Investing > How to Buy Stocks in Canada Explained

How to Buy Stocks in Canada Explained

Buying stocks in Canada isn’t hard to do—but to pull it off properly, investors need a few important pointers.

By
Reviewed by
Updated August 12, 2022

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

Do you want to buy stocks?

We thought you might, considering the title of this guide. Buying stocks in Canada is quite simple to do, and investing in the stock market is a relatively common practice—with almost 40% of the population being invested in the stock market. To further sweeten the pot, Canada has an advanced economy, with plenty of thriving businesses—and a citizenry with cash to invest. 💵

But there are no guarantees when it comes to investing—the stock market is a fickle mistress, and many smart investors ended up losing it all because they didn’t take the proper precautions.

Rushing in blindly is by far the worst way to approach the stock market. Sure, this stuff might seem very dry, technical, or even boring—but we promise that we can explain it in layman’s terms, and it is essential for success.

Without a good overview of the process of buying stocks, opening an account, choosing a brokerage, and other factors such as taxes, the odds of losing money are much higher. Investing is more accessible than ever—but we’ve already seen what sort of reckless and ill-thought-out behavior that can lead to.

On the bright side, getting a decent overview of how the stock market works and how to actually buy stocks is simple. We’re going to be covering both of these topics in our guide. There’s no rush—investors should take things at their own pace, familiarize themselves with all the important concepts, and only then should investing begin. Our guide is meant to be a one-stop shop for this topic—so don’t hesitate to revisit it when the need arises.

What you’ll learn
  • An Overview of Stock Trading in Canada
  • Canadian Stock Market Taxes
  • Stock Market Trading Terminology
  • How to Start Investing in the Canadian Market
  • Popular Stocks in the Canadian Market
  • How to Choose a Good Canadian Brokerage
  • Canada vs. U.S.—Stock Trading Differences
  • Pros and Cons
  • Conclusion
  • Get Started with a Stock Broker

An Overview of Stock Trading in Canada 🇨🇦

Before we move on to the actual process of buying stocks, it’s always good to have a clear understanding of the bigger picture that we’re dealing with. Investors interested in learning more can tackle our guide to the stock market’s operations, but let’s deal with some general facts regarding stock trading in Canada.

Average Returns and Statistics 📊

Canada is the world’s 8th largest economy by GDP and the 24th economy in terms of GDP per capita. The country is large, abundant in natural resources, industrialized, urbanized, and the workforce is highly-educated.

It comes as little surprise that the Canadian stock market is robust, dynamic, and full of opportunities, with still more room to grow. The largest exchange in the country, the Toronto Stock Exchange (TSX) is the 11th largest exchange in the world—with more than 2,000 listings, a market cap of $3.1 trillion, and an average daily trading volume of 39.7 billion shares.

Although the outbreak of the COVID-19 pandemic had a significant impact on the Canadian economy, the recovery was unexpectedly quick, with the S&P/TSX 60 (the closest equivalent to S&P 500) index returning to pre-COVID levels by January 2021.

Unlike most countries’ stock markets, the Canadian stock market can actually hold a candle to the U.S. stock market—and that’s putting it mildly. On the whole, both the stock markets provide similar returns, show similar volatility, and are comparable in a variety of other metrics, such as drawdowns and Sharpe ratio.

However, it is also important to note the differences between the two. The U.S. stock market is much more focused on the tech and I.T sectors when looking at the makeup of the market—while Canada’s market has a much more pronounced focus on financials, energy, and materials.

Safety and Regulations for Canadian Traders 🛡

When it comes to the regulatory framework that is in place regarding investing in Canada, there are a couple of regulatory bodies that investors should be familiar with. The most important of these are the CSA, IIROC, and CIPF.

The Canadian Securities Administrators or CSA is Canada’s regulatory body most similar to the U.S’s SEC and FINRA. The organization is an umbrella association of territorial and provincial securities It ensures that brokerages meet strict licensing and regulatory standards.

The Investment Industry Regulatory Organization of Canada (IIROC) fills a similar role, but is composed of Canadian brokerages themselves—it is, in essence, a self-regulatory body that serves to hold its members to a high standard in terms of transparency.

The Canadian Investor Protection Fund (CIPF) is a state-run investment insurance program, which covers all IIROC-member brokerages. In practice, it is the only provider of insurance for legitimate, licensed, and registered brokerages in Canada.

Can I Buy Stocks in Canada Without a Brokerage? 🤔

Buying stocks without a brokerage is indeed possible—but it is highly impractical. Direct stock purchase plans (DSPPs) are available in Canada, however, not all publicly-traded companies have such plans in place, which severely limits the range of assets one can invest in.

On top of that, DSPPs are very time-consuming and require a lot of effort—instead of using a brokerage as a go-between, investors have to do all the legwork, which oftentimes means opening numerous DSPP accounts that have to be monitored separately.

All in all, although it is possible to buy stocks in Canada without a brokerage, it is not recommended—investing via a brokerage is the superior option in every respect.

Can Non-residents and Foreigners in Canada Invest in the Stock Market? 🌎

Yes—investing in the stock market as a non-resident in Canada is not only possible—it’s quite simple. Non-residents are allowed to open accounts with brokerages regardless of whether or not they are citizens and regardless of visa and immigration status. The only universal constant is the requirement to have an SIN number and to be more than 19 years old.

However, non-residents, immigrants, and visa-holders will likely have to provide more documentation during the account opening process and will be taxed differently than residents who are also Canadian citizens. On top of that, non-residents cannot invest in Canadian mutual funds—but other asset classes are fair game.

Of course, in the day and age of globalization, borders aren’t quite the barriers they used to be—Canadian citizens who live abroad aren’t limited to Canadian brokerages. For example, Canadian citizens residing in the United Kingdom are free to engage the services of one of the best apps for buying and selling shares in the UK.

Canadian Stock Market Taxes 💰

Investing in the stock market will (hopefully) lead most investors to gains in the form of profit. This profit comes with tax implications—investors will have to pay close attention to tax rates in order to determine when a deal is profitable. Although taxes fall under the jurisdiction of the Canadian Revenue Agency (CAR), the tax rates and brackets that investors are subject to depend on the province or territory of residence—and those rates and brackets vary by a large degree.

Whenever the issue of taxes comes up, it is best to consult the aid of a professional. However, understanding the basics of the Canadian tax system can make investing in the stock market easier—understanding taxes allows investors to choose a strategy that is best suited to their needs.

Taxes might seem like an arcane subject, but when the topic is broken up into three main parts, it becomes much easier to understand. These three factors are marginal tax rates, capital gains tax, and the type of investment and how long it was held.

Marginal Tax Rate 📃

The marginal tax rate is the basis of understanding the tax implications that investors will face. So, is income from the stock market considered taxable income? Yes, it is—in effect, investors pay their marginal tax rate on income from stocks…but there’s a catch.

Ontario

  • 5.05% on the portion of your taxable income under $46,226
  • 9.15% on the portion of your taxable income between $46,226 and $92,454
  • 11.16% on the portion of your taxable between $92,454 and $150,000,
  • 12.16% on the portion of your taxable income between $150,000 and $220,000
  • 13.16% on the portion of your taxable income over $220,000

Quebec

  • 15% on the portion of your taxable Income under $46,295
  • 20% on the portion of your taxable income between $46,295 and $92,580
  • 24% on the portion of your taxable income between $92,580 and $112,655
  • 25.75% on the portion of your taxable income over $112,655

British Columbia

  • 5.06% on the portion of your taxable income under $43,070
  • 7.7% on the portion of your taxable income between $43,070 and $86,141
  • 10.5% on the portion of your taxable income between $86,141 and $98,901
  • 12.29% on the portion of your taxable income between $98,901 and $120,094
  • 14.7% on the portion of your taxable income between $120,094 and $162,832
  • 16.8% on the portion of your taxable income between $162,832 and $227,091
  • 20.5% on the portion of your taxable income over $227,091

Alberta

  • 10% on the portion of your taxable income under $131,220 
  • 12% on the portion of your taxable income between $131,220 and $157,464
  • 13% on the portion of your taxable income between $157,464 and $209,952
  • 14% on the portion of your taxable income between $209,952 and $314,928,
  • 15% on the portion of your taxable income over $314,928

New Brunswick

  • 9.4% on the portion of your taxable income under $44,887 
  • 14.82% on the portion of your taxable income between $44,887 and $89,775
  • 16.52% on the portion of your taxable income between $89,775 and $145,955
  • 17.84% on the portion of your taxable income between $145,955 and $166,280
  • 20.3% on the portion of your taxable income over $166,280

Nova Scotia

  • 8.79% on the portion of your taxable income under $29,590
  • 14.95% on the portion of your taxable income between $29,590 and $59,180
  • 16.67% on the portion of your taxable income between $59,180 and $93,000, 
  • 17.5% on the portion of your taxable income between $93,000 and $150,000,
  • 21% on the portion of your taxable income over $150,000

The tax rates for investors in Canada will vary. In effect, investors pay their marginal tax rate on income from stocks…but there’s a catch.

Capital Gains Tax 📜

Not all of the profit earned from investing in the stock market is considered taxable income. Some of those gains are subject to capital gains tax—a preferential tax treatment. In essence, if certain conditions are met, only 50% of the profit will be counted toward taxable income—and that can make a huge difference in the amount of money investors end up with once the dust settles.

Let’s use another example to illustrate. An investor buys a stock at $5, and after some time sells it for $7. That investor has 2$ in capital gains—so in effect, $2 is added to their taxable income, and they will have to pay a hypothetical (and outrageous)  50% of that $2 as tax.

However, capital gains tax rates make things more favorable for the investor—only 50% of the capital gains are taxable, so the math actually works out differently. Instead of $2, only $1 is added to taxable income—and that $1 is taxed at 50%.

Instead of having $1 after taxes, the investor would have $1.5—50 cents, yes, but in this case, that’s a difference of 50% in total profit. Unlike the marginal tax rate, the Capital Gains tax rate in Canada is set federally—meaning that it is always 50% across the board, regardless of province or territory.

However, as we said just a minute ago, this holds true in some cases. As always with taxes, there’s yet another catch…

Type of Investment and Holding Period 🗃

The capital gains tax rate does not apply to all gains realized from investments. Whether or not it applies depends on the type of investment and the holding period.

Profit earned from selling stocks, ETFs, mutual funds, bonds, or real estate falls under the capital gains tax rate if the asset in question was held for more than one year. If the asset was held for a shorter time, CGT does not apply—investors will owe taxes on the full amount of capital gains acquired. In effect, this serves to discourage short-term approaches to investing (otherwise known as trading), such as day trading, swing trading, and scalping.

But capital gains aren’t the only income investors earn from the stock market. Dividend payments present an appealing method of passive investing that can lead to very enticing levels of passive income. 

The importance of dividends to total stock market returns is very significant—so the value that dividends bring to the average portfolio is likewise important, and strategies like dividend investing are very common.

Visual representation of S&P 500 total returns over time.
Dividends’ share of total returns in the S&P 500 over time.

Dividends are low-risk, stable investments—and in order to encourage such investing, the Canadian tax system has a dividend tax credit. Underneath all those confusing terms, what this means is that taxes on dividends can be much lower—corporations already pay taxes, so why burden the taxpayer even further?

The tax intricacies surrounding dividends are too complex to jam into this review—while investors can go straight to the source, we strongly recommend consulting a tax professional to gauge the feasibility of tax-loss harvesting and tax optimization. However, this does not apply to dividends received from foreign corporations—they are treated as taxable income, and are not eligible for tax credits.

Stock Market Trading Terminology 📝

Although some of our readers might be familiar with the basics of the stock market, most people do not possess this knowledge. Unlike plenty of other topics, passive cultural osmosis doesn’t apply to the stock market. The first order of business is the different types of asset classes.

Investing in the stock market, as it is popularly referred to as, is actually a lot more varied than one would think—this is an inaccurate term. Although stocks are popular investment vehicles, investing in the stock market usually entails making investments in other asset classes such as funds, bonds, futures, and options on top of stocks.

Although the term investing is often used as a catch-all term for anything done in the stock market, this is actually a common misconception. Investing actually encompasses long-term, buy-and-hold, and passive strategies—strategies that can last anywhere from three to five or even more years.

Visual comparison of passive and active trading style
A summary of the most popular approaches to buying stocks: long-term investing, or short-term trading.

In contrast, short-term strategies fall under the umbrella term of stock trading. Approaches such as scalping, swing trading, day-trading, and news trading depend on different factors, require different risk tolerances, and are usually taxed in a different way—the distinction is completely justified.

Exchanges are basically marketplaces where publicly-traded companies are listed, and the place where business is done. Exchanges provide the connection between buyers, sellers, and companies that is necessary for investing.

Brokerages are companies that provide access to exchanges and act as middlemen. Although that might sound slightly unsavory, the reality is quite different—without brokerages to provide execution, liquidity, and access to different exchanges and markets, the stock market as we know it today could not exist.

How to Start Investing in the Canadian Stock Market 👷‍♂️

With the exception of taxes, up to now, this guide has mostly dealt with theoretical business and abstract terms. But that’s all over now—so let’s turn to something a bit more concrete and easy to define.

In order to invest in the Canadian stock market, investors will have to go through a couple of steps. Although they may seem complicated or time-consuming on the surface, we promise that it isn’t so—and we’ll do our best to summarize and explain in this part of the guide.

Open Online Brokerage Account 👨‍💻

Opening an account with an online brokerage is the most convenient and overall best way to start investing in the stock market in Canada. The process with most of the top-rated stock brokerages is a breeze—it usually doesn’t last more than a couple of days, and can be completely done online.

Investors will have to provide scanned copies of certain documents and some basic information—but beyond a proof of identity, proof of residence, a bank account, and a valid SIN number, there’s nothing more that needs to be prepared.

Foreigners, non-residents, and others can also open investment accounts in Canada—but in these cases, the process could last a little longer, and applicants may be required to submit additional information.

Valid forms of proof of identity include:

  • ☑ A passport
  • ☑ A driver’s license
  • ☑ A permanent resident card
  • ☑ Government-issued identification card

Valid forms of proof of address include:

  • ☑ Bank statements
  • ☑ An investor’s most recent income tax assessment
  • ☑ A recent utility bill (telephone, water, power)
  • ☑ A residential lease or mortgage statement

Open an Investment Account 💻

Once a brokerage account has been opened, investors will have to choose which type of investment account to open with said brokerage. Although not all brokerages offer multiple account types, a large majority do—and all of the top-rated brokerages certainly do.

This step will require investors to take a step back—picking the optimal type of account will depend on factors such as commission and price structure, personal risk tolerance, and goals. We’ll cover those factors in detail later in this guide—but for now, memorizing this step as is will suffice.

Another factor to consider is whether or not opening multiple accounts is the best decision. Although when we talk about investment accounts, we usually refer to non-registered accounts, registered-accounts such as RRSPs, TFSAs and RESPs offer tax benefits that might be hugely beneficial for retirement planning and older investors.

Deposit Funds Into Your Account 💸

The next step is also simple and straightforward—before investors can begin putting money into the markets, their account has to be funded. This can be achieved in a variety of avenues, depending on the specific brokerage in question, but almost all brokerages except deposits and wire transfers from banks. 

A lot of brokerages accept payments from debit or credit cards, and some also support payments from online wallets such as PayPal, Payoneer, Skrill, or Neteller. A small number of brokerages also accept funding from crypto wallets and exchanges.

It is obvious that investors will have to meet minimum deposit requirements before they can begin trading, but it is also wise to budget a bit more in depth before setting out. Before moving on, investors should make a plan—how much to invest, at what intervals, what their risk tolerance is like, and whether or not they will practice methods such as dollar-cost averaging.

Visual representation of how dollar-cost averaging method works.
A graph demonstrating the principle behind dollar-cost averaging—a common budgeting method for buying stocks.

Analyze the Stock Market and Start Investing 🔍

Once an investor has chosen a brokerage and opened and funded an account, it is (almost) time to start investing. But going in blindly won’t do anyone any good—to truly succeed, an investor has to have a strategy, or at least a general idea of what they are doing, in place.

Choosing a strategy doesn’t mean that investors have to have everything figured out ahead of time—still, knowing at least the broad strokes of how to approach things allows for a smoother beginning and makes it easier to adjust and optimize.

Keeping in mind what their risk tolerance is like, the assets their brokerage offers, and how much money they have, investors should choose whether or not they want to be passive investors, active investors, or short-term traders.

It is also good to have a clear goal in mind—buying a new property, making a nest egg, or securing oneself for retirement allow investors to know exactly where they want to end up, financially speaking.

Investors should also set about learning how to properly research stocks and other securities. Knowing how ETFs work will be a boon for passive investors, for example—while getting a feel for technical analysis can be a great asset for swing traders and news traders.

To make matters easier, investors should consider subscribing to a stock-picking service or a high-quality investment newsletter. Once the sights have been set, there’s nothing else to do but to start investing. To make things a little more abstract, the guide will now shift focus to slightly more practical matters.

Popular Stocks in the Canadian Market 🌟

Canada’s stock market is host to a wide variety of interesting, promising businesses, as well as already-established industry leaders. Let’s single out a couple of the more notable stocks in the Canadian market.

Although the Canadian I.T. and tech sector is proportionally much smaller than the U.S. , this does not mean that the businesses found within it are of a lesser quality. Constellation Software (CSU:TO), a company founded in 1995 which focuses on acquiring software companies, has seen some pretty amazing returns since going public.

Canada is also host to a thriving and rapidly expanding cannabis market. Apart from a wide bevy of cannabis penny stocks to invest in, Canada also has companies like Tilray Brands (TSX:TLRY) and Canopy Growth (TSX:WEED) which have already managed to secure large market caps. The Canadian cannabis industry has been struggling since the pandemic—however, the large domestic market and developed infrastructure holds much promise if the U.S. were to legalize marijuana.

On top of these companies, the TSX also has listings such as Lithium Americas Corp (TSX:LAC) and Nuvista Energy (TSX:NVA) for materials and mining, respectively, and famed e-commerce giant Shopify (TSX:SHOP). While energy and materials companies have seen great returns since 2020, Shopify has been struggling, which is best exemplified by the recent earnings call.

Along with this, Canada has a very concentrated banking industry—with most of the companies in the top of the TSX by market cap being banks. These include but are not limited to CIBC (TSX:CM) and Scotiabank (TSX:BNS).

How to Choose a Competent Canadian Brokerage 🏆

Getting into investing in the stock market isn’t all too hard—but some of the steps leading up to that goal do require research and have to be thought out. The choice of a brokerage is an important issue—so it’s important to know what to look for and what criteria to use to evaluate brokerages.

Although investors will have a different set of preferences when it comes to stock brokers, there are a couple of universal questions that have to be addressed. Getting it right on the first try is important—transferring assets from one brokerage to another requires time and money. In no particular order, the factors that should be considered are…

Commissions & Fees 💳

The question of price cannot be avoided. The cost of doing business is the first order of the day when choosing a brokerage. Investors should focus on finding a broker with a fee schedule suited toward their means. This is particularly important when choosing a first stock brokerage—minimum deposits limit the choice of available brokers—meaning that this factor is very important in terms of accessibility.

Although it might stand to reason that cheaper always equals better in this regard, it isn’t always so—if an investor can afford a more expensive brokerage, the cost might be well worth it when contrasted with the benefits provided by other factors such as more powerful trading tools or a better trading platform.

Investors should start by determining what type of brokerage (full service, discount, or online) they feel best suits their needs—and once that’s done, a closer look at the fee and commission schedule is in order.

Visual representation of the different types of brokerages.
A short overview of the different types of brokerages.

Securities Offered 📄

When we say investing, most people will think of investing in stocks. Investing in the stock market is a common phrase, but it usually entails investing in much more than stocks. In fact, due to the benefits of diversification, a vast majority of investors should invest in more than one asset class.

List of the most common types of secirities offered bu the online brokerages.
The most common types of securities available for purchase via online brokerages.

The variety and amount of tradable securities is an important factor to consider when choosing a brokerage. Access to different types of securities opens up more options in terms of viable investing strategies and approaches. No matter the amount of money an investor has, or their preferred method of investing, variety is always a benefit.

Short-term traders might find options or other assets like penny stocks, fractional shares, pink sheets, or OTC securities and crypto as good trading opportunities—while access to a wide variety of foreign exchanges, exchange-traded funds, and bonds makes passive investing and retirement planning easier.

Trading Tools 🛠

Depending on what approach an investor decides to take, the trading tools best suited toward meeting their goals will change. The tools at the disposal of investors—from trading platforms, mobile apps, alert services, and other pieces of software can make a huge difference.

For traders on the go who enjoy mobility and clean user interfaces, most brokerages offer a number of top stock trading apps in Canada, which rival the mobile apps offered in any other jurisdiction.

To figure out what trading tools would appeal to them, investors should have a clear overview of how they will invest. Short-term traders will find that technical analysis tools, charting and drawing tools, technical indicators, and execution speeds are priorities—while long-term, buy-and-hold investors might prefer access to fundamental data, low margin rates, and complex order types.

When it comes to trading tools, investors ought to keep in mind that most brokerages offer a variety of account types at different prices (and with different fee schedules). A brokerage that offers room to grow later on in terms of platform complexity is more versatile and might be worth prioritizing.

Education & Research 📚

Educational materials make brokerages more user-friendly, allow investors to broaden their horizons, and serve as a one-stop shop for finding well-produced, relevant information. Research materials, on the other hand, allow clients to execute more complex and demanding strategies in conjunction with trading tools.

As far as educational materials go, brokerages differ quite a lot—some are scant in the education department, while others operate complex systems with platform tutorials, trading guides, educational pieces, courses, quizzes, and webinars. One of the most important features in this department is the availability of a demo account or paper trading account.

On the research-side of things, access to market commentary and analysis, fund ratings, research methodologies, stock recommendations, and stock screeners allow investors to find and tackle new opportunities to earn a profit.

Safety of the Brokerage 👮‍♂️

In terms of safety, the most important issue is licensing and regulation. While the world of finance does experience its share of fraud and malpractice, keeping some common sense in mind can save investors from a lot of trouble.

In general, brokerages that are available in Canada have tier-one regulatory licenses. Tier-one regulation means that the brokerage in question is headquartered in a country that has stringent, strict requirements for doing business, along with serious fines associated with malpractice. In practical terms, this brings about transparency, investor protection by way of insurance, legal protection, and safe, ethical business, while also driving costs down significantly.

In contrast, unregulated brokerages and offshore-companies are held to a much lower standard, and have little to offer in terms of advantages. There are a lot of brokerages available in Canada that have no minimum deposit requirement—when all is said and done, unregulated brokerages should be avoided.

In terms of platform security, features like two-factor authentication, fingerprint, voice, or facial logins, proper encryption and security measures are preferable to lacking these features. Along with that, investors should check whether or not brokerages have experienced any large security breaches (like Robinhood’s breach) or regulatory actions.

Canada vs. U.S.—Stock Trading Differences ⚔

One major difference is that unlike the SEC and FINRA, Canadian regulatory bodies do not enforce an equivalent of the dreaded pattern-day trading rule. In essence, this means that the barrier to entry for high-volume intraday trading is much lower in Canada—although the approach is risky, heavily taxed, and hard to pull off. 

Keep in mind that some brokerages might enforce the rule (either because they are headquartered in the U.S, or if they use clearing services in the U.S.)

Canadian bond returns have generally outclassed those of their southern neighbors, but the U.S. does have an edge in total returns when looking at the market as a whole. The most glaring differences between the two, however, have to do with sectors and industries.

Visual representation of stock market performance in both Canada and U.S.
A chart representing performance in the U.S stock market by industry—Canada’s market.

For example, the U.S. healthcare sector is 10 times as large as Canada’s. Although Canadian healthcare stocks are renowned for good, reliable dividends, the sheer size disparity means that there are a lot more opportunities in the U.S.

Although both countries are major producers of energy, Canada’s share of the stock market that is in the energy sector is roughly five times as represented when compared to the U.S.—and the same applies for the materials sector. The Canadian energy sector has shown surprising resilience in the face of COVID-19.

 The same principle, although to a lesser degree, applies to financials, such as banking—but the U.S’s consumer staples, consumer cyclical, and IT sectors dwarf Canada’s. In addition, Canadian markets have a much greater degree of penny stocks.

And last but not least, there is a huge difference in terms of size. The market cap of the NYSE is $27.2 trillion, and it experiences an average monthly trading volume worth $1,452 trillion. In comparison, the TSX has a market cap of $3,32 trillion, and an average monthly trading volume of $97 trillion.

Pros and Cons of Investing in the Canadian Stock Market ⚖

Although we wouldn’t exactly say that there are any cons per se associated with investing in the Canadian stock market, there is the matter of opportunity cost. Simply put, investing in the stock market in Canada might be fine—but what if there’s a better opportunity?

It comes as no surprise that these comparisons will mostly be made with the United States in mind. Canada’s stock market is accessible, the economy is stable, and economic forecasts are promising.

On the other hand, in terms of the stock market, the U.S. provides a lot more room to grow. While one might think that accessibility to the U.S. stock market is an issue, that isn’t so—the sheer size of that particular market means access to it is a priority feature as far as most brokerages are concerned.

Ultimately, investing in Canada’s stock market is good—but as always, too much of a good thing can cause issues. Thankfully, both research and experience has shown that diversification is one of the most essential elements to success in the stock market. 

It boils down to this—no one has to choose between the Canadian stock market and other markets. Diversification is always preferable, so we strongly suggest gaining exposure both to the domestic market as well as foreign markets—but the exact proportions and division of investments will depend on risk tolerance and personal goals.

In general, the higher liquidity and volatility of the S&P 500 makes investing in the U.S. more appealing to short-term traders—whereas in terms of long-term investing, the U.S. and Canada are on equal footing.

In conclusion, there are no fixed pros and cons of investing in the Canadian stock market—it is always a question of comparison with some other market.

Conclusion 🏁

While buying stocks might seem daunting to the uninitiated, Canada’s regulations aren’t complicated, and the country provides access to a  wide variety of high-quality brokerages both domestic and international.

How to Buy Stocks in Canada: FAQs

  • Can I Buy Stocks Online for Free in Canada?

    Yes—certain brokerages offer free stock trading in Canada, which is usually referred to as commission-free trading.

  • What is the Best Canadian Online Brokerage Platform for Beginners?

    CIBC Investor’s Edge is a user-friendly platform owned by a large bank, with a host of beginner-friendly features.

  • How Do I Start Buying Stocks in Canada?

    To buy stocks in Canada, an investor should set aside some money, research brokerages, open and fund an account with a brokerage that meets their needs—the only thing that’s actually left to do after that is the act of actually buying stocks.

  • How Do Beginners Buy Stocks?

    There are no set rules for how beginners buy stocks—however, most beginners will naturally gravitate toward long-term, passive, buy-and-hold investing in low-cost exchange-traded funds, index funds, stocks, and bonds.

  • How Do I Buy Stock by Myself?

    Buying stocks without engaging the services of a brokerage is possible—however, only a limited number of companies support Direct Stock Purchase Plans (DSPPs). This approach is more complicated, more limited, and much more time-consuming.

  • How Can I Invest With $100?

    To invest with a starting sum of $100, investors should find a low-cost or discount brokerage with a low minimum deposit, open and fund an account, and invest in safe, passive investments.

  • How Much Can You Make a Month From Stocks?

    The amount of money that can be made from stocks in a month is entirely dependent on initial capital, risk tolerance, investment method, and a host of other factors. However, it is important to look at the bigger picture—focusing solely on monthly income from investments is a good way for beginners to get discouraged.

  • How Can I Buy Stocks Without a Broker in Canada?

    In order to buy stocks without using a brokerage in Canada, investors should find out what publicly-traded companies offer Direct Stock Purchase Plans (DSPPs), and approach each investment opportunity on a case-by-case basis.

  • What is the Cheapest Stock Trading Platform in Canada?

    Wealthsimple’s mobile platform, Wealthsimple Trade, offers both commission-free stock trades and a $0 minimum deposit.

Get Started with a Stock Broker

Fees
Account minimum

$0

$0

Minimum initial deposit

$0

$50 - $200 (jurisdiction dependent)

Commissions

Vary

$0

General
Best for

Active traders

All types of investors

Highlight

Huge discounts for high-volume trading

Copy trading

Promotion
Rating
Fees
Account minimum

$0

$500

Minimum initial deposit

$50 - $200 (jurisdiction dependent)

$0

Commissions

$0

$0

General
Best for

All types of investors

Beginners and mutual fund investors

Highlight

Copy trading

Low fees

Promotion
Rating
Fees

Account minimum

$0

$0

$500

Minimum initial deposit

$0

$50 - $200 (jurisdiction dependent)

$0

Commissions

Vary

$0

$0

General

Best for

Active traders

All types of investors

Beginners and mutual fund investors

Highlight

Huge discounts for high-volume trading

Copy trading

Low fees

Promotion

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

Cookies & Privacy

The Tokenist uses cookies to provide you with a great experience and enables you to enjoy all the functionality of the site.