# Getting started with $1000 To Learn Ropes



## matt72yard (Jan 17, 2017)

Hello, brand new to investing. Want to do everything myself and avoid unnecessary fees.

Figured I would join Questtrade with $1000, invest in a couple stocks, and learn the ropes. Could not even register. Too many questions I do not know the answer to.

Margin account? Registered & TFSA? FX & CFD trading?

Huh?

I just want to take my $1k, invest half in Exxon (or whatever), the second half in something else, and jump in?

This is how I learn. By doing.

What is the easiest way for me to jump in and get started? 

Any help is appreciated.


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## Oldroe (Sep 18, 2009)

Skin in the game is the only way to learn.

At this point don't worry about cost. I would suggest a Canadian Bank for the other other half and hit the books.


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## cashinstinct (Apr 4, 2009)

I would not suggest a margin account (that you can borrow to buy) FX & CFD trading, considering your current knowledge.

As for the type of account, do you have a TFSA account already ? If you have contribution rights left (most probably), you could start a TFSA account, which will mean that the gains and dividends will be tax-free.

However, you could also choose a RRSP account and get a tax deduction on your $1000 contribution to your account....

I would suggest a little reading before jumping in and getting started.


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## redsgomarching (Mar 6, 2016)

Learning by doing is great. But you should still read up on the basics to get started and on what these terms are. 
You wouldn't buy a car without doing research first right? 
Same thing here. How can you open a DIY brokerage account without understanding what questions are in the contract/account opening form?
Go through the form, google what you don't know, evaluate based on your position and then proceed.


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## matt72yard (Jan 17, 2017)

Thanks for the quick replies. Yes, my current knowledge is zero.

Cashinstinct, I do not even know what a margin account is. And I do not have a TFSA account, either. (Which I also do not know what it is.) 

I don't mind reading a little bit, if it is relevant. But I don't want an overview. I just want "What is the easiest way for a Canadian to jump in, with zero knowledge." I surely am not the first person ever to be in this position? (All of the terms and mumbo jumbo helped to keep me out of this for a long time.)

So you are recommending I start a "TFSA account"? Is that something I can do through Questrade, or I have to go to a bank first?

Can I not just "jump in" with $1000 I deposit? And not worry about whether it is tax free or not? I just want to get going and learn as I go, even if I don't do things as efficiently as possible? That is how I learn, by doing.

Thanks!


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## redsgomarching (Mar 6, 2016)

Well why would you want to pay taxes when there is an opportunity for you not to? And yes you can open the TFSA through questtrade.

I also learn by doing but the doing part or executing is still only part of that. the other part is still researching and finding answers yourself. (if you truly learn by doing as you say, this should be no problem)


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## matt72yard (Jan 17, 2017)

redsgomarching said:


> Learning by doing is great. But you should still read up on the basics to get started and on what these terms are.
> You wouldn't buy a car without doing research first right?
> Same thing here. How can you open a DIY brokerage account without understanding what questions are in the contract/account opening form?
> Go through the form, google what you don't know, evaluate based on your position and then proceed.


Actually, I might buy a car with no research, if it was cheap? And if someone knowledgable said to do it?

But thanks for the reply.

You guys know my background: No knowledge, just want to jump in fast. Only spending $1k -- no huge risk.

Can't a knowledgable person here say "Just open this type of account on this site and choose this and this and this and boom!", the same way my uncle might tell me "For your first car just to get from your house to work, look for a 2012 Mazda Whatever"?


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## cashinstinct (Apr 4, 2009)

example of model portfolios that allow you to invest in hundreds of companies :
http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-ETFs-2016.pdf


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## redsgomarching (Mar 6, 2016)

matt72yard said:


> Actually, I might buy a car with no research, if it was cheap? And if someone knowledgable said to do it?
> 
> But thanks for the reply.
> 
> ...


Well why don't you ask your uncle about this then?? also say bye to that 1000 if this is your attitude. 

You already tried opening a questtrade account and you couldn't even get passed the account opening documents.............


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## matt72yard (Jan 17, 2017)

So a TFSA is the way to go, in getting started?

I have googled it, and found this link: 

www dot dividendearner dot com / tfsa-explained

So I can invest up to 5k per year since 2009? 

So to get started with this, I can add 1K and just keep adding as I go? (It is not like I only have 1 chance per year or some nonsense, right? That is what worries me the most, is that there will be some gotchas that I don't foresee...)


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## matt72yard (Jan 17, 2017)

redsgomarching said:


> Well why don't you ask your uncle about this then?? also say bye to that 1000 if this is your attitude.
> 
> You already tried opening a questtrade account and you couldn't even get passed the account opening documents.............


Whoa, amigo? I don't mean to ruffle feathers. I appreciate your advice.


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## Pluto (Sep 12, 2013)

I think you already have stated the easiest way to get started: open an account, put in 1000, and buy two stocks. Its a great idea. At that point you are already ahead of 99%+ of most Canadians. Don't apply for the stuff you don't understand, and don't try to know everything all at once in the beginning. You can apply for all the bells and whistles later as needed. 

I agree with you, it is only 1000.00. Besides, losing a little money helps the concentration. 

Over time you will discover what type of investor you are as there are many different strategies. The Globe and mail has a feature called Strategy Lab showing the results of different strategies. It is worth while having a look. As you gain experience you will gravetate to the strategy you relate to the most. 

In this forum there are a many advisors who, in their mind, have the one and only answer for every one and what they "should do" and they will want to micromanage your every move. In reality there is no single set of investing rules, strategies, and "you shoulds" that apply to everyone, so follow you own intuition.


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## Eclectic12 (Oct 20, 2010)

matt72yard said:


> So a TFSA is the way to go, in getting started?


Had the TFSA been around, I wouldn't have been confident enough in my investing strategy to go this route at the start.

The upside is that where there are gains, there are no Canadian taxes, only American dividend withholding tax - if you buy certain US investments. As you are starting out, odds are higher of mistakes that mean losses. Losses in a TFSA means contribution room was used up with no benefit or possibility for future withdrawals to. 

The RRSP has a bit of the benefit in that the gov't loses on their taxes. The taxable account has the biggest benefit as a capital loss can used to reduce/eliminate capital gains.

One can decide "it's only $1K" but personally I'd rather pay a small amount of tax while sorting out what the plan is, or have a loss for future use. 




matt72yard said:


> So I can invest up to 5k per year since 2009?


Potentially ... if you were 18 or older in 2009, for each year you were a Canadian resident - amounts have been granted. You say you don't have a TFSA so you can't have used up any contribution room.

That should mean from 2009 to 2012, $5K a year was granted to you, then 2013 - 2014, $5.5K, 2015 was $10K then $5.5K for 2016 - 2017. This totals up to $52K TFSA contribution room available to you.
http://www.taxtips.ca/tfsa/contributions.htm

The most common things people seem to misunderstand are:
a) making a $5K contribution to a TFSA account uses up $5k of contribution room (i.e one should track it like a bank account).
b) withdrawals this tax year become TFSA contribution next year (ex. withdraw $5k in 2017 means there will an additional $5k contribution room in 2018).
c) the contribution room is granted to a person so opening three TFSA accounts means being sure deposits across all three accounts don't exceed the personal limit available.
d) a TFSA can hold almost the same investments as an RRSP so it is not limited to the cash savings accounts banks advertise.
e) the value of the TFSA has nothing to do with what room is available for making contributions.




matt72yard said:


> So to get started with this, I can add 1K and just keep adding as I go?


Maybe ... if you have available contribution room - you can add it whenever you want. Adding $$ means reducing the available TFSA contribution room so that one is sure one does not exceed the limit to trigger the over-contribution penalty (1% of the over contribution *per month*).

For example, have $52K of TFSA contribution room on Jan 1st, 2017, make a $1K TFSA contribution Jan 28th, 2017 ...
Current TFSA contribution room = available room before contribution made - contribution = $52K - $1K = $51K.

If no other action is taken and the 2018 TFSA contribution room granted is $5.5K,
Jan 1st 2018 TFSA contribution room = available TFSA contribution room + annual amount + last year's withdrawals
= $51K + $5.5K + $0 = $56.5K.




matt72yard said:


> (It is not like I only have 1 chance per year or some nonsense, right? That is what worries me the most, is that there will be some gotchas that I don't foresee...)


No ... though I am puzzled as to how you plan to avoid gotchas without starting with an overview, making sure you understand then moving into the details.

Keep in mind that you are learning a broad subject with many parts ... learning what you can, when you can is likely to help you avoid costly mistakes as well as expand what you are comfortable with and can do. After all, one doesn't start learning about car maintenance by looking at an engine rebuild then give up as "it's too complicated". 


Cheers


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## Oldroe (Sep 18, 2009)

This is huge subject . People get masters degrees to play this game. If you don't want to read and study.

Send me your 1k I will report back on how you are doing.


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## redsgomarching (Mar 6, 2016)

Oldroe said:


> This is huge subject . People get masters degrees to play this game. If you don't want to read and study.
> 
> Send me your 1k I will report back on how you are doing.


+1


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## matt72yard (Jan 17, 2017)

Oldroe said:


> This is huge subject . People get masters degrees to play this game. If you don't want to read and study.
> 
> Send me your 1k I will report back on how you are doing.


Haha. Please post your bank account info here, and I will send you that $$. 

Never said I didn't want to do *any* reading. I just want to jump in with as little reading as possible. 

*Then*, while I am learning by doing, of course I can and will read up and become familiar. But no, I do not believe this is Rocket Science and needs a Masters Degree, lol. That may be what you and the powers that be want to make me think, while you take my $$$, but nope.

Anyway, thanks for the replies everyone. There are some good nuggets in here. (And a couple cranky old dudes.)


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## mordko (Jan 23, 2016)

Keep in mind that Questrade will charge you $25/quarter "inactivity fee" if your account is less than $5K. 

And that the cost of regular trading with a $1000 account will represent a significant fraction of any gains.


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## hboy54 (Sep 16, 2016)

matt72yard said:


> There are some good nuggets in here. (And a couple cranky old dudes.)


Your decision of course to pay attention to the "cranky old dudes" or not. Just take under advisement that there are quite a few around here that have grown their portfolios into 7 figures.

Hboy54


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## Eclectic12 (Oct 20, 2010)

matt72yard said:


> ... Never said I didn't want to do *any* reading. I just want to jump in with as little reading as possible.
> *Then*, while I am learning by doing, of course I can and will read up and become familiar.


Question is ... will the little reading be enough to identify issues and avoid missteps?
If you go into it with the idea you've already lost the $1K and that it is the price of learning, it may not matter to you.

Learning on the fly meant my roommate was paid 20% less for taking the same risk. Had he been willing to discuss it or had read a bit more widely, this could have been avoided.

Of course it wasn't all bad as it was about 5x better than what he originally planned to do. :wink:


I'm not saying one has to be an expert, down to the lowest levels but some expensive lessons can be avoided by not being in a hurry.


Cheers


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## zylon (Oct 27, 2010)

I have only one suggestion:
1/ Go with the TFSA.

Learning about TFSA is a piece of cake compared to what needs to be learned about a non-registered account.

Some things you *don't* need to know in a TFSA:


Calculating and reporting your capital gains and losses
What is a superficial loss?
Adjusted Cost Base - ACB
Return Of Capital - ROC
Dividend Tax Credit
Foreign Tax Credit
The capital gains inclusion rate may rise


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## matt72yard (Jan 17, 2017)

Thanks Zylon, that is what I did. Or think I did.

I registered at virtualbrokers.com and indicated I wanted to use a TFSA account. We'll see if it takes. (I had to give banking info, where I will draw $$ from, and it will take a couple days to see if that lines up correctly.)

Thanks to any and all that have replied here. Even the naysayers! It''s all good. I am jumping in!

I will update this thread as I proceed to lose my $1k, or as things develop...


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## GreatLaker (Mar 23, 2014)

matt72yard said:


> Yes, my current knowledge is zero.


Finiki, the Canadian Financial Wiki is a great starting point: 
http://www.finiki.org/
http://www.finiki.org/wiki/Getting_started


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## matt72yard (Jan 17, 2017)

So my $$$ still hasn't gone through (said it may take 2-5 business days) and I have read up a bit.

Seems to me, the most surefire way to make $$$, and not pay someone else for managing things, is to:
1. open a TFSA account (I am in the process)
2. instead of buying 2 stocks, buy an ETF
3. do nothing

I mean, over the course of several years, an ETF has got to go up, right? If I am in it for the long haul, that is the way to go?

(I am not saying this is what I am going to do, but I am just seeing if I understand things.)

I have been reading up on The Motley Fool (http://www.fool.ca/13-steps-to-financial-freedom/)... does anyone else have any simple, "getting started" type of links? (No books.)

Thanks!


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## Oldroe (Sep 18, 2009)

You might look at DRIPS.

Be aware if you buy a dog it takes months to sell.


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## Mookie (Feb 29, 2012)

Hey Matt, glad to hear you’re starting out with a TFSA. That is definitely the best way to go unless your marginal tax rate is really high, in which case an RRSP might be better. Definitely avoid going with a non-registered account until you’ve maxed out your tax sheltered options. For now, just make sure you fully understand the TFSA contribution and withdrawal rules.

Since you’re starting out with a small amount, you really need to pay attention to fees, which could really eat into any gains you may be making. Double-check with Virtualbrokers to see if they charge any admin fees for accounts under a certain dollar amount. 

Buying a single balanced and diversified blue chip Canadian ETF is probably a good way to get started. 

Below is another getting started link for your consideration:
http://www.moneysense.ca/save/investing/index-funds/ultimate-guide-couch-potato-portfolio/

Also, keep reading and posting here on CMF. I have learned a lot from this forum over the years from the many knowledgeable investors that hang out here. You may not always agree with everything they say, but their perspective should make you think, and learn, which in turn will help you make better investing decisions.

Keep us posted on your progress!


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## Dilbert (Nov 20, 2016)

If you are opening a TFSA trading account, you might as well open three others: SDRSP, USD and a Canadian cash acount at the same time, providing there are no fees.

No harm in getting it done now. In the future you'll likely need all of them.


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## canew90 (Jul 13, 2016)

matt72yard said:


> Hello, brand new to investing. Want to do everything myself and avoid unnecessary fees.
> 
> Figured I would join Questtrade with $1000, invest in a couple stocks, and learn the ropes. Could not even register. Too many questions I do not know the answer to.
> 
> ...


It's just not the $1,000 but how much more you can afford and how often. I wrote a Two-Part article for MyOwnAdvisor, which may suit your needs. Just another path to consider.
http://www.myownadvisor.ca/try-this-average-retirement-plan-to-wealth-part-1/
http://www.myownadvisor.ca/try-this-average-retirement-plan-to-wealth-part-2-of-2/


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## matt72yard (Jan 17, 2017)

Thanks for the links, I will check them out!

Update: I entered the wrong Transit # on my bank account when setting things up, so tying my bank to VirtualBroker has been delayed at least a day. No worries, I have more time to read up a bit.

I am just using my regular personal bank account to transfer funds. Should I have opened a special account to do this first?


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## Eclectic12 (Oct 20, 2010)

^^^

I use my regular bank account (can transfer to all brokerage accounts, including registered ones). I have also used the ATM to deposit a cheque then the bank account to transfer to brokerage account.

I'm not sure what you mean by "open a special account" or what advantage you are thinking a special account would provide.


Cheers


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## matt72yard (Jan 17, 2017)

Eclectic12 said:


> I'm not sure what you mean by "open a special account" or what advantage you are thinking a special account would provide.


Ha, I am probably just showing my ignorance, but I was under the impression you could open TFSA accounts and RRSP accounts at a bank. Thought maybe that designation might lubricate the wheels between a discount online broker and my bank?

Listen, just wanted to say I appreciate the info you have provided throughout this thread, Eclectic12, it is much appreciated.

Thanks to you and others, I am now upgrading my original "Zero Knowledge" admission to "I have 0.01% Knowledge"! I am at least familiar with two new terms: "TFSA" and "ETF" which literally I had no knowledge of 3 days ago! Woohoo!!


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## Spudd (Oct 11, 2011)

matt72yard said:


> Ha, I am probably just showing my ignorance, but I was under the impression you could open TFSA accounts and RRSP accounts at a bank. Thought maybe that designation might lubricate the wheels between a discount online broker and my bank?


You can open those types of accounts at a bank, but if you plan to use a discount broker, there's no point to opening them at a bank as well. 

As you are a complete beginner I would propose you look at the Tangerine all-in-one fund solutions, or possibly a robo-advisor such as WealthSimple. This will be a lot less to worry about than your current plan, and gives you time to build up your knowledge along with your funds.


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## Eclectic12 (Oct 20, 2010)

matt72yard said:


> ... I was under the impression you could open TFSA accounts and RRSP accounts at a bank.


You can ... for the TFSA I have a bank savings account type for emergencies and a brokerage TFSA that can have a lot more than cash in it.




matt72yard said:


> ... Thought maybe that designation might lubricate the wheels between a discount online broker and my bank?


The opposite ... for most TFSA accounts, withdrawals are free from where a TFSA to TFSA transfer costs anywhere from $25 to $150, per transfer.

If cash in the bank TFSA is the source, then withdrawing from the bank TFSA at the end of Dec then contributing the same $$$, in Jan to the brokerage TFSA saves money.
It is a withdrawal so there is not withdrawal fee. There is also no risk of an over-contribution penalty as $100 withdrawn in Dec becomes $100 additional TFSA contribution room Jan of the following year.




matt72yard said:


> ... Listen, just wanted to say I appreciate the info you have provided throughout this thread, Eclectic12, it is much appreciated.


No problem ... we all started somewhere. 

IMO the biggest mistake people make is not learning a bit at a time, at their own pace.


Cheers


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## Eclectic12 (Oct 20, 2010)

Spudd said:


> You can open those types of accounts at a bank, but if you plan to use a discount broker, there's no point to opening them at a bank as well ...


On one hand, there is no point as it won't address the OP's "lubricate the wheels between bank/discount broker".

OTOH, it has been nice for me to have a bank TFSA to dip into for house expenses like a new roof without any concerns about having to sell anything in the broker account or HISA trail fees.


More accounts adds complexity so just opening another account without a plan is probably not a good idea.


Cheers


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## spdr1812 (Apr 8, 2016)

Try to keep the banking stuff simple for now maybe , i like having the trading platform within my bank for ease and speed of trasfers . Fire up a TFSA , dump a couple grand in there then STOP 

Grab an ETF like Mook said , stay with CAN $$ TSK ( take any extra math/conversion out for now ) then watch it for a week . Its not going to do much in a week being an ETF but you can learn the bare bones of barely even knowing what your looking at . 

Sounds like you want to dig is so grab a couple positions in TSK blue chips and giver . If you want to lay awake at night grab a couple small-caps and go along for the ride . I like Google Finance for on the go updates instead of having bank open on mobile unless doing a quick trade . 

I'm just hitting my 1st year of active trading and have barely scratched the surface , your entering the abyss , good luck to you


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## lonewolf :) (Sep 13, 2016)

money management first you have figured how much to put on table. ( beware of beta slipage )
Develop a method that gives you an edge that fits your personality
follow your method (other wise you heard going from one method to another)

If you can do the above will be ahead of the average investor


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## CPA Candidate (Dec 15, 2013)

matt72yard said:


> Hello, brand new to investing. Want to do everything myself and avoid unnecessary fees.
> 
> Figured I would join Questtrade with $1000, invest in a couple stocks, and learn the ropes. Could not even register. Too many questions I do not know the answer to.
> 
> ...


I think you need a $5k balance at Questrade in order to avoid a quarterly fee.


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## Spudd (Oct 11, 2011)

spdr1812 said:


> Grab an ETF like Mook said , stay with CAN $$ TSK ( take any extra math/conversion out for now ) then watch it for a week . Its not going to do much in a week being an ETF but you can learn the bare bones of barely even knowing what your looking at .



What is TSK?


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## mordko (Jan 23, 2016)

TSX


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## welsh-investor (Jan 5, 2017)

Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed, as well as any income earned in the account - for example, investment income and capital gains, is GENERALLY tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.


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## Bechard (Jan 21, 2017)

Matt, 

I say go ahead and get your feet wet. That is exactly how I went about doing my first trades. My first account was with Questrade so I will tell you how to proceed.

During account registration, open up a tax free savings account (TFSA) then proceed with filling in beneficiary information, drivers license etc. Once you have the account open and funded you will be ready to buy. Keep in mind that if you plan on buying an american stock, questrade will convert the cash automatically and exchange rate is horrible right now. I would suggest sticking to Canadian stocks with the $1,000. If you want to throw half in a dividend paying bank, I suggest throwing the other 50% in something like Aphria which is a small cap canibis stock. Risky but lots of potential. 

Let me know if you need anymore help.

Matt


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## matt72yard (Jan 17, 2017)

Thanks again for all the replies, folks...

So my micropayment to verify my bank account went through, but I got an email saying there is still a 2-5 day "Verification Process" on my registration. I guess I still have yet more time to read up.

I also have discovered that though VirtualBrokers allows you to set up an account with only $1k, to avoid a $25/quarter charge, you need to have > $5k in assets through them. That kinda sucks. Might as well have used Questtrade (which looked more user friendly). That said, I do have until April 1 to get my assets up to $5k, so it could happen!


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