non-registered account.

Step #3: Start Trading

Once you’ve logged in and selected the investment account you want to make a trade in, you can go ahead and start preparing to make your first trade!

We recommend doing your due diligence on the companies you are thinking of investing in. There are a lot of choices of stocks to invest in, but not all are worthy of your money. You can check out our top TSX dividend picks as a starting point, as well as by using the educational resources provided by your brokerage. 

stock trading screen

After selecting the ticker symbol for the stock you want to purchase, complete the necessary information on the next page as shown below.

stock purchase order

Almost there! Now, you just need to review the order. If everything looks  good, you are ready to submit!

stock order review

To track orders, simply click on the “Order Status” tab to check on how things are going. 

For stock market beginners, the toughest trade to make is the first one, which is totally understandable as it’s all new to you. 

After that, you can easily follow the same simple steps to trade again and again! Soon you will be trading with confidence as you watch your investments start to grow.

How to Start Stock Trading With Market Limit Orders & Stop Orders

Market orders are the most straightforward and simplest types of orders. With a Market Order, you are choosing to buy a stock or ETF at the best market price available on the market at the time your order is sent to the exchange market and is processed (i.e. executed). 

In other words, if you are buying a stock, and the last order price is $28.80, then you will be buying stock in and around that price. Keep in mind, stock exchanges/the market executes orders in the sequence it receives them. So if someone buys a whole bunch of stocks just before you buy yours and that moves the price up to say $29.00, then when your order is ready for execution, you will be buying the stock at this new price.

This is the type of order that I personally use and what I recommended in the section above because it is the most simple.

But what if you want absolute certainty in the price you’re paying for a stock? 

Limit Order gives you the ability to specify a price that you will pay (or receive) when buying or selling a stock or an ETF. Your order will only be executed if the price matches the price you set, within the time limit you choose.

Now, you might ask yourself, why not always go with limit orders? This way, I can always make sure I’m not overpaying for a stock?

Well, while this is theoretically true, it also means that you might not be able to buy the stock or ETF you want at all. Remember, the order only executes when the stock price you set kicks in. If it never hits that price, or worse, if it goes up, you might lose the opportunity to buy a stock or ETF at the original market price. 

Another type of order is called a stop order. A stop order is when you place an order to buy or sell a stock at a specified price. The transaction is triggered when the price you selected becomes the market price. The order will then be processed as a regular market order. The order will not be executed unless the price you have selected has been met. The goal is to protect a potential gain or limit a potential loss.

Timing the market is a tough business – one that even the pros can’t get right.

That said, one major benefit of limit and stop orders is that you can set a price you believe to be a fair price for a stock. Assuming you do your homework and understand what a fair value of a company is, say using value investing principles, then using limit orders ensures that you won’t overpay for a stock. 

Stock Investment Returns and Taxes

As with any investment, when you make money on your investment, you need to let the tax man know. Or else.

You need to claim any capital gains, which are investment earnings on any shares you sell at a gain, on your tax returns. In Canada, you’ll be taxed on 50% of your capital gain amount. 

If you automatically reinvest dividend earnings (DRIP), you will still be taxed on the gains. The good news is it will be at a lower rate. 

How to Build an Investment Portfolio for Beginners

Now that you know how to buy stocks in Canada, the question is just which stocks (or other investments you should buy).  

Investors often refer to all the investments they own as their “portfolio”.

Most Canadians (and investors around the world for that matter) are best off if they focus on diversifying their portfolio as much as possible. 

This means making sure they are invested in companies from around the world and from all the different sectors. But it also means investing in something other than stocks (because stocks can go up and down by 30%+ in a very short time). For most people this means some balance of stocks and bonds in their overall investment portfolio.

Here’s a great video describing the difference between the two:

The quickest way to buy an instantly diversified portfolio is through an all-in-one ETF. This type of investment lets you invest in many companies and many government bonds just by purchasing one single ETF using the steps above.

Here’s our Ultimate Guide to all-in-one ETFs in Canada

If you want to read more about managing risk and how much to put in bonds vs stocks, I recommend checking out our Free eBook.

How to Get Started Buying Dividend Stocks In Canada

Now, many Canadian investors simply love the idea of dividend investing. This has long been the most popular type of DIY investing on Million Dollar Journey.

The basic idea is that stocks make us money in two ways:

1) The price of the stock goes up, and we sell it for more than we bought it for. This is called a capital gain.

2) The company decides to pay shareholders (aka: investors who have purchased their stocks/shares on a stock exchange). This type of payment is called a dividend. Many of Canada’s biggest companies make a lot of money (duh) and each year they decide to pay out a portion of their profits to their shareholders. That payment is called a dividend.

For a lot of people the idea of building an ever-increasing stream of dividends as the fuel for their retirement (at any age) is a perfect fit. The dirty secret when it comes to getting started in investing is that everyone is going to tell you that their style of investing is by far the best one. 

The truth is that your overall success in building an investment portfolio is likely going to come down to your personal psychology. Whichever style of investing you feel you “click with” best will likely motivate you to save and invest more money AND stick with the strategy when times are rough. Those two behavioural concepts are vitally important in avoiding the most common investing mistake of selling at the worst times!

Our Ultimate Guide to the Best Dividend Growth Stocks in Canada fully explains this style of investing and is always updated with our top dividend stock picks (as well as fill reasoning for why we like them).  If you’re attracted to the simplicity of dividend-focused investing, the good news is that Canada has some great dividend all stars.

How to Buy Stocks in a TFSA, RRSP, and Non-Registered Account

For most Canadians, when they first get started buying stocks online they will only need to open a Tax Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP). Most Canadians are somewhat familiar with these acronyms but don’t really know the details. The other type of account that some might want to open is a Non-Registered Account.

A Non-Registered Account is the plainest of investment boxes. It just holds your investments, but leaves them wide open to taxation. Generally speaking – with a few very specific exceptions – most Canadians would only use this type of account once they have maxed out their TFSA and RRSP.  There are also other types of investment accounts for corporations, your children’s education, etc. But for now, let’s just focus on getting started with a TFSA or RRSP.

You can see our full RRSP vs TFSA comparison, but the most important takeaway is to just choose one and GET STARTED! It’s never too late, and we can show you how to create a $1,000,000 portfolio whether you are in your 30s, 40s or even 50s. I’ve watched way too many investors procrastinate on this decision for years, and rob themselves of a lot of investment growth in the process. 

Buying Stocks Online in Canada – FAQ

Getting Started on Investing Online in Canada

You know you need to invest, and investing in stocks is one of the best ways to get started. With all of the online brokerages available, there is a very low barrier to entry for beginner investors to start trading and start earning. 

Over the last 10 years, the S&P/TSX Composite Index has averaged a 6.23% return, which is considerably more than the 1% you will make on savings account interest (if you are lucky). 

Is the stock market a risky way to invest? It depends on how you invest. Although it is not entirely without risk, as with any investment, with the right strategy, persistence, and time, you can in fact grow your wealth.

While stocks should be an important part of any well-balanced portfolio, it’s wise not to put all of your eggs in one basket. Bonds, CDs, real estate, and investing in small businesses are other great ways to invest.

Remember to always do your homework before making any investment as a way to mitigate risk and give yourself the best chance at earning healthy returns. Ready to get started? Check this Qtrade review, our top rated online brokerage in Canada to start your Million Dollar Journey today!

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Dale Roberts

Dale Roberts is the owner operator of the Cut The Crap Investing blog. He also writes a weekly column for MoneySense.
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