Answers to investing questions you may be too embarrassed to ask

Have you ever had questions about investing that you were too embarrassed to ask? Don’t be. Making informed investing decisions includes asking questions. Here are some basic questions and answers that can help provide you with some investing confidence.

What is a mutual fund?

A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager. Here is how mutual funds work.

What is an advisor?

An advisor can provide advice in many areas, including: investing, financial planning, personal insurance, taxes, and estate planning. If an advisor is providing advice relating to investing in securities, they need to be registered, unless an exemption is available. Find out more about checking registration and understanding their category of registration.

How do I open an investing account?

Your local bank or registered investment firm can help you open an investing account. Before you open an account, figure out if you need a full-service investment firm, discount broker or portfolio manager. This article can help you decide and help you understand the difference between a cash account and a margin account. You can also learn about online investment advisors which are a hybrid of a full-service investment firm and a discount broker. Here are 7 questions to ask before you invest.

What is a common share?

A common share is the most common type of stock (in a company) you can buy. It represents ownership in a company and may give you voting rights – to elect directors and vote on some corporate matters. The value of the common share can increase or decrease depending on the company’s success.

What is a dividend?

A dividend is part of a company’s profits that it pays to shareholders in proportion to the total number of shares held. The Board of Directors sets the amount. For common shares, the amount varies. The company may not pay dividends if business is poor or the directors invest money in things like new equipment or buildings. Find out more about how stocks work. 

What is an ETF?

An exchange-traded fund (ETF) is an investment fund that holds a collection of investments, such as stocks or bonds owned by a group of investors and managed by a professional money manager. ETFs trade on a stock exchange and can be sold short or margined. You can also trade in futures and options on ETFs. Learn more about ETFs.

What is an RRSP?

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you use to save for retirement. RRSPs have special tax advantages. Here is how RRSPs work.

What is a TFSA?

A Tax-Free Savings Account (TFSA) lets you save tax-free for any goal. You earn contribution room every year (even if you do not set up a TFSA. You can hold a wide range of investments in a TFSA, including cash, GICs, bonds, stocks and mutual funds. Visit our TFSA hub for more TFSA basics.

What is an initial public offering?

An initial public offering (IPO) is the first sale of stock by a private company to the public. It’s often called “going public”. Find out more about the 5 reasons companies go public. 

What is a prospectus?

Generally, securities offered to the public in Ontario must be offered with a prospectus – a document that provides detailed information about the security and the company offering it. Here is information about how to get information on a company.

How do I trade on the stock market?

Before you start trading on a stock market, learn more about where to buy stocks and stock market basics. Understand your investing personality, create an investment plan, and check registration.

 

More questions? Head over to our Re: Investing website. Browse through the hundreds of investor questions we’ve already answered or ask your own questions to get clear, unbiased answers from a trusted source.

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