Types of Affordable Stocks
Before you start your affordable investment journey, it’s important to know that there are different types of affordable out there. You don’t have to stick with traditional stocks when investing in the stock market. Let’s take a look.
Index Funds
One of the most popular types of stock market investments is index funds. You may know them as mutual funds,d exchange-traded funds (ETFs)s, and a variety of other investment vehicles. These types of investments are often used for RRSPs and other retirement accounts, but they can also be used as general investments.
The idea behind index funds is to replicate the performance of specific markets such as the TSX and Nasdaq. They passively track performance by holding the same stocks as the index. This makes them easier to manage than actively managed funds and also cheaper.
One of the reasons that index funds are so popular, especially with those who are new to investing or have little money, is that you can put a little money into a lot of stocks. This allows for instant diversification and to control how much risk you’d like to take. It also gives you exposure to the overall market in respective industries. On top of that, you can build long-term growth without compromising your current financial position. Instead of buying stocks separately, index funds can give you more consistent cash flows and more structured investment returns.
Blue Chip Stocks
If you want to invest money directly into the stock market without spending too much, a good option is a blue-chip stock. Blue-chip stocks are stable, reliable, and perform well on the market. The reduced risk and lower cost make them a good investment for those just starting.
The great thing about blue-chip stocks is that they’re well-known companies that you’ve probably heard of. They’re all financially sound and have a history of strong market performance. They have large market capitalization and consistent returns over time.
One of the biggest reasons these types of stocks are popular is that they require little research and offer less risk. This is because the notoriety of these companies shields them from many of the market fluctuations that smaller companies might face. They also pay dividends, providing consistent passive income. It might not be as large as a smaller company, but its income is consistent, which can build wealth over time.
Dividend Stocks
On the stock market, many companies provide dividends to their shareholders. Dividend payments are provided either monthly or quarterly, depending on the company. Because you don’t have to sell these stocks to start turning a profit (capital appreciation), it’s a great start for those looking to build their wealth over time.
Not only do dividend-paying companies provide a supplemental source of income, but dividend stocks offer less volatility than stocks that don’t pay dividends. This is because companies that provide dividends are often more financially stable and have strong cash flows. You can also invest your dividend earnings and earn more by selling your stock.
Fractional Shares
Another way to get started in the stock market with limited funds is with fractional shares. Fractional shares allow you to purchase partial shares. This allows you to benefit from buying expensive shares without having to buy the whole stock. They also let you customize your portfolio to match your investment goals.
Affordable Stocks to Choose From
When it comes to stocks, there are plenty of affordable options out there to help with your investment strategy. That said, the stock’s price isn’t the only thing you need to consider. It’s also important to consider other factors of the stock, such as risk factors and the likelihood of a return.
Eldorado Gold Corp (ELD)
Eldorado Gold Corp is a Canadian company that operates gold mines in Canada, Turkey, and Greece. It was founded in 1991 and has over 4,800 employees. Its annual revenue is estimated at around 618 million.
Since Eldorado is a gold company, many beginner investors choose it as a way of investing in gold through the stock market. Since they’re relatively affordable, they’re also a great choice. Here is what their stock looks like.
| Stock Price | $45.53 |
| Market Cap | 11.89B |
| Average Volume | 862.62K |
| P/E Ratio | 11.73 |
| Dividend Yield | 0.89% |
Bombardier Inc (BBD-B.TO)
Bombardier Inc. is a Canadian aircraft manufacturing company. That said, they’re also known for manufacturing snowmobiles. In fact, the company was founded in 1942 by Joseph-Armand Bombardier to market snowmobiles. After that, they transitioned into building aircraft. Now, the company is headquartered in Montreal and operates worldwide.
| Stock Price | $18.78 |
| Market Cap | 29.89B |
| Average Volume | 1.38K |
| P/E Ratio | 1.51 |
| Dividend Yield | — |
Cenovus Energy Inc (CVE)
Cenovus Energy is a natural gas and oil company that is based in Calgary, Alberta. While this company was founded in 2009, it was formed from the split of another company and can be traced back to the 1880s. They’re currently the second-largest Canadian oil and natural gas company as well as the second-largest Canadian-based refiner and upgrader.
| Stock Price | $28.16 |
| Market Cap | 52.78B USD |
| Average Volume | 8.36M |
| P/E Ratio | 15.46 |
| Dividend Yield | 2.29% |
Cameco Corp (CCO)
Cameco Corp is one of the largest producers of uranium fuel worldwide. Their head office is located in Saskatchewan, specifically Saskatoon; they’re one of the largest employers of Indigenous people in Canada. Their land holdings currently consist of 1.8 million acres.
| Stock Price | $152.29 |
| Market Cap | 66.32B |
| Average Volume | 857.74K |
| P/E Ratio | 101.97 |
| Dividend Yield | 0.16% |
Blackberry LTD (BB)
BlackBerry is a Canadian software company best known for manufacturing cell phones. Now, this company, which has been around since 1984, has transitioned into secure communications and the Internet of Things. The fact that this company has been around for so long and has been able to pivot is a great investment for all stock investors.
| Stock Price | $12.23 |
| Market Cap | 7.17B |
| Average Volume | 5.12M |
| P/E Ratio | 99.35 |
| Dividend Yield | – |
BRP Inc (DOO)
BRP, better known as Bombardier Recreational Products, is a Canadian manufacturer of snowmobiles, ATVs, and other recreational equipment. They’re a subsidiary of Bombardier, a company founded in 1942.
| Stock Price | $82.98 |
| Market Cap | 6.11B |
| Average Volume | 425.64K |
| P/E Ratio | 17.86 |
| Dividend Yield | 1.21% |
Iamgold Corp (IMG)
Iamgold Corp is another gold company that’s headquartered in Toronto, Ontario. They own and operate gold mines in Canada and Burkina Fusa. They’ve been incorporated since 1990 and have a long history of good returns and stability on the stock market.
| Stock Price | $24.24 |
| Market Cap | 14.01B |
| Average Volume | 1.67M |
| P/E Ratio | 10.24 |
| Dividend Yield | – |
Power Corporation of Canada (POW)
Power Corporation of Canada is headquartered in Montreal, Canada. They were founded in 1925 and are a prominent management and holding company focused on financial services across North America, Europe, and Asia. They hold a variety of investments, including insurance, retirement, and others.
| Stock Price | $81.22 |
| Market Cap | 46.75B |
| Average Volume | 1.75M |
| P/E Ratio | 19.48 |
| Dividend Yield | 3.29% |
Best Stocks Under $20 and Penny Stocks
While we’ve already seen some great stocks at great prices, here are a few more that are a great choice for under $10.
Pulse Seismic (PSD)
Pulse Seismic is a market leader in energy data. They’re known for delivering the largest 2D and 3D data library in the Western Canadian Energy Sector. They’re also expanding into different forms of energy, including geothermal, lithium, carbon capture, utilization, and sequestration and helium extraction.
| Stock Price | $3.19 |
| Market Cap | 161.78M |
| Average Volume | 55.44K |
| P/E Ratio | 19.32 |
| Dividend Yield | 2.35% |
Silvercorp Metals (SVM)
Silvercorp Metals is a mining company that is based in Vancouver, Canada. They focus on the acquisition, exploration and development of properties that contain silver. They’re actually considered to be China’s largest silver producer.
Like many of the other companies that we’ve discussed, this company was founded in 1991. They’ve been around long enough to maintain consistent profits and provide a stable investment for experienced and new investors alike.
| Stock Price | $17.23 |
| Market Cap | 3.81B |
| Average Volume | 972.52K |
| P/E Ratio | – |
| Dividend Yield | 0.20% |
PertroTal (TAL)
PetroTal is domiciled in Calgary, Alberta, but it is headquartered in Houston, Texas. They were founded in 1979 and have a long history of good returns. Like many other oil producers, they’re also committed to providing and maintaining a sustainable future.
| Stock Price | $0.58 |
| Market Cap | 533.79M |
| Average Volume | 1.13M |
| P/E Ratio | 13.75 |
| Dividend Yield | – |
How To Start Affordably Investing
When it comes to investing in Canada, the simplest way is to start using an online brokerage account. Many online brokerages offer the tools, up-to-date market news and education you need to make informed investment decisions using your online investment account. They also have very affordable rates and have low management fees. That said, there are plenty of different online brokerages to choose from based on the types of investments that you’re looking for.
If you don’t want to go with an online brokerage, you can also choose to use an investment broker. However, investment brokers are more expensive than online brokerages. This is because physical brokerages more actively manage your accounts, which have higher management fees. However, they also come with professional advice that can help reduce your overall investment risk.
How Much Money You Need to Start Investing
There’s a common misconception that you need a lot of money to start investing. However, that’s not really the case. You can start investing with just $1. This is due to fractional shares and zero-commission trading.
However, just because you aren’t spending much, that doesn’t mean there aren’t growth prospects. You can still set yourself up for future growth and financial stability with beginner-friendly stocks.
Safe Stocks for Beginners
In general, all stocks have a risk tolerance. That said, going with well-known stocks with a strong track record and good profit margins is a safer bet. You also want to go with a stock that pays dividends. Companies that pay dividends are usually more financially stable. For those who are new to investing, this is much less risky.
When it comes to choosing a safe stock, cheaper isn’t always the best. However, many cheap stocks are safe. To make a good choice, though, it’s important to do your research. Looking into a few years’ worth of history, market trends, and the specifics of the stock can usually tell you enough to help you make a decision.
Purchasing Stocks in Canada Without a Broker
Purchasing stocks without a broker is also known as self-directed investing. Online brokerages in Canada offer this approach to investing. Before you begin, though, you must choose an online brokerage that offers the types of stock you’re interested in investing in. They also offer a variety of investment accounts to fit your needs. You can even link your bank account to make your investing simpler.
Depending on which brokerage you use, fees will vary. The information and investment advice available to you to support your investment journey will vary as well. The great thing about online brokerages, though, is that you don’t just have to stick to one. You can use them to gather a variety of different investments to help diversify your portfolio. This is another factor that helps reduce your overall risk when you’re investing.
A great way to prepare for your investment journey is with a paper trading account. These accounts allow you to invest in stocks using fake money to practice before you dive into the real thing. It’s a great way for novice investors to get comfortable before they start investing for real.
The Importance of Diversification
No matter what type of investing you prefer, broad market exposure and diversification are the keys to mitigating your risk. Not only should you diversify your portfolio with different investment types, but you should also vary the different sectors that you choose to invest in. Even if you choose to use financial advisors, this is the strategy that they will use.
Even if you’re just intending to focus on stock investing, there are some great ways to diversify. You can go with index funds or individual stocks; there are growth stocks, large-cap stocks, small-cap stocks, meme stocks, and many other types.
Principles of Investing
Many new investors choose to work with a certified financial advisor, but one of the most important things that you can learn to reach your investment goals is investing principles. These are:
- Invest early
- Invest regularly
- Invest enough
- Have a plan
- Diversity
Not only do these principles help with risk management in the event of an economic downturn, but they also make it so you can take a little more risk with your portfolio. If you want to invest in different asset classes and smaller companies, following these principles can help reduce your risk of loss. That said, these key factors aren’t foolproof. You still need to follow financial news, look for strong balance sheets, and invest in a broad range of stocks to help you earn passive income and reach your financial goals.
Are Fractional Shares Worth it for Small Investors?
You might be surprised to learn this, but fractional shares are worth it for small investors. They remove the barriers of investing in more expensive stocks by allowing you to invest whatever you have and build consistent revenue with diversified revenue streams.
Should Beginners Pick Stocks or Purchase ETFs?
When you start investing with limited capital, ETFs are the better choice. This is because they already hold a diversified portfolio. Single stocks, on the other hand, take much more research, and it’s easy to pick wrong.
Depending on the ETF you choose, you gain exposure to multiple different stocks, get consistent dividend payments, and can find yourself in a strong market position with a lot of growth potential. Many who invest in ETFs also choose to reinvest profits.
The Safest Stock for a Beginner
While there is no safest stock for beginners due to economic fluctuations, ETFs that track broad market indexes are a good choice. However, if you do choose a stock, Fortis Inc. is considered the safest choice.
While economic indicators and industry trends are important factors in choosing the right stock, Fortis is considered safe because people need power and gas to live. This means that they are heavily insulated from broad market crashes and recessions. The company’s business model is encouraging to many investors, and it has a track record of consistent dividends that increase each year.
How Long Beginners Should Hold Their First Stock
When it comes to investing, steady growth is how you earn your money. This is why it’s generally recommended to hold your first stock for 3 to 5 years. Unless the company’s core business model fundamentally breaks, you should avoid panic selling in moments of poor performance because market fluctuations are normal.
Best Canadian Blue-Chip Stocks Under $50
Blue chip stocks are shares in large, well-established companies with dependable earnings and dominant positions in their industries. Finding these for under $50 is a great way to earn some consistent income without breaking the bank.
That said, while these stocks are under $50 per share, you still need to consider account maintenance fees and trading platform fees into your budget. Keeping expense ratios low is always a good idea.
BCE Inc (BCE)
This company, also known as Bell Canada Enterprises, is well positioned in the market. When it comes to money investing, they’re a good choice for investors because they’re under $50 per share, and they’re one of the largest telecommunication companies in the country.
| Share Price | $34.39 |
| Market Cap | 32.04B CAD |
| Average Volume | 3.56M |
| P/E Ratio | 5.09 |
| Dividend Yield | 5.09% |
Brookfield Infrastructure Partners L.P (BIP.UN)
This company engages in the acquisition and management of infrastructure assets worldwide. They began trading on the TSX and NYSE in 2020 and are used as a stable, long-term investment in diversified portfolios.
| Share Price | $26.21 |
| Market Cap | 18.11B USD |
| Average Volume | 4.69K |
| P/E Ratio | – |
| Dividend Yield | – |
Best Dividend Reinvestment Plans for Small Investors
If you’re a small investor looking to invest in Dividend Reinvestment Plans (DRIPs), then your best option is brokerage-based fractional share DRIPs that are paired with low-cost dividend ETFs or blue-chip stocks. They allow you to reinvent tiny payouts into brand-new whole shares, or even fictional shares, without having to pay any commission fees.
Avoid Common Beginner Stock-Picking Mistakes
When you’re new to investing, there are quite a few mistakes that can be easily made. Not looking into company news, not paying attention to key metrics and trying to achieve rapid growth are just a few of these.
The biggest mistake that beginner investors make is failing to diversify. Putting all your capital in one place makes you very vulnerable during times of struggle. You can avoid this by investing in different stocks in different sectors. You can also invest in ETFs, which are already diversified and expose you to hundreds of stocks all at once.
Another common mistake is purchasing a stock because it’s trending. You should always do your own research before you invest. This includes looking at a company’s business model, balance sheets and revenue growth.
Panic selling is something that many new investors also do. You should base your trades on logic, not on market extremes. Things usually have a way of balancing out, and the research will tell you more than moments of volatility.
How to Read a Stock’s Annual Report as a Beginner
When you’re new to investing, reading the stock’s annual report can help you make an informed decision. Whether you’re investing in cloud computing or consumer health products, this information can make all the difference.
To find these reports, you’re going to access Canada’s regulatory database via the SEDAR+ Public Search. You can also go to the company’s website; they may have it listed there. Usually, management and CEO’s also provide a statement regarding the company’s recent successes and failures.
Next, analyze the financial statements. Really look at the income statements, balance sheets, and cash flow statements to gauge the company’s performance. You should also look at the fine print. These explain how exactly all the numbers were calculated.
Free Stock Research Tools for Canadian Beginners
With the internet, there are so many free stock research tools out there that you can utilize. Some of these include;
- Yahoo Finance
- Google Finance
- TMX Money
- Investing.com
Bank Stocks Vs Utility Stocks for First-Time Investors
As a first-time investor, the amount of stocks out there to choose from can be very overwhelming. This is why most investors choose to invest in things they know. This makes both bank stocks and utility stocks very popular.
As a new investor, utility stocks are the recommended way to go. This is because they’re reliable, have steadily increasing dividend yields, and are risk-averse. They’re best for income-focused beginners looking to build long-term wealth.
Bank stocks are good because they have strong growth potential during economic booms. However, they are quite volatile during recessions. They’re a better option for investors looking to balance moderate dividend income with overall portfolio growth.
