Are you ready to start investing your hard earned money so your money works just as hard for you? You might be wondering how to buy stocks in Canada and where to start on your DIY Investing journey. But, do you really have to do it yourself?
There are a variety of different resources available to you. Here, we break down how to buy stocks in Canada whether you want to go through a financial advisor, robo advising, or you are ready to start with DIY investing.
Though prior to the digital revolution, the only course of action was to find a financial advisor, there now are other options. With computer algorithms developing more sophisticated approaches every day, it has left many wondering which to choose: in-person advice, algorithm-based science, or to do your own research.
The answer depends on many factors and requires a thorough understanding of how investments actually work. Whichever path you decide to take, understanding and tracking your investments is a critical part of improving your financial health.
Wealthica is an indispensable tool that helps both financial advisors and personal investors using robo advising or DIY, to get a better picture of your finances. Track your investment holdings, debt and transactions as well as handy add-ons like Google Sheet Export, Yahoo! Portfolio Export, Couch Potato Investing, and Portfolio Tracking using Wealthica.
The first step down the road of growing your wealth is identifying your resources. There are different routes you may take to accrue funds and expand your portfolio.
The Wisdom of the Financial Advisor
When it comes to the realm of finances, planning ahead is more than responsible, it is a necessity. Regardless of where you are in your life and career, creating a plan for managing your finances is a key step in reaching your goals. Whether you are looking to grow your wealth, pay off your mortgage, or diversify your portfolio, one of the most popular and safe approach is to seek the wisdom of an advisor.
Who are Financial Advisors?
These professionals have years of combined education and experience in the field of finance. Whether hired for advice or a consultation, you can use the services of an advisor for either a short-term period or as an ongoing service. They can assist with a wide variety of wealth management, including planning for retirement, trusts and estates, and your investment portfolio. Some advisors specialize in specific fields, such as stocks and bonds or retirement matters. Others provide a more general approach to the field. When choosing your advisor, knowing what you want out of the arrangement is helpful.
How a Financial Advisor can help?
Traditionally, you would meet with a financial advisor in person at their office. During this scheduled meeting, you would discuss your financial situation, including your assets and liabilities. The professional will go through your goals with you and create a personalized plan to help you achieve this end.
The Robo : Algorithm-Based Science and ETFs
Who are the Robo Advisors?
These computer-based advisors use advanced algorithms that help assess, grow, and continually maintain your financial portfolio. Available with little to no human involvement, this approach to financial advice relies more heavily on your judgement. While all the algorithms may seem similar, each uses a different approach to fostering a financial portfolio.
How do Robo Advisors work?
The first step is to identify the robo advisor you wish to utilize. From there, you will provide the system with information related to your finances. Typically, this will involve inquiries relating to your age, long-term intentions, and details surrounding your current portfolio to establish your risk profile.
Then, they will choose and buy the best ETFs (Exchange Traded Funds) and an adequate mix of Equities & Bonds to build your portfolio. The Robo advisor will make sure your portfolio is rebalanced regularly in order to maintain the ratio of Equities and Bonds that fit your risk profile. The method is pretty similar to a DIY investor using a Couch Potato Investing strategy and tools like Passiv and Wealthica to rebalance the portfolio regularly.
You remain in control and it is your onus to declare the acceptable amount of risk, the timeline you desire, and the amount you are willing to invest.
Doing it Yourself, Doesn’t Mean Doing it Alone
What is DIY Investing?
You can also do your own research and invest using online brokerages to buy stocks yourself. For this, you will need an online brokerage account and time to develop an understanding of markets and how investments work. There are many free and premium resources out there that can be helpful in making sound investment decisions.
How to buy stocks in Canada?
The first step is to choose an online brokerage.
Our friends at Stockchase have put together a handy article comparing the different brokerages. You can also read the Stockchase review of Questrade, which goes over the pros and cons of using Questrade to buy stocks in Canada. Once your account is set up with the online brokerage, you can research investment strategies and specific stocks using online resources like Stockchase, TradingView and Yahoo Finance. If you want premium content and access to more resources, you can consider signing up for Stockchase Premium or 5i Research.
Once you’ve researched your stock and are confident in your investment decision, you can buy the stock through your online brokerage account. If you open an account using our affiliate link, you’ll get $50 in free trades and free account transfer.
Differences Between Financial Advisors, Robo Advisors and DIY Investing
Understanding the nuances of each type of financial advisor is necessary to make the right choice. While both offer many benefits, each has a set of drawbacks. Identifying the correct path is a matter of your personal comfort and your current financial situation.
Financial Advisors
Human interaction and the personal wisdom of financial advisors is one key factor that sets them apart. Amongst the many noteworthy facets are:
● The ability to handle more complex financial situations. This means that if you have a blend of monies held in trust, stocks, bonds, and retirement funds, you may require a more personalized approach.
● Retirement planning. If this is a major goal for you personally, an in-person financial advisor will be able to create an arrangement that works best for you.
● The opportunity to discuss the pros and cons of each investment and the associated risk. This is particularly important if you are newer to wealth management. A financial advisor can explain the services in a way you will understand.
● Financial advisors have years of expertise behind them, and this comes at a cost. Typically, getting this type of advice is a significantly higher investment than using technology.
● Requiring you to meet certain financial criteria. Prior to taking you on as a client, a financial advisor will need you to meet certain standards. While these differ between individual advisors, it generally includes a monetary threshold.
Robo Advisors
The ease of use and accessibility of robo advisors account for some of the main reasons for their overwhelming popularity. Among their features are:
● A low price point. Choosing a digital algorithm for your wealth management costs drastically less than using an in-person service. Generally, the minimum threshold for investment is lower, meaning you can start investing regardless of where you are in life.
● Services entirely focused online. With robo advisors, there is no human interaction. This also means that the risk of human error on the side of the advisor is eliminated. While most services include features for technological troubleshooting, the wealth management features are entirely digital.
● Generally, robo advisors use a passive investment strategy. Essentially, this means identifying affordable routes that match your goals and investing with a focus on the long-term. This means that there is likely to be less trading of your assets, gearing instead toward a slow-but-steady growth strategy.
DIY Investing
The low cost and personalization that a DIY investment portfolio offers is the main reason you might choose to pursue this path. Among their features are:
● Low fees. By choosing an online brokerage, you can keep your fees low. Many brokerages only charge around $5 to buy stocks, and some will let you buy ETFs with no fees.
● Lower barrier to entry. Going the DIY route means that you can start by investing a small amount of money. For example, you can start investing with Questrade for $1000.
● Personalization. Since you choose which stocks to buy or sell, your portfolio is entirely up to you. This is why you must devote some time to understand investment strategies and research stocks before investing.
Is a Robo Advisor or a Financial Advisor, or DIY Best for Me?
It’s important to understand that each financial portfolio and road to wealth management is unique. When deciding the best approach, some helpful factors to consider include:
● Costs: The first thing to consider is your budget. Determine whether you can comfortably afford the services of a financial advisor, while still having the desired amount remaining for investment. If your funds are limited, consider a robo advisor. However, if you are looking for advice to manage large sums, an in-person approach might be better.
● Investment amount: Figure out how much you want to invest, understanding that it is a long term solution and the funds won’t be accessible for some time. Using this figure, you can establish what the best approach will be. Lower amounts suggest that a robo advisor would be a better solution.
● Human interaction: Determine how important interacting with a professional directly is to you. If this is a priority, consider the merit of a financial advisor. Conversely, if you want to avoid this type of engagement, lean toward a robo advisor.
● Convenience: Finally, consider the factor of convenience. Financial advisors offer valuable help, but it takes time. If you lead a busy lifestyle and cannot take time away from work or other responsibilities, a digital approach may be the best route to success.
Wealthica
When you invest, diversifying your portfolio is key to mitigating the risk you take. Problem is, it can be confusing and difficult to track your investments when they’re scattered across different investment platforms. That’s where investment tracking apps like Wealthica can help. It provides you with the ability to sync and consolidate all your investment data from different platforms into one account. Doing so will allow you to better manage and track the performance of your investments. Whether you’re working with human, robo advisor, or a combination of the two, investment apps like Wealthica can provide you and your advisor with better insights into your investments.
When investing with either a financial advisor or robo advisor, it can be hard to keep track of what investments you hold. Using Wealthica can help you get a clear overview of all your holdings and financial wealth, as well as handy tools that can even help you with filing your taxes. The platform can even help you understand the fees you are paying which, in the long-term, can add up and eat into your profits.
Final Thoughts
Now that you have an understanding of how financial advisors and robo advisors function, you can make the best decision for your future. Bear in mind that the two are not mutually exclusive. You are free to first begin with a robo advisor and further down the line, access the services of a financial advisor. The road to wealth management is a personal journey that is different for everyone. By learning your options, tracking your portfolio and doing your research, you gain the tools necessary to succeed.