A lot of people are overly narrow when it comes to the world of investing. The most common sentiment is that the United States is the only place where investment can go anywhere. Not only is that not true, but people go on to think that the only companies in the US worth investing in are big ones.
There are thousands of companies listed on the Toronto Stock Exchange. They are not Tesla or Google, but there are problems with Tesla and Google that Tesla and Google of which those companies work very hard to keep people ignorant. To invest anywhere, you have to look past the big money.
But what does it mean to invest? And how is it done? Moreover, where is it done? That is what we are seeing out to answer today, as many Canadians are woefully under-educated as to how to engage with the economy on that level. Let’s start by talking about what investing is and how you do it.
Investing is the process of putting money into a company, usually through buying shares of a company called “stocks”. There are other methods of investment, but this is by far the easiest as well as the most common, so when we talk about investing, we will be focusing on the buying and selling of stocks.
There are two ways of investing into a company by purchasing stocks: The first is investing for the long term, or “growth investing”. This is where you invest in a company that pays dividends. Dividends are a payment you receive from a company in exchange for the money you invested into them.
These are usually given out once every quarter of the year. So, you buy shares by a certain date, and then the company sends you dividends for owning shares. The more shares you own, the more dividends you receive. You can reinvest those dividends into more stocks, which grants more dividends.
The other way of investing is called “income investing”. This is done by buying stocks and selling them when they increase in value. You buy something that costs $20, then sell it when it becomes $21.
This question is more important than you might think, as many Canadians end up avoiding even trying investing out due to not knowing the answer. Which is a shame, because if you go to the right place, then it will not only let you invest, but oftentimes have a database for learning how to invest.
If you want to invest, then you need to go to an investment app. To help you find the best place for you to start, we have found the top 8 best investment apps in Canada for you to get started on.
As you may or may not know, Starbucks employees can be paid part of their salary in stocks belonging to the company.
These stocks are free, and you can sell them for the cost of the stock, sometimes to get more money than you would normally get if you just took a normal paycheck.
Many companies do this. In fact, it is the method by which most people get introduced to the world of trading stocks. However, most people just take the money rather than the stocks due to not knowing how to turn the stocks into money, usually because they don’t know where to sell it.
Wealthica is brilliant because it does exactly that. Wealthica has excellent tutorials and a wide marketplace, both built for two things: The first is getting you comfortable with trading what you own.
And the second, arguably more important, job is getting everything you own in one place. That means consolidating stocks, debt, loans, revenue, and any other financial data points that you can use.
This makes it not only good for accessing the markets and learning about them, but also for tracking expenses, doing your taxes, and turning elusive securities like stocks from work into value.
Wealthica is easy to use, but it explores such strange niches of handling and trading stocks that there is no way for it to make everything accessible. For instance, in order to actually get a stock someone gave you in lieu of salary into a brokerage account, you need to gather several documents from the company.
It also allows you to trade stocks with companies that are technically from the United States, which includes being issued a document by the Canadian government that entitles you to a foreign stock.
None of these things are easy, and Wealthica can only do so much to help you along with them. You will also find its lack of alternative securities frustrating if you want something higher risk and higher reward. In short, it is designed for new traders, but very much tosses them into the deep end.
It is worth noting that Wealthica is a good starting point because of how much it does for you, not because it makes it terribly easy to do.
While Wealthica gives you a lot of options that beginners love, it can be a bit overwhelming for that same reason. If you want something that eases you in much better, Questrade is the place to start.
But what makes it a great place for new traders to start? Simple: Options. Questrade presents you with two pathways when you first open an account.
You can switch at any time, but they basically boil down to a beginner path and an advanced path. This is good for people who might want to see what the deep end is like before they jump in, allowing them to go to the beginner path if they feel overwhelmed.
What the beginner path does is that it arranges a pre-built portfolio for you. Basically, you put money into your account, and the app allows you to “fill in the blanks” by providing a snapshot of what your portfolio should look like with the amount of money that you initially put into your portfolio.
This guidance comes with tutorials on how trades work and what value they add. And as we said before, whenever you want you can switch over to the advanced path to trade yourself.
You should probably be aware that the guided portfolio option has a management fee associated with it. Fortunately, the management fee is tied to the trades you make, not the time you spend holding the account. You are never going to bleed money while the account sits around doing nothing.
What you will do is bleed money as you trade. This is because the commission fees Questrade levies on trades are larger than usual. Most apps have commission fees, so we will not condemn that. But people should know that every trade will cost them. And for fast, small trades, that adds up.
So, imagine you have tried out every single trading app (somehow) to find which one is the best for you. After that, you probably have at least a few dollars floating around the market somewhere.
If you ever end up in a situation where your trades are disconnected from the app you used to make them, then Passiv is one of the best investment apps and management tools you could ask for.
What it does that is so impressive is bring together the accounts of all other trading and investment apps. That means you can still execute trades on those apps and hold money in them, but you do not have to change interfaces to go from one to another. You can even make them trade simultaneously.
You might be surprised at the kinds of opportunities this opens up. For one, it means you can have one bank account on one trading app, and then another bank account on a second app. Passiv will let you control them both at the same time, making the same trades. Why is that important? Well, how else might you manage two different people’s investments at the same time?
You can even use Passiv to automate your investments, though that is more advanced and there are better tools for that out there.
“There are better tools for that out there” can be said for most of the things Passiv offers you. It has a ton of features, but with the exception of the ability to bring accounts together, it is not the best at anything. Being the second or third best at a lot of things is still good though.
On top of that, most of the accounts it is compatible with are for trading platforms from the United States. That means a lot of the value of Passiv is dedicated to allowing it to trade in that country. The reason this is a drawback instead of an advantage is that it doesn’t pass that on to everyone.
The upsides of trading with the United States don’t matter if you are disallowed that privilege.
Automated investment has an interesting history. There was a time when it was thought of as cheating, both by the marketplace and the regulatory bodies which police the marketplace.
That was during the time when automated trading was restricted only to the super rich. Back when a computer with 500 megabytes of hard drive space was considered a future-proof wonder of the modern age, the idea of using a computer to execute trades for you was ludicrous and expensive.
Now that these kinds of technology are available to all kinds of people, however, regulations have responded by lightening. And that has given rise to apps like Moka, which specializes in passively trading your money to turn a small amount in a large amount.
The process is simple: You set up a weekly deposit into Moka (or use a single lump sum deposit). Then, Moka connects to the stock exchange to start trading. It takes incredibly low-risk trades. Basically, it buys stocks that are increasing in price, then sells once it has earned a penny.
This creates a steady growth of your money that you don’t have to micromanage.
Of course, some people want to have a hand in their trading, so it is not for everyone. This app is uninteresting to purists, as well as those who want to learn how to trade for themselves.
These two groups are very different (there is still overlap between them, of course), but they both have one thing in common: They will feel the fact that Moka has no way to manually buy, sell, or even learn about stocks. All you can do is trust it with your money to grow it very slowly.
We mentioned early on that most trading is done through trading stocks. But that is far from the only type of trading you can do. Alongside stocks are options, crypto, and other “securities” you can trade.
Wealthsimple is one of the best places for exploring these things. It gives you tutorials on what they are and how to use them that make them accessible. Not to mention the fact that they are rarer in Canada than in other countries, meaning you will have trouble getting them elsewhere.
This is yet another app that allows you to automate your trades too. They even give great advice on how to manage your investments in general, meaning that automated investing is as much about executing a plan you come up with as it is slowly growing your money over time.
The biggest issue with securities besides stocks is that they are almost always riskier. Options and foreign currency in particular are known to be volatile. Volatility is part of the appeal, as it means things can explode in value or shrink rapidly. But it is something you should be warned about.
We will go ahead and admit that this is not exactly an investment app in the way that the others are. This is an app for managing investments in the abstract sense.
It does not help you initiate them, but it does help you keep track of what they are bringing you and what their risks are.
That is where investing starts to get especially complicated. Imagine you have a stock you are holding for dividends. Borrowell will not only tell you how much it will make you, but also how much it might change over time, and the risks involved in the industry the company is in.
That’s a lot of information. It does the same with both existing and potential loans as well.
You might have already spotted it, but the complexity of the app is Borrowell’s biggest weakness. That works on two layers: First, you will have to get an understanding of what kinds of liabilities are out there and how they work in order to understand what the app is describing to you in the first place.
But on top of that, the sheer volume of information that Borrowell manages means that much of it has to fit into form pages. In short, rather than each page detailing risks being handwritten, specific tags and canned messages will be written and cobbled together to form the warnings.
This is part of what makes the information so hard to sift through.
Strictly speaking, Coinbase is an American company. But one of the great things about crypto is the fact that it can be traded internationally with ease.
This means you can access it in Canada, Europe, or the arctic circle. As long as there is internet, you can trade crypto with Coinbase.
Coinbase is totally focused on crypto, bringing hundreds of different currencies together. That means you have currencies that are designed to be traded quickly for income, as well as currencies which will grow over time. They also have a database to tell you how crypto works.
This is important, as many people are confused about how it works. They fill in the gaps with assumptions that cost them money. Coinbase allows you to be smarter than that.
We gave it away in the second paragraph: The biggest problem with Coinbase is the fact that it is totally focused on crypto. No stocks, no options, nothing but crypto. And if, like many people, you are skeptical of cryptocurrencies, then you will not have any use at all for Coinbase.
This is an even bigger drawback with the recent crypto crash, which saw some currencies disappearing entirely. That does not mean crypto is dead. That just means there are less eyes on it.
KOHO is a curious app. It is not a trading app, and while it has tools for balancing your budget and keeping track of your investments, it relies on outside apps to actually interact with those things.
What KOHO does is rather niche. When you get dividends, the money goes to your brokerage account. You have to withdraw them in order to spend them. This is a level of bookkeeping that can be prohibitive to some people. What if the dividends went straight into your pocket?
KOHO is an app and an associated prepaid card that let’s you do just that. Your investments will go straight to the card, allowing you to spend them without any hassle. This also makes it a great accessory for anyone looking to share the spoils of their investments with others.
It also works with automated trading accounts and other sources of passive income.
Like we said, it is a niche tool. Not everyone is going to have investments, dividends, and passive income sources like that. Not a lot of people are going to get to use KOHO as it was intended.
Still, that niche is not covered anywhere else.
It also does not allow you to directly interact with the financial instruments that fund the card. This is for the best, as it allows the card to be passed between people safely. They can see what goes into it and spend it, but they cannot interact with it.
The investment industry is bigger than you think. There are tons of avenues to make money if you know where to look. Finding out where to look is always the problem though.
That is why we recommend these eight apps. Between them, you are inevitably going to find some sort of investment that will prove to be valuable to you. Just be patient. Do not be afraid to ask questions. There is no shortcut to financial independence. But the money is there if you are able to take it.
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