How to start investing in stocks


Here are some of the key things you need to know about buying and selling stocks as a beginner. Stock market investing isn't necessarily as complicated as it may seem. 

We've all heard stories of people who've paid off their mortgage, bought their dream car or funded their child's education, thanks to a well-timed stock market investment. But before you start investing, it's important to understand what you're getting into. What works for everyone else might not work for you. That's because every investor is unique, with different goals, investment horizons and risk profiles. Refer to the information below to get a clear picture of what you should consider before you make your first investment. This step-by-step guide is designed to help you make well-informed decisions and invest in the stock market with confidence – from the get-go. 

Where to begin

When it comes to investing in the stock market, there's no such thing as the perfect approach. Each investor is unique and has their own investment style based on their current financial situation, individual preferences, and risk appetite. To shape your personal investment strategy as a self-directed investor, start by considering a few key factors.

Figure out your goals – A clear understanding of why you want to invest in the first place will help you to set specific goals. It's helpful to think about how much you want to make and by when. So, are you investing for the short or long term? Are you saving for a down payment? Or are you building your nest egg? Answering these questions around your unique timeframe can help ensure a more goal-oriented approach to investing.

Identify your investor profile – Investing in stocks comes with a certain amount of risk. Your risk tolerance, or how much risk you can reasonably take on and your timeframe or when you need to access your money will define your investor profile. A conservative investor is someone whose priority is protecting their investment. An aggressive investor is someone who is willing to risk losing their investment. And, moderate investors fall somewhere in the middle, as they seek to generate a steady return, but are less comfortable with risking all their investment. Remember, even the most conservative approach can lead to some capital loss. When it comes to investing in stocks, nothing is guaranteed.

Set your budget – Try to create a realistic budget before you invest in stocks. Consider using your after-tax income as a measure so you know exactly how much money you have to invest. Other things to consider are your regular expenses, overall debt, and time horizon.

Open an account with a discount brokerage – An online brokerage, also referred to as a discount brokerage, can carry out buy or sell orders with little or no commissions. Before you can start investing, you need to open a self-directed account. 

Selecting an online broker

The popularity of stock market investing has led to a proliferation of discount brokers. Here's what to consider when selecting an online broker.

Platform capabilities – As a beginner, you can benefit from a platform that features an intuitive interface. Look for a platform that lets you access advanced features and capabilities as you gain investment experience. An investing app that allows you to trade on the go can also be beneficial.

Account minimums – Does the brokerage require that you deposit a certain amount of money just to open an account? Make sure you read the fine print to ensure you understand all the costs involved.

Fees and Commissions – Some online brokerages charge a monthly fee for using the platform. You may also be charged for using research tools and other features. Brokerages also charge commissions – a fixed transaction cost charged for executing each trade. Commissions for trading can range from $0 to $10 per trade. The fees and commissions charged are variable and depend on the brokerage and services you opt for.

When selecting an online broker, consider platforms that offer you the tools you will need as an investor. If you are interested in investing in U.S. stocks, then you may want to consider a broker that can help you save on currency conversion costs. The platform should also let you hold both Canadian and U.S. dollar components in your account so you can build investment plans that align with your goals. Also consider mobile apps like TD EasyTradeTM that can make buying and selling stocks easy and hassle-free. 

Stock market investing for growth

Once your account is set up, you may be tempted to follow a hunch and just execute a trade. But it's crucial not to get swayed by media frenzy and hype. The stock market can be volatile, and it makes sense to analyze every potential investment while keeping in mind your time horizon, investment goals and investor profile.

Research – As a self-directed investor, it will serve you well to develop an analytical mindset. Once you've identified a company you would like to invest in, it’s a good idea to analyze the financial statements and other available information about the company. Then assess several stocks in the same industry. This approach, known as comparative analysis, sets the stage for well-informed investment decisions.

Invest and build your portfolio – An important aspect of building a portfolio is diversification. Consider investing in stocks of various companies across different sectors like information technology, energy or healthcare to create a balanced portfolio. This will help to ensure that your investments are not all exposed to the same risk.

Track your progress – As you go about building your investment portfolio, it's important to monitor your progress. This will help you see if you are moving towards your goals. It will also help you see how much you're paying in fees and if there are any changes that need to be made to your asset mix. 


Ready to start investing in the stock market? 

You've got choices. Learn about TD Direct Investing intuitive trading platforms and advanced tools or TD Easy Trade™, a simplified easy-to-use app.


The information contained herein has been provided by TD Direct Investing and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.

TD Easy TradeTM is a service of TD Direct Investing, a division of TD Waterhouse Canada Inc., a subsidiary of The Toronto-Dominion Bank.

® The TD logo and other trademarks are the property of The Toronto-Dominion Bank and its subsidiaries.



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