Immigrants can buy stocks in Canada. All you need is a valid SIN number and be at least 19 years old in most Canadian provinces. However, tourists who do not have SIN number are not allowed to buy stocks in Canada.
Immigrants are allowed to open most investing accounts in Canada. The most common are RRSP, TFSA, and non-registered accounts.
Can Immigrants buy US stocks?
Immigrants are allowed to buy US stocks while in Canada. Even if you are a citizen of other country, anyone can invest in Canada as long as they meet these two conditions:
- Have a valid SIN number (starts with any number)
- Be at least 18 or 19 years old (depends on provinces in Canada)
Even if you are only staying in Canada for only a year, it is indeed possible to open a brokerage account and trade stocks. I’ve reached out to Questrade, the leading brokerage in Canada, and they allow anyone to open a TFSA.
However, providing net worth is required when opening a margin account. Opening a margin may require a margin account, depends on the brokerage you use.
There are a lot more stocks in the US. Also, US stocks has the most popular stocks.
Minimum Amount to Get Started
You do not need to large sums of cash to start investing in stocks. A $1,000 capital is more than enough to get started. It is entirely your choice if you wanted to add more to that or not.
For example, Wealthsimple Trade in Canada and Robinhood and other platforms in the US have no minimum amount to get started. A $50 or less is more than enough to buy a couple of stocks.
On TFSA (Tax Free Savings Account), you are allowed to withdraw or deposit your investments at any time. Of course, you may need to sell a stock to withdraw.
Also, you are not required to invest all money while in investment account. For example, let’s say you transfer $1,000 into an investment account like TFSA or RRSP. You can keep it half or all of it in cash while waiting for a stock you like to drop in value before buying.
Having cash on the sideline can give you more flexibility. At the same time, investments can give you returns.
Why Invest in Stocks?
Investing in stocks are proven to generate the best returns over the long run. Over the long run, the average of 500 largest stocks (S&P 500) have returned around 10 percent per year.
Savings accounts in Canada only generates 1 percent on interest. Also, GICs can only give 2-3 percent in returns.
Investing in stocks matters a lot on the long term. Let’s say you put $300 a month for 15 years. On a 1 percent return in savings accounts, that will be $58,234 in 15 years. While the same capital but for 10 percent will be $124,341.
That’s more than double than regular savings account.
Losing capital in the market is common when trying to make quick gains. The proven way is to leave the investments for several years.
Being patience is the number trait to be successful in the market. Also, having experience in the market helps a ton.
When starting, it might be optimal to just invest little money in stocks. After a year or two, most people are comfortable investing and is confident to invest more.
What Investing accounts can I open as an Immigrant?
Immigrants can open almost all investing accounts. Immigrants has the options on account opening as Canadian citizens.
Choosing an investing account is not complicated. There are a lot of Investing accounts out there. For simplicity, these are the most common and useful Investing accounts.
Keep in mind that these are not investments in itself. Instead, these are accounts on where to put your investments. The main purpose of choosing your account is for tax purposes.
Also, choosing an account is required when opening a brokerage account.
TFSA
For most people, TFSA account is the best account to open. Mainly because investments in this account is tax free.
Tax Free Savings Accounts (TFSA) can be opened by all nationalities as long as you have a valid SIN number and be at least the age of majority (18 or 19).
Any income from TFSA are tax free. Also, you can withdraw and deposit at any time in TFSA. For most beginners, TFSA are the best account to invest in.
However, investing in TFSA has limits. You can only put at most $6,000 in a year. For most information on TFSA limits, click here.
If you have less than $6,000 to invest in, TFSA should be good for you. If you are planning to invest more, keep reading.
Cash / Margin Account (Non – Registered)
These accounts are non-registered accounts. Meaning, you have to pay taxes to your investment income. The good thing in this account is that there is no limit on how much you can invest.
Also, you can withdraw or deposit at any time in these accounts. For most people, taxes on capital gains on these account is 50 percent of your tax bracket.
For example, if your tax bracket is 30%, you are taxed at 15% on your tax investments. That means you have to pay $150 taxed in $1000 stocks income.
Disclaimer: I’m not a professional advisor. Always consult your your accountant or any professional for taxes and any investments decision. This website only speaks from the author’s experience in investing.
Margin account allows you to borrow money to invest with an interest. For the most part, you can choose to not to exercise that option as borrowing money to invest is not recommended by Warren Buffet.
RRSP
RRSP are tax-free accounts at the time of contribution but are taxed at the withdrawal date. RRSP is proven to have given the best returns among any other accounts.
The problem is that you can only withdraw it when you became 60 years old. RRSP are designed for retirement. Also, there is a limit of contribution to RRSP.
For beginers, TFSA is the best account to open in as long as you have less than $6,000 to invest in.
Best Brokerage for Beginners
Brokerage is required to invest in the stock market. In the past, you have to call to your broker and pay $50 for every buy or sell trade.
Today, you can buy or sell stocks in your phone or laptop wherever you are. Also, fees are only as low as $4.95 per trade.
Questrade has the lowest fees in the market as low as $4.95 per buy or sell trade ($9.95 on big banks). Also, Questrade is the #1 brokerage in Canada with more than 50,000 new users every year.
Questrade also has great research tools and insures up to $10 million.
Steps to Invest in a Stock for Beginners
1. Open a Brokerage Account
There are a lot of brokerages in Canada. Questrade has the lowest fees in the market as low as $4.95 per trade.
2. Choose an Account
For beginners with less than $6,000 to invest in, TFSA is a no-brainer. More than that, you can choose between RRSP or Cash/Margin account.
The minimum requiremnt in Questrade is $1,000. You do have to invest everything.
3. Transfer money in
Connect your bank account to the Questrade account. Upon account opening, Questrade will give you directions how to do that.
If you have any questions on Questrade, their email typically responses within 2 days while their phone number responds immediately.
4. Buy a Stock
Search the name of company on google plus “stock”. For example, if the name of company is “Company A”, search on google “Company A stock”. It will give you the current price of stocks.
To buy a stock, simply put a limit order. Limit order means how much you are willing to pay the most for a stock. For example, if a stock is trading at $38.55, you can put a limit order of $38.65 to execute immediately.
Also, determine how much you want to invest in a stock. Let us say you want to invest $500 on the stock mentioned at $38.55. Simply divide 500 to 38.55, that will result to 12.9.
There is no fractional stocks. That means she can put a limit order of $38.65 for 12 stocks to actually invest the $500.
The market is open 9:30 to 4:30 Eastern Time. If the market is close, the order will be placed the next day.
To buy a stock, you can open a Questrade account which allows you to buy and sell stocks in Canada.
