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Online Investing in Canada [2024] | Step-by-Step

Online Investing in Canada [2024] | Step-by-Step
Diana Paluteder

Summary: To invest online in Canada, you must first register with a brokerage such as Interactive Brokers. Then, once you’ve funded your account, you are ready to start buying stocks or other financial instruments that interest you. 

Best Platform for Worldwide Stock Trading & Investing

  • Highly trusted multi-asset broker with clients in over 200 countries

  • Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)

  • Low commissions starting at $0 with no platform fees or account minimums

  • Easily fund your account and trade assets in 26 currencies

  • IBKR pays up to 4.58% interest on cash balances of $10k or more

Up to 4.58% interest on balance*

How to invest online in Canada: Step-by-step 

Although the stock market is often perceived as a complicated and high-risk venture, in reality, it is one of the most effective ways to accumulate wealth over time, even (or particularly) for those beginning with a small initial investment.

To begin investing online in Canada, follow the steps outlined below. 

Step 1: Choose an online broker and open an account

Before you can dive into investing, you’ll need to set up an account with a reputable stock broker.

To securely invest in the stock market in Canada, we recommend Interactive Brokers (IBKR), which offers: 

  • Commission-free stock and ETF trading;
  • Trade stocks on 90+ market centers;
  • Fractional stock trading;
  • Earn extra income on fully paid shares;
  • Lowest financing rates for margin accounts in the industry;
  • No account minimum. 

Best Platform for Worldwide Stock Trading & Investing

  • Highly trusted multi-asset broker with clients in over 200 countries

  • Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)

  • Low commissions starting at $0 with no platform fees or account minimums

  • Easily fund your account and trade assets in 26 currencies

  • IBKR pays up to 4.58% interest on cash balances of $10k or more

Up to 4.58% interest on balance*

How to choose an online broker?

With the abundance of online trading platforms available, traders have unparalleled access to financial markets. Yet, the sheer volume of choices can make finding the right platform tailored to your investment goals both daunting and time-intensive.

As a result, when assessing brokers, try to take into account the following factors:

  • Product offerings: Verify that the broker provides access to your chosen stocks as well as any other instruments that interest you, such as Canada-focused exchange-traded funds (ETFs), bonds, commodities, cryptocurrencies, or currencies, as well as more complex derivative financial instruments like options, CFDs, or futures;
  • Fees: Look for a broker that offers a competitive fee structure. Fortunately, you can expect commission-free ETF and stock trading from most online brokers nowadays; 
  • Regulation: Ensure the broker is fully regulated by the relevant financial authorities in Canada; 
  • Security: Opt for a broker that incorporates advanced security measures, such as two-factor authentication (2FA), to protect your data and funds;
  • Trading platform: If you’re new to investing, a user-friendly platform with an easy-to-navigate interface is advisable. A section with educational resources can also be beneficial. And if you prefer to trade on the go, ensure they offer a robust mobile application;
  • Fractional shares: Fractional share trading allows investors to buy ETFs based on the cash amount (rather than by the number of shares), democratizing access to pricier stocks and allowing for greater diversification with limited capital.

Step 2: Decide on an investment

Deciding which stock to buy is a multifaceted process that requires careful research, planning, and consideration of several factors. Without diving too extensively into how to pick individual stocks, here are some tips for best practices: 

  • Research the Company: Delve into the company’s fundamentals, such as its financial health, products, services, competitive position, and future prospects. Understanding the industry’s growth potential is equally vital;
  • Valuation: Utilize metrics like P/E (price-to-earnings) and P/B (price-to-book) to evaluate if the stock is appropriately priced. Comparing these metrics with industry peers can give added context;
  • Macro-economic context: Assess broader economic factors like interest rates, political stability, and global conditions, as they can significantly impact stock performance;
  • Don’t put all your eggs in one basket: Don’t concentrate your investment on one stock or sector. Spreading investments reduces risk and offers a safety net against market volatilities;
  • Emotional discipline: Approach investing rationally. Avoid making decisions based on market hype or panic. Have a clear plan and stick to it;
  • Think long-term: Stock prices can be volatile in the short term, but quality stocks generally appreciate over the long haul. It’s often beneficial to adopt a long-term perspective and not get swayed by short-term market fluctuations.

Step 3: Place your order

Execute your order by following these five steps:

  • Fund your account: Several deposit methods will typically be available to you, including bank transfers, credit and debit cards, as well as third-party payment services like PayPal (PYPL). Remember, it can sometimes take up to three days for the money to reach your account;
  • Locate the stock: Search for your desired stock or ETF by their ticker symbol;
  • Decide how you want your order to be executed: Choose between a market order (filled immediately at the best market price) or a limit order (fulfilled at your predetermined price point);
  • Specify how much you want to invest: Decide how much you want to invest, whether by the dollar amount or by the number of shares;
  • Double-check: Before finalizing the purchase, review all the details to ensure their accuracy.

Once you’re familiar with the stock purchasing process, take the time to dig into other areas of the investment world. Luckily for you, we have several guides for different investment options for investors in Canada, including: 

Step 4: Manage your portfolio

Managing a stock portfolio requires both foresight and discipline. Start by establishing clear, long-term objectives which will anchor your investment decisions. Additionally, try to avoid investing funds you might need in the immediate future, given the unpredictable nature of the stock market.

Another pivotal aspect of portfolio management is understanding when – and when not – to sell. While it might be tempting to liquidate stocks during market downturns to prevent further losses, such a move often results in locking in those losses. In fact, the stock market historically tends to recover over time, so it’s recommended to ride out the volatility in pursuit of long-term gains.

Pros and cons of online investing in Canada

Pros

Pros

  • Convenience: Online platforms allow for 24/7 access to your investments, enabling you to trade and monitor your portfolio from anywhere with an internet connection;
  • Lower fees: Typically, online platforms offer lower fees and commissions compared to traditional brokerages;
  • Diverse investment options: Many online platforms offer a wide variety of investment options, ranging from individual stocks to currencies and rare metals;
  • Educational resources: Online brokers often provide resources like tutorials, webinars, research reports, and tools to help investors make informed decisions;
  • Transparency: Most online platforms provide real-time updates, comprehensive views of assets, performance analytics, and more.
Cons

Cons

  • Impersonal: The lack of personal interaction can mean missing out on tailored advice that might come from a personal relationship with a traditional financial advisor;
  • Overtrading risk: The ease and convenience can lead to frequent trading, potentially eroding gains through fees or emotional, impulsive decisions;
  • Information overload: Access to a multitude of resources and data can lead to confusion or paralysis by analysis for some investors;
  • Emotional decisions: Without the tempering influence of a financial advisor, some investors might make rash decisions based on market volatility or news events;
  • Hidden costs: Some platforms might have costs that aren’t immediately apparent. Understanding all potential fees and charges associated with an online investment platform is essential.

In conclusion 

In short, to start your online investing journey in Canada, follow these four steps:

  1. Open an account with a stock broker;
  2. Research and decide on the right stock (or any other) investment for you;
  3. Place your order;
  4. Periodically review and adjust your portfolio as needed. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

FAQs about online investing in Canada

What is a stockbroker?

A stock broker is a person or firm licensed to buy and sell stocks and other securities on behalf of investors, typically charging a commission or fee for their services. They serve as intermediaries between stock buyers and sellers to facilitate transactions.

What to consider when selecting an online broker?

When choosing an online brokerage, it’s essential to consider factors such as regulatory oversight, the platform’s security, fee structure, and the range of available investment products. 

What is the best trading platform in Canada for beginners?

While various options are available for Canadian investors, our pick for the best online broker is Interactive Brokers. 

What is the best free trading platform in Canada?

Interactive Brokers offers commission-free trading as well as a competitive fee structure. 

What brokers offer commission-free trading in Canada?

Interactive Brokers offers commission-free trading in Canada. 

Best Platform for Worldwide Stock Trading & Investing

  • Highly trusted multi-asset broker with clients in over 200 countries

  • Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)

  • Low commissions starting at $0 with no platform fees or account minimums

  • Easily fund your account and trade assets in 26 currencies

  • IBKR pays up to 4.58% interest on cash balances of $10k or more

Up to 4.58% interest on balance*

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