Are you a knowledgeable and experienced investor? Do you feel confident making your own investment decisions, without advice or help? If yes, you may want to set up an account with an online discount brokerage firm. Why?
- You’ll pay lower fees and commissions. In most cases, there is a flat fee each time you buy or sell
- It’s easy to compare rates, products, and features before you buy investments. It’s also easy to track your investments after you buy
- You’ll have 24/7 access to your account. Most orders are processed quickly during trading hours, although there can be short delays.
Tip: Most discount brokerages offer a wide range of investment products. But they don’t offer every option. Choose a firm that has the products you want.
How do I set up an account?
- Go to the firm’s website and set up a personal account. You will create a personal password to access your account online.
- Transfer money from your bank into this account to invest.
- Send orders online to buy and sell anytime.
Tip: Some people use accounting software to track their online investments. There are many software packages available.
How do I buy and sell investments?
Suppose you wanted to buy 100 shares of LMN-O Company stock. You would:
- Enter this information in the on-screen order form. You can also state the highest price you want to pay.
- Click the Submit button. You should get an instant electronic confirmation that your order has been received.
- Check your account later to find out if the order has been filled, and how much you paid.
- You'll also get a confirmation later by mail showing what you bought, the price, and your brokerage firm's commission.
Of course, a lot goes on behind the scene to process your order. Most people don’t know or care about the way a trade gets made. It’s like driving a car: Few people understand how an engine works; they only care that they get where they are going.
Remember: If you use a discount broker, you’re on your own.
You pay lower fees, but you don’t get the same level of service and support you get from a full service broker. This makes it a better choice for people with more investing experience and knowledge.
Find out more about Investing and the Internet – read this guide from the Canadian Securities Administrators.
Watch this video of Paul Bates, Dean at the DeGroote School of Business at McMaster University, with Rob Carrick from the Globe and Mail discussing do-it-yourself investing.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.