How to Set Up a Brokerage Account in Canada

By Amelia Nelson

An increasing number of Canadians are recognizing the importance of investing. In fact, data provided by financial services firm Investor Economics notes that 2.3 million new DIY investing accounts have been opened between January and December 2020.

An increasing number of Canadians are recognizing the importance of investing. In fact, data provided by financial services firm Investor Economics notes that 2.3 million new DIY investing accounts have been opened between January and December 2020. This goes to show that more and more people today are prioritizing their long-term financial health.

If you’re keen on investing in the top stocks, bonds, ETFs, and mutual funds, you’re going to have to open a brokerage account. Essentially, a brokerage account connects you to the stock market and allows you to purchase all types of securities. In this short guide, we’ll discuss how you can set up your own brokerage account in Canada.

Figure out what kind of brokerage account you need

Before setting up a brokerage account, you have to first determine your investment objectives. For example, if you have relatively short-term financial goals, want to save for hard times, and don’t want your money to be inaccessible until you retire, you will benefit the most from a traditional brokerage account. With this, you can create your own stock portfolio and manage your investments yourself. However, it’s important to remember that traditional brokerage accounts don’t have tax advantages. You can compute how much tax your investment profits are subject to by using an income tax calculator. On the bright side, you can withdraw your investments, as well as your earnings, anytime you like with a traditional brokerage account.

But if you’d rather save money for retirement or other major life goals, you should look into opening a tax-free savings account (TFSA). Simply put, a TFSA is an investment account that lets your investments grow tax-free. Qualified investments that can be held in a TFSA are stocks, cash, bonds, and mutual funds. What’s great with TFSAs is that upon withdrawal, your earnings won’t be taxed. However, your contributions are tax-deductible with a TFSA.

Choose a brokerage platform

There’s never been a better time to open a brokerage account than now. Today, there are plenty of online brokerage platforms that make it more accessible for people to invest their money. What’s more, most online brokerages offer commission-free trading, as well as rewards for completing certain actions. However, you should be careful with choosing which brokerage platform to do business with.For one, you should check the online broker’s full pricing schedule as these may vary depending on the type of asset. Aside from finding a broker that offers the lowest price, you should also look for features that can help you ensure the success of your investments. This includes access to third-party research, fractional shares, device compatibility, and commission fees. You should also read reviews of the online brokerage platform and make sure that they provide superb customer service and handle complaints well. Doing so can spare you from unpleasant situations down the road.

Sign up and start investing

Once you’ve settled on an online brokerage platform, you can now apply for a new account. This may require you to provide proof of identification, such as your driver’s license or your Social Insurance Number. You may also have to provide information with regard to your employment status, net worth, and investment goals. After that, you can start funding your brokerage account and embark on your investment journey. A brokerage account is essential if you want to reap the benefits that come with investing. It’s important to note, though, that managing your investments is not an easy task. If you want to ensure the success of your investments, be sure to do your due diligence and carefully study the behaviour of the economic market

How to make the most out of your investments

Investing in both Canadian and American companies will allow you to diversify your portfolio! Many trading platforms will allow you to do this by:

1. Converting your currency through the trading platform

Though this is a quick and convenient option you'll be subject to fees and weaker conversion rates. This means you'll have less money to buy stock on and lose potential profits.

Converting currency prior to moving funds to a trading platform

Many trading platforms allow you to have accounts that hold both CAD and USD. The key is to convert currency before moving it to the trading platform to get the best exchange rates and avoid fees.

How to convert currency online

Converting currency online is easy with Remitbee. Simply sign up for an account, connect your CAD and USD bank accounts. Confirm your exchange rate and make your exchange! Remitbee provides the best exchange rates and doesn't charge any fees. Once you've exchanged your money with Remitbee you can fund your trading account and start buying stocks!

*Article exclusively written for remitbee.com By Amelia Nelson*