In: Root » Legal and finance » Stocks and mutual funds
Let's assume you have read piles upon piles of books, read the extremely informative articles on this website and you have spent the last fifteen days researching stocks and you have found some you want to buy and you have even gathered up some money that you want to invest into them. There's only one thing left to do: choose an online brokerage. Many people will give you the option of regular brokers or whatever else exists, but let's face it, we are in the age of the internet where everything is cheap, fast and convenient - so I'm not going to recommend you take up telephone trading among other things, unless you are ninety-seven and have chronic haemorrhoids. That's why I recommend an online brokerage where you can buy and sell stock at the click of a button (literally). To set up a brokerage account all you need is (typically) your name, contact information, Social Insurance Number (SIN) and bank account details - and then you can start rolling in the dough! I also recommend an online brokerage since their commissions tend to be significantly lower than other means of trading stock (if you don't know what commissions are, keep reading). The way most online brokerages work is the more trades you make per quarter (for example, buying stock is one trade, selling it is another trade), the less money you have to pay for each transaction. For instance, TD Ameritrade (an online brokerage) currently charges $10 per trade, flat. On the other hand, E-Trade charges $13 per trade, but if you make over 150 trades a quarter you are charged only $7.99. Then again...I don't know how much speed you have to mix with your cocaine in order to make that many trades in three months. For those of you who aren't familiar with how buying stock works or if you had a large chunk of your brain blown out in Vietnam; whenever you make a transaction in order to buy or sell equity, such as a stock or bond, you are charged a commission fee. So, say you open up an account with E-Trade, and buy a stock: you will be charged $13 for purchasing shares and then when you feel that you are ready to sell, you have to pay another $13 for the transaction to sell. That's twenty-six bucks ripped out of your deadly kung-fu grip and there's nothing you can do about it. Let's say you invested $1,000 for the above process. That means your $1,000 investment has to grow by 2.6%% just to break even and make that $26 back. On the other hand, if you invest $10,000 you will only have to grow your investment by 0.26% in order to break even. That 2.6% of $1000 may not seem like much, but you have to remember that many professionals can barely make 2.6% returns in one year. Also, the higher your return, the more your money compounds and the richer you get. For those who are weary about managing your own investment account, especially making buy/sell orders online, I'll say this as plainly and simply as possible: If you are mentally fit to handle a pomegranate, then you can handle an online brokerage account. Your brokerage's website should have some dandy, easy-to-follow guides to help you through the process of opening your account, making trades and closing your account after you lose all your money because you haven't been paying close-enough attention to my sacred advice.
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