Direct Investing on the TSX
The simplest way to invest on the TSX is also the most traditional method: buy shares in publicly traded companies like RBC, BCE or RIM. But how exactly do you buy shares in these companies? You can't simply walk into the stock exchange and ask to buy. Instead, you have to use the services of a broker. There are two main types of brokers that serve stock market investors: discount and full service brokers.
In addition to the discount broker services offered by Canada's large banks, there are other companies that provide brokerage services. If you are a confident and educated investor, using a discount broker is an excellent option. Most brokerage services offer a variety of research services such as charts, historical stock prices, analyst ratings, technical research and reports. Commissions charged to buy or sell can range from $10 per trade to $30 per trade. Generally, the larger your portfolio the lower commissions you can expect to pay. Once you buy shares or other securities, there are very few costs to worry about. The main disadvantage to this investing method is that you cannot ask the company for advice, financial planning or other assistance.
Full Service Brokers
For investors with more than $500,000 to $1,000,000 to invest, seeking the service of a private bank or full service broker can be an excellent option. These services can help you build an investment portfolio that meets your needs. In addition, you can often get financial planning and tax planning advice from these organizations. For example, you can find out how to build a portfolio that is not too heavily weighted towards natural resource firms and financials, two industries that make up a very large share of the Toronto Stock Exchange (TSX). The fees charged for these services are generally much higher than in a discount brokerage, but one does tend to receive much more advice and service as a result.