Stock Market

“I’m broke.”

It’s the classic student mantra, as we count nickels and dimes to make it to dollar beers, but this doesn’t need to be your reality.

For many post-secondary students, the stock market is a completely foreign concept. Unless you take business courses, you'll never learn what it is and how it works.

While it can be risky, with some background knowledge and guidance, the stock market can be a great way to earn money on a long-term basis.

Step one: find a stockbroker

A stock represents owning a fraction of a company, allowing you to receive a portion of the company’s assets and profits. The stock market is the avenue in which you can buy and trade stocks, with the price depending on the supply and demand of the market.  

You’ll want to choose an online stock broker first, which is where you’ll be able to buy and trade stocks. Each stockbroker is different and all will offer different rates for their commission. It can be as easy as setting up an account with your bank, but some of the most popular are Questrade, TD Direct Investing and CIBC Investor’s Edge. 

There’s three main types of accounts you can get: a cash account, a Tax-Free Savings Account or a Registered Retirement Savings Plan.

A cash account requires you to pay taxes each year based on your investment income and is the most basic account, while a TFSA allows any Canadian 18 or older with a social insurance number to grow investments tax-free.

An RRSP is only taxed when the money is withdrawn after retirement. The College Investor suggests going the route of RRSP for long-term savings but if you would rather see your money now, a TFSA is the way to go.

Step two: pick the stock you want to buy

You’ll want to research what stocks you want to buy and are worth investing in. Most major companies like McDonalds, Nike and Apple are publicly traded on the stock market.

While it’s a more enjoyable process if you invest in a stock of a company you really like, make sure you’ve done your due diligence by analyzing the stocks' history, its potential growth and stability. If you know absolutely nothing about stocks and don’t have the time to keep up with them daily, the S&P Index is a safe place to start.

Each company that is publicly traded will have a "ticker symbol" — an arrangement of one to five characters that represent a company. You’ll need to know the ticker symbol when you want to buy and trade stocks, which can be found on any search engine.

Make sure you know what stock market you’re trading in, because the New York Stock Exchange and the Toronto Stock Exchange have different currencies.

Step three: buy your stock

You’ll be able to buy and trade your stocks online through your stockbroker.

 

You can only purchase stocks when the market is open between 9:30 a.m. and 4:00 p.m. on business days. You can still purchase stock outside of these hours, but your order will only go through when the stock market reopens again the next business day.

Economistsrecommend diversifying your portfolio with smaller investments on a regular basis in order to keep your portfolio stable and keep some aside for emergencies.

Avoid investing in volatile stocks until you’ve ramped up your experience. Set a gestation period for leaving the stocks you invested in alone, and then allow yourself to check in on it to avoid emotional trades. Don’t panic if the market drops — it will always have the opportunity to recover.

Investing in stocks isn’t as easy as one, two, three — but these are the basics you need to know before investing your money. It doesn’t need to be hard but the onus is on you to research and maximize your success in the market.

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Sarah is the Coordinating Editor of culture and sports for volume 115. She was previously a culture editor for volume 114. Email her at sarah.wallace@westerngazette.ca or find her on Twitter @sarahkwallace7

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