Is there a minimum age for investing in stocks?

Question

i'm 18 and live in Canada. i don't have a credit card or checking account, but i have a part-time job and i'm a university student. would this show that i'm responsible enough to invest in stocks?

i want to get started, but i heard that minors may need their parents to sign forms and things for them. i don't want my parents to know what i invest in or how much money i use for stocks. is there a law like this in Canada?

and one last question. if i want to start investing, how do i do it?

Answer 1

if you're 18, with a sin number, you probably can open up your own investment account.  your basic choices are whether to invest in an rsp or  in a regular taxable investment account.  at your age, consider setting up an rsp investment account.  any capital gains you recognize on sale of investments are sheltered as long as you keep the proceeds in the rsp investment account to be reinvested at a later time.  you have an opportunity to utilize the earned income (a tax term) you generate from your part-time job to make tax deductible rsp contributions so you should take advantage of the opportunity to reduce your personal tax bill and to grow your investment capital.

now chances are, you may accumulate more savings that you can contribute into an rsp.  in that case, you can also open up a regular investment account to invest the excess cash you have on top of your rsp contributions.  unfortunately, any capital gains you recognize in a regular investment account has to be declared in your annual tax return  and you may be subject to tax on it.

regardless of how you employ the funds (through a rsp or a regular investment account or both), start off slow with regular deposits in an established balanced mutual fund (a mutual fund that is actively managed by professionals to hold both equities and bonds).  when i say established, i mean a balanced mutual fund that has a respectable track record in comparison to its peers.  a good research site for mutual funds is morningstar.com.  buy units in the mutual fund regularly and expect your fluctuate to the down and upside.  however, over the long term, you should experience a net gain in your investment capital.  

while you let your capital grow, do formal investment research at the local library to learn more about directly investing in individual stocks and bonds.  when you think you know what you're about to do, stop!  the next step is to perform paper transactions of individual securities to see if your understanding of the financial markets makes sense.  only if your simulated investment strategy objectively shows you consistently make wise investment decisions should you look at directly investing future capital into individual stocks.

what some people find is that they either lack the aptitude and/or attitude to properly invest.  as a result, they will say hey, individual stock investing isn't for me.  i would rather spend my time doing other more enjoyable things than reading annual and quarterly reports and financials.  i'll just invest through mutual funds and that is perfectly fine.

one last thing, stay away from trading or flipping stocks, options, futures, currencies, etc.  it's highly risky and you can easily lose everything in a matter of minutes.  people make it sound exciting and a quick way to make a buck, but many people also end up losing everything when they try.

i would encourage you to ask your parents about how they invest.  most parents want their children to learn from their mistakes and will have reasonable advice to offer from lessons learned.  listening doesn't cost you anything.  however, if you don't listen and make the same mistake they did, it could cost you thousands of dollars.

good luck.

Answer 2

in Canada you have to be 19 before you can invest without having a parent signature

Answer 3

To answer the last part of your question, here is a good website to learn about investing and stock trading:

http://www.investopedia.com/beginner.asp

This website has a stock simulator where you can open a free account and practice trading stocks with virtual money.  You can even open a Canadian Dollar account there and practice trading stocks on the Toronto Stock Exchange.

When you are ready to start trading with real money.  Then all you need to do is open an account at a discount brokerage.  And after you deposit your money in your account, then you can trade over the internet from your home.  Here is a list of Canadian Discount Brokers:

http://www.ndir.com/SI/brokers/discount....