October 18, 2011 | In: General
Where Can You Buy Stocks?
One of the questions that I always get from new investors is: “OK, now I know how the stock market works, how stock prices are set, and I want to join the game! But, I still don’t know where I can buy stocks!”
The answer to this question is easy: “Just call your bank!” – That’s right, all you need is to do call your bank and tell them that you want to trade stocks and they’ll help you. Let me explain…
Most (if not all) banks in the US, Canada, the UK, Australia, etc… act as large stock brokers, so what they do is that they have something called “investor accounts” (In BMO – The Bank of Montreal – it is called BMO Investorline). These investor accounts are made for any type of investor who wishes to trade stocks. When someone opens up an investor account with any bank, he is typically provided with an online interface where he can trade in the market (equities and options) from the convenience of his own home using his computer (it’s just about choosing the stock that you want to buy/sell, enter the number of shares, and click on buy/sell). Typically there is no minimum amount that you should invest (or allocate for investing) in order to be eligible for these accounts. However, you may incur fees if your balance is below a certain limit (for example, the Bank of Montreal charges quarterly fees if your balance in your investor account is below $10,000). Now, how do these banks make money out of you?
The answer is simple: commissions. Bank make money out of commissions. Every time you make a trade you will incur a commission fee, that ranges anywhere between $5 and $30. Additionally, some banks have complicated fee structures where you may incur the same fee multiple times (that’s not very good for your profits!). For example, the Bank of Montreal charges you the commission feefor each 1,000 shares, so if you buy 3,000 shares of SIRI with them, you may incur 3 x 29.99 = $89.97. On the flip side, almost all banks offer a “flat-fee” rate (except for options) if you are an active trader (for example, you perform more than 30 trades per quarter) or if you have over a certain amount invested (most banks set this number at $100,000).
So, you see, getting into stock market is not that hard, it’s just a call to the bank…
Note: All Canadian banks offer their clients the ability to trade stocks in both the Canadian and the US markets. I’m not sure if it’s the same thing the other way around (I mean I don’t know if US banks offer their clients the ability to trade in the Canadian markets as well).
This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.