Stocks: How do other people do it?

[kiwis-mom]

Good Afternoon Everyone!


I am trying to do some research into buying Stocks but don't know the first thing about how to go about doing it. There is so much information out there that it's a bit overwhelming and I'm not sure where to start. So I'm putting this out there to see what you Smart Canucks do.

Any suggests for someone who starting out in buying stocks? Where is the best place for information and research?
Do you use an online brokerage, if so which one?
What are the tax implications?

Any and all useful advice would be great...I need a starting off point.

Thanks for reading!

[lecale]

Did you notice today that the stock market tanked on account of Trump?

Maybe this isn't the best time to get into stocks.

[kiwis-mom]

Did you notice today that the stock market tanked on account of Trump?

Maybe this isn't the best time to get into stocks.

This is exactly the time to look into stocks....What goes down today will be back up again in due course. There maybe good deals to be made.
And you're giving him too much credit for the dive in stocks. Just like one can't give him all the credit when the market is up. There are so many other factors at play then just him.

[GoodBoy]

If you are not savvy in doing investing then maybe you should be looking for a good financial planner who can do it for you. That is what I have done and I do not worry about ups and downs now and let them and their fund managers do all the work. Returns this year have been extremely good and I am not thinking about a thing. Just a thought...

ETA: I did do my own stock picking for many years and it turned out very well. In the end, there was no reason to continue to do it myself ... YMMV but something to think about ...

[tjthemanto]

1. If you are new to stocks, maybe you can start off with Exchange Traded Funds ( ETF's ) . They have extremely low Management Expense Ratio ( MER ), unlike regular Mutual Funds where the MER and fees are high.
TD Bank has some good ETF's with very low MER, especially their e-series funds, with MER as low as 0.3 %

2. If you are buying stocks, initially just stick to Canadian stocks - so exchange rate won't be as factor, like when you buy US stocks. Also initially stick to big and good dividend paying stocks like Canadian Banks, Rogers, Bell, Telus etc.

Later on when you get a hang of it, you can buy riskier stocks of smaller companies. High risk - High reward. I know people who have made a fortune buying risky penny stocks, but you can easily lose your shirt on it too.

3. Yes, you have to pay Capital gains tax, when you sell your stocks. But only when you sell. 50 % of the profits you make are taxable. So if you buy a stock for $ 100 and sell it for $ 150 and make a profit of $ 50. $ 25 will be taxed and added to your income.

Also you can show a Capital loss, if you lose money, when you sell your stocks. You can carry forward this loss for future years if you want.

The Capital loss can only be used to off set Capital gains or can be carried forward, it can't be used for any other purpose like off setting regular income tax you pay.

4. Yes Online brokerage is the way to go these days as their transaction fees and commissions are less, when you buy and sell stocks. The Big 5 have their own Online brokerages, but some have high commission fees, minimum balance, minimum trades and annual maintenance fees.

Questrade and Virtual Brokers are another two options, which are quite popular. Compare all of them for ease of transaction, fees, commissions , trading platform and then choose the one, which suits you the most. Too much buying and selling, almost day trading can erode most of your gains, just in commission and transaction fees, so be careful.

5. Some good stock discussion sites and forums and Bullboards :

( Be careful, some posters and Analyst have vested interest, and try to pump their own stocks or bash other stocks. So do your own research too and don't just blindly follow these so called experts, its your money on the line, not theirs. use them for just reference )

www.stockhouse.com

www.siliconinvestor.com

www.fool.com ( The Motley Fool )

www.bnn.ca ( Business News Network - Specialising in Canadian companies )

Just some basic rules :

1. Don't put all your eggs in one basket. Try to diversify. Not just companies, but sectors too. So buy some banking stocks, Telecom stocks, IT-Technology stocks etc.

2. Buy low, Sell high. Don't panic and sell good stocks at a low price, when the market tanks. Have patience and a long term plan and courage to ride the ups and downs.

3. Stick to fundamentals. Lot of time the boring blue chip dividend paying stocks are better than the sexier technology stocks, which go up and down like a roller coaster.

4. Past gains does not necessary guarantee future gains. Just because some stock went up 100 % last year , doesn't mean the same will happen this year. Don't try to chase a stock. Sometimes you have missed the boat so forget about that stock and look elsewhere.

5. Don't just follow the herd. Don't get emotional and sentimental, when dealing with stocks, stick to your plan, goals. Don't get emotionally attached to the stocks and get too greedy. If you have achieved your purpose, sell and move on.

[kiwis-mom]

Thanks so much for the great reply tjthemanto!
This is exactly the kind of info I'm looking for. I wanted to try buying stocks myself but don't know where to start and wanted to get an idea of what others are doing or have done, so your reply is fantastic!

[kiwis-mom]

Keep the info and suggestions coming! I love to learn new things!

[Silk]

Also check out index funds instead of conventional mutual funds as the MER is lower.

ETA: This article may interest you.

http://www.moneysense.ca/columns/sho...funds-or-etfs/

[tjthemanto]

Thanks so much for the great reply tjthemanto!
This is exactly the kind of info I'm looking for. I wanted to try buying stocks myself but don't know where to start and wanted to get an idea of what others are doing or have done, so your reply is fantastic!

Questrade has a FREE Practice account, where you can buy and sell stocks with fake virtual money. Its exactly like buying with REAL money, minus the risk.

http://www.questrade.com/trading/free-trial

Register for that and get used to the trading platform. Then later on you can buy stocks with REAL money and open a real account.
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Initially, Try to buy or sell with a LIMIT order first as opposed to a live MARKET order.

LIMIT order you fix a price to buy or sell. When the stock hits that price the BUY or SELL order gets triggered, otherwise nothing happens. You put the LIMIT order till the end of day or even end of the month. So any time during that time frame if it reaches your fixed price, it will be executed - whether its buy or sell. So you don't have to sit there and constantly watch the price and market. You can set it and forget about it.

So if a stock is $ 12 and you don't want to buy it for that price. You can put a LIMIT Buy order for $ 10 . IF and when it goes down and reaches $ 10 your order will be executed.

The risk is it will never reach that price and you will never buy. Or the $ 12 stock might fall even further after $ 10 , say goes down to $ 8 , but your LIMIT order will trigger at $ 10.

[lecale]

This is exactly the time to look into stocks....What goes down today will be back up again in due course. There maybe good deals to be made.
And you're giving him too much credit for the dive in stocks. Just like one can't give him all the credit when the market is up. There are so many other factors at play then just him.

Uh, I think it helps to keep on top of the news if you are going to be directing your investing yourself. The market gained when Trump came in because people were expecting pro-business policy. Since all the scandals have erupted, people have realized he is going to be spending more time dealing with that than policy. Thus, the market has now lost all the gains it made since Trump came in, and any further scandal could drive it lower. Things have not yet bottomed out. Thus the news today:

Are stock markets losing faith in Donald Trump?
http://www.cbc.ca/news/business/dona...kets-1.4121456

On Wednesday, as the political bedlam reached a boil in D.C., spooked investors helped drive several U.S. indexes down to the lowest levels seen in eight months.

"It's certainly a day when the chickens are coming home to roost," Donald Selkin, chief market strategist at Newbridge Securities, told Reuters.

On Wednesday, the U.S. dollar fell dramatically, giving up the gains it made since Donald Trump took office. Bank stocks were clobbered. And tech stocks fell 2.8 per cent. Then there's the VIX. Technically it's a measure of the implied volatility in markets. Colloquially, it's known as Wall Street's fear index.

It soared 46 per cent on Wednesday.

[brunt]

For a beginner, I would suggest reading up on The Couch Potato Portfolio.

Avoid getting advice from the bank. They tend to push high cost mutual funds. You would generally be better off with ETFx (Exchange Traded Funds) which trade like individual stocks but contain a variety of stocks in order to give you low cost diversification.

[kiwis-mom]

Wow lots of great info, suggestions and tips. I'm sure that I am not the only Smart Canuck who wants know about this sort of thing, but I'm not afraid to ask questions and to learn.
I really do think they need to make it mandatory to teach these things in high school along with basic financial principles​ before people get into the work force. Even just the basics of investing would go a long way. Knowing what financial options beyond chequeing/ savings accounts and RRSPs are out there could help set someone on the right money path for them and their future.

Thank you to all of you for the wonderful information.
Please don't stop!

[kiwis-mom]

I am also interested to know the tax implications of buying, selling and holding stocks. Am I right in understanding that you only get taxed when you sell your stocks (either making a profit--results in Capital Gains or losing money--results in Capital loss).
As well what do you all think about borrowing money to invest?
Is it best to invest inside and RRSP or outside? I know that RRSPs allow you differ paying taxes until withdrawal upon reaching 65 (hopefully at a lower tax rate). So many questions......

[GoodBoy]

Since you seem hell-bent () on doing this yourself and not getting a financial planner involved, I really think you need to go to your local library and get some initial books on investing in Canada etc. There are many basics you are not aware of and this forum is not the place to learn them. RRSPs can be held up to age 71 and can be taken from at any time (as an example) before that or converted. Bottom line - do some reading - it will make a world of difference. Library, bookstore... it will be time and some $$$ well spent IMHO.

[kiwis-mom]

Books are not really what I am looking for (already done that)as I wanted to hear about other people's experiences, you know some sounds good on paper but in the real world not so much.