How to buy Canadian shares?

Canada is best known for marijuana stocks. However, there are also many other Canadian companies that may be attractive. In this article you will see from which brokers you can buy Canadian shares against low transaction costs.

How to actively invest in Canadian shares?

If you want to actively respond to all market developments, you can choose to use CFDs on Canadian shares. The best way to do this is at Plus500. With this party, you can try out the possibilities of active trading, completely risk-free, by means of a demo. Use the button below to create a free demo account:

Where to buy & sell Canadian stocks?

When you are going to invest, it is important to keep an eye on costs. Do not waste money buying your Canadian stock from an expensive broker. A good party where you can buy cheap CFD Canadian shares is eToro. At eToro you do not pay set commissions on your trades in CFD shares. Use the button below to open an account:

Note the price of the Canadian dollar

When you are going to invest in Canadian companies, it is important to keep an eye on the Canadian dollar. The shares on the Canadian stock exchange are listed in this currency. You can lose a lot of money when your currency becomes less valuable compared to the Canadian dollar. Therefore, always study how the regions’ exchange rates develop.

investing in canada

Marijuana investments

Many people invest in Canada because they have a lot of confidence in the weed business. This can indeed work out well: in the past, some of these stocks have made massive returns. However, it is also important to remember that there is often a hype. Prices can fall sharply when the interest declines. Therefore, beware of marijuana investments.

Tip: Check the opening hours of Canadian stock exchanges here.

Why can investing in Canada be attractive?

Investing in Canada can have the necessary benefits, but what are these benefits? An important first advantage is the low government deficit. In 2018, Canada even managed to run a surplus of 0.8% in the first half of the year. More broadly, society is stable, which of course can also be good for business.

Another advantage of investing in Canada is the fact that the country is rich in commodities such as oil and precious metals. As a result, the country is less dependent on other countries for importing raw materials. This makes the Canadian economy more robust than that of countries that have to import many raw materials.

Another advantage of investing in Canada is the stable inflation. Because the government has a stable monetary policy, it is on average around 2%. This brings more stability to your investments in this beautiful country.

Where to buy Canadian shares?

Many people choose to buy large Canadian stocks on the U.S. stock exchange. This way, you often pay lower transaction costs, and your investments are also listed in dollars. You can likewise choose to invest in Canadian shares on the Canada Stock Exchange. Pay attention to the transaction costs and the exchange rate of the Canadian dollar.

What do you need to look out for to be successful with your investments?

Of course, at the end of the day everyone wants to be successful in investing. You can achieve returns through either an increased share price or through dividend payments.

Choose a good broker

A good investment strategy succeeds or fails with a good broker. Many people lose a lot of money because they work with a rogue or expensive broker. For that reason, it is important to choose a broker that is supervised by a reliable party. That way, you can be sure you will not have to deal with scams. By choosing a broker with low costs there will be more money left to achieve a good return.

Do you want to know which brokers are most advantageous to invest with? Use the button below to compare the different options:

Deposit enough money into your account

With many brokers, you can invest in shares with as little as $100. ‘Because you can’ is often not a good reason to do it, though. It is advisable to deposit an amount of $1000 or more. That way you have enough room to buy different shares. This reduces your risk and increases your chances of achieving a positive return.

Learn to analyse stocks

Do not follow the masses: You will not be the first to lose a lot of money investing this way. If you are taking investment advice, it is important to check whether that person knows what they are talking about. Always ask for the results he or she has achieved in investing in recent years.

It is often better to learn for yourself how to evaluate a share. There are several analyses that you can use. Two well-known examples are:

Useful concepts you can use

Before you buy Canadian shares, it is advisable to review some basic concepts. When you investigate whether a stock is worth buying, you can examine these figures in any case.

Price-to-earnings ratio

The P/E ratio or price-earnings ratio shows how many times higher the exchange rate is than the price of a stock. Be careful when a company has a very high price-to-earnings ratio. The company either has a very sunny perspective of their own future or there is a bubble effect.

Return on equity

The profitability of the equity or Return on equity shows how the net profit is proportional to the capital with which the proceeds are obtained. A high return on equity is positive.

Debt-to-capital ratio

This ratio shows the size of a company's debt relative to total capital. Companies that carry a high debt burden have a greater risk of bankruptcy if things go sideways.

Important advice

These figures on itself do not mean much: One Canadian company is not the same as the other. Therefore, compare the figures with companies in the same sector. This way, you can better determine whether a stock is undervalued or overvalued.

investing in Canada

Choose an investment strategy that suits you

Not every investor has the same tolerance for risk. If you are planning to buy Canadian stocks, it is a good idea to select stocks that suit you. Therefore, there is not one single Canadian share that is the absolute best.

Value investing

In this type of investing, you look for companies that have been presenting stable figures long-term. You are specifically looking for shares that trade below the intrinsic value. Sufficient research is important for achieving good results.

Investing for an income

When you are looking for stability and security, you can invest for an income. It is then wise to buy shares that pay a relatively high dividend.

Growth investing

You can also invest in companies that deliver above-average results. You will mainly find these types of companies among the low-cap companies and in innovative industries. This type of investment can be extremely rewarding, but at the same time it is also riskier. After all, there is no evidence of future performance yet.

Tip: diversify your risk

  • Invest in different sectors within Canada
  • Invest not only in Canadian stocks, but also in shares from other countries.
  • Initially, invest staggered to avoid investing all your money at the top.

Placing a stock order

If you want to buy a Canadian stock, you will have to place a stock order. The so-called bid and ask price are important. The bid price is the price someone is willing to pay for the stock and the ask price is the price at which you can buy the share. There is always some space between these values: this is what we call the spread. The spread adds up to your total transaction costs.

With a market order, you can buy a Canadian share directly at the most favourable price available at that time. With high liquidity, you can safely use this option. However, when there are few people who trade in the stock, it is better to use a limit order.

With a limit order, you set a price on which you buy a Canadian share. That way you can be certain that you are paying the price you want to pay for the share. However, the risk that you eventually will not open an investment, and you will miss out exists.

Buying your first Canadian share

You now know enough to buy your first Canadian share! I always advise people not to practice endlessly. Do not misunderstand, it is advisable to keep learning. However, do not wait too long to buy just one share. By buying your first share you will discover what it feels like to invest with real money.

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