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Are you ready for self-directed investing?

30 August 2022 by National Bank
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Want to get started as a self-directed investor? Whether you’re looking to buy a few stocks occasionally or take complete control of your investments, a number of solutions are available. Read on for an overview of what you’ll need to know to get started as a self-directed investor.

About self-directed investing

Self-directed investing options

Self-directed investing (via an online broker, also known as a direct or discount brokerage) offers you a wide variety of choices. You can build your investment portfolio exactly the way you want it. You can include:

→ For help understanding investing terminology, read our article: “Your guide to investments: Read before investing.”

You’ll have to carry out the trades yourself. Like buying or selling securities.

Self-directed investing generally offers more choice than investing with the help of an advisor from your financial institution. This is the main difference between the two options.

That said, you may be perfectly happy with the services provided by your advisor. You may well find that investing with the full or partial assistance of a specialist is the right choice for you, even though your options will be more limited.

What self-directed investing involves

Being a self-directed investor requires more time and effort than doing it with assistance. Exactly how much work is involved will vary from one person to the next. It all depends on your goals, your strategy and your areas of interest.

In summary: 

  • You’ll probably need to devote a significant amount of time if you plan to manage all your assets yourself and try to take advantage of short-term market fluctuations. 
  • You probably won’t need to invest much time or effort if you’re planning to invest in one or a handful of stocks with a view to creating long-term growth.


Getting started with self-directed investing

Choosing an online brokerage platform

There are a number of online trading platforms to help you get started in self-directed investing. Many large financial institutions offer this service.

While some people will opt for the services offered by their bank, there are other factors that you may want to consider. Here are four:

1. Trading commissions or annual fees

Each platform has its own pricing policy. Some transactions may be free, while others may incur a cost. Keep an eye on commissions and administration fees. Some platforms will waive fees if you maintain a minimum balance in your account.

Expert tip:

Think about your needs and compare prices before settling on a direct brokerage platform.

Why pay when it’s free? 0$ commission at any time with NBDB

2. Features

Most platforms offer similar options and features. In most cases, you’ll be able to carry out the same transactions and access the same products.

The differences lie mainly in the user experience. This includes:

  • Interface design
  • Ability to customize alerts

However, some advanced options may only be available on certain trading platforms.

Another difference you might notice is the way results and reports are presented. While you should still have access to the same data, some platforms are more user-friendly than others when it comes to how data is presented.

3. Knowledge and training

The amount of information, tools or training offered varies from one platform to another.

Pro tip:

Opt for a platform that gives you access to content and analysis that’s relevant for you.

4. Customer service

When it comes to customer service, such as being able to speak with a specialist to ask questions or get help, not all platforms are created equal.

You might have questions about analysis tools or the stock market, especially when you’re starting out. Being able to get answers quickly is a major benefit.

Self-directed investing, step by step

Once you’ve chosen your platform, you’ll have access to the tools you need to start self-directed investing.

You’ll be able to carry out the following steps, in this order:

  • Open a brokerage account
  • Link your brokerage account to your bank account
  • Transfer funds from your bank account to your brokerage account
  • Choose your investments (stocks, bonds, etc.) and your investment vehicles (TFSAs, RRSPs, non-registered accounts, etc.)
  • Buy and sell securities

Making the right choices as a self-directed investor

Making good decisions as a self-directed investor means:

  • Doing your research
  • Staying true to your investor profile
  • Reflecting on your goals (e.g., saving for retirement)

A wealth of information about stock values and market trends is available online. To sift the good advice from the bad, you’ll need to use common sense.

Your direct brokerage platform is a reliable source of information. Brokers are subject to regulatory control, and the information they offer must be approved by experts.

Exercise caution when it comes to information from businesses, forums or sites you don’t recognize or are unsure about. The allure of a profit can lead to bad investment decisions. If something seems too good to be true, it probably is.

The golden rule: If someone promises you a big profit in a short time, take it with a grain of salt.

While many investors prefer to rely on expert advisors, others swear by self-directed investing. Both approaches have their merits and can help you achieve your financial goals.  It’s up to you to decide which option is right for you. To get started as a self-directed investor easily and at a low cost:

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