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How to Get Ready to Buy Shares of Stock in a Company through a Self Directed Account

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It’s very easy to place an order to buy stock using a BMO InvestorLine account, a RBC Direct Investing account, or a CIBC Investor’s Edge account. In fact, it may be a little TOO easy. Before you click that Submit Order button, there are some things to stop and consider. This article discusses a few things to do while you get ready to buy shares.

Things to Decide Before You Place an Order to Buy Shares

  • How many shares do you want to purchase?
  • Do you want to buy all of your shares in one purchase, or ease in over several months? (Note that each time you buy or sell shares you will have to pay a trading commission.)
  • What is the maximum price you are willing to pay per share?
  • Are you willing to take a risk of the price going up above what you expect to pay?
  • Are you willing to pay “too much” if the price drops below the current ask price if you set a fixed price to buy at?
  • What is your cost (commission) to make a purchase trade?

Remember that if you place a large order to purchase a stock that has a low volume of trades, you may not be able to buy all of your stock in one business day. If so, you will have to pay one trading commission for each day it takes to fill your order. (To be honest, though, if you can afford to buy that many shares I doubt the trading cost is going to matter to you!) Click to read a bit more about “partial fills”.

Decide Within Which Account You Wish to Own the Stock

You may have a non-registered regular trading account with your self directed brokerage. You may also have a TFSA account, a RRSP account and a RESP account. You will need to select which account the new shares are for before you make the purchase.

You can only make the purchase with cash already in the account, or with cash your will move into the account before the trade settles. If your contribution room is zero for a TFSA, RRSP, RESP or other registered account, remember you can not simply add more cash to the account. In that case you would have to sell another investment to be able to re-invest the cash into a new set of shares.

Click to review an article which describes How to Review Your Holdings in a BMO InvestorLine account. You can follow its instructions to:

  • check the Cash Balance in your account
  • check the status of your other investments

Funding Your Purchase

If you want to sell a mutual fund to pay for the stock, it will take at least today (if today is a business day, and if you are entering the order before the mutual fund cut-off time, usually 2:00 P.M. ET.) plus one additional business day for the cash to land in your account the morning of the second business day.

If you want to sell a deposit in a high interest savings account, it will also take today (if it’s a trading day) plus at least one additional business day for the cash to be ready to spend. For BMO’s own AAT770 there was an explicit warning message several times that it might take longer to get the cash. In my test, however, the cash was reported properly in my account on the morning of the second business day after I placed the sell order. This is not a guarantee it will work that way the next time though!

If you want to transfer money in from another account be prepared for it to be slow. Personally, I wouldn’t execute the trade until the cash was in the account.

If you want to make a new contribution I wouldn’t execute the trade until the cash was received. I find it slow to get new money into my account.

Review the Pricing History for the Equity

It’s usually a good idea to do a quick review of how the stock has been trading before entering a purchase order.

Click to review an article which describes How to Check the Trading History for a Stock Using InvestorLine. You can follow its instructions to:

  • Review the day’s information about bid, ask, high, low, open and previous close.
  • Look at the 52-week high and low, the EPS and  P/E ratio.
  • Check today’s trading history.
  • Check a chart of the trading history for 5 days; 1 month; 6 months; 1 year and 5 years.
  • Check the dividend information.

Review the Dividend Yield, Timing and Ex-Dividend Date to See If You Will Get Paid the Next Dividend

If it’s of interest, check the Ex-dividend date. You must have your purchase request filled BEFORE this date to receive the next dividend. So if it is April 29 and the Ex-Dividend date is April 29, it’s already too late to get the next dividend payment.

Check the Dividend Yield based on the current price, if it’s of interest. (Note the yield will flip up if the stock price drops and flip down if the stock price rises. You won’t get that exact yield unless you pay that exact price.)

Also remember that for some shares, there is often a dip in price both the first trading day after the stock goes Ex-dividend and the day the dividend is paid. You may want to defer your purchase to one of those days, although market conditions could eliminate any dip with no warning.

Last Thoughts Before You Place Your Buy Order Using a Self Directed Brokerage

So before you place your purchase request, you should have considered

  • How much you can pay and therefore what is the maximum price you can afford to pay for each share
  • What your commission (fee) is to buy the shares
  • Where the cash is coming from to pay and whether it will be in the account in time
  • Whether you will get the next dividend payment or not and whether that matters to you
  • Whether the stock is currently trading in a price range that appeals to you or whether it’s trading higher than you are prepared to pay

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Are there other considerations that should be made before clicking on that Submit Order button? What have you learned, perhaps the hard way, about purchasing shares? Please share your investing insights with a comment.

How to Order Cheques for a PC Financial No Fee Chequing Account

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Ok, first I opened a joint PC Financial chequing account and we funded it by depositing a cheque at a CIBC bank machine. Next I paid a bill from my account online. Our first set of cheques arrived in the mail on the second Tuesday after the Saturday that we opened the account. But I wanted to order another set of paper cheques. First, they only send you 50 cheques initially and we need tons to keep up with our children’s insatiable demand for small amounts of money for activities. Second, I have this terrible fear that PC Financial will suddenly start charging a fee for cheques just because I have finally opened an account. (I have extremely good luck with this kind of thing.) So I decided to try to order a second batch of 50 cheques using their online service. You can also order cheques for your PC Financial no fee account by phoning them at 1-8. Instead, this is what I did.

Ordering Cheques from PC Financial

There are a few changes to these steps. You may want to check the newer article: President’s Choice Financial Is Closing and Becoming Simplii by CIBC So I’m Ordering More Cheques

  1. To sign In to your PC Financial account/s
    1. Go to http://www.pcfinancial.ca/
    2. Make sure Online Banking is selected from the drop down list in the top right corner of the screen, then
    3. Click the Go button.
    4. In the Card Number field, type the number on your debit card.
      Do NOT type your account number. (Weird but true.)
      Do NOT click to select Save Bank Card. This is a terrible idea. Why give someone half the information to break into your account after they steal your computer?!
    5. In the Password field, type the password. (This is your long password, not the shorter one for telephone banking.)
    6. Click on the Sign In button.
  2. From the list across the top of the screen, click on: special requests.
  3. Under the account services section, click on the link called: order cheques.
    The Order Cheques screen will open.
    PC Financial reminds you that you have to change your address at least 24 business hours before you order new cheques. If your address has changed deal with that first. If your address is fine you can continue.
  4. If you have more than one chequing account, in the Order cheques for which account? drop-down list, select the correct account.
  5. To order the free cheques, click on the button called: quick order now.
  6. You’re done!
  7. If so desired, click on the button called: return to account services; or
    If you are not going to do anything else click on the Sign Out button.
    For extra security, close your browser session.

The cheques are ordered and should arrive in 7-10 business days.

PC Financial warns you that you cannot order another batch for at least 10 business days.

To Check on the Status of your Cheque Order with PC Financial

  1. Sign in to your account/s.
  2. From the list across the top of the screen, click on: special requests.
  3. Under the account services section, click on the link called: order cheques.
  4. On the Order Cheques screen, near the top, click on the View your status link.
  5. You will see a reference number and a status.
  6. Click on the Sign Out button and close your browser session.

Interestingly enough, seconds after I ordered my cheques, the status is reported as: complete.

So I guess there isn’t much information provided here, as I certainly don’t have the cheques yet, and I doubt they mailed them seconds after I ordered them. I’ll have to try to remember to check this again (notice the little pun on “cheque”!) to see if it ever includes info like when they were mailed, etc. I suspect it doesn’t.

When Will I Get my Cheques from PC Financial?

When we opened a new account, we received our cheques in the mailbox 7 business days later.

I have just ordered my second set of cheques online and I will report when they arrive. I ordered the cheques on May 2. They arrived Monday, May 13, 2013.

The PC Financial website says that cheques should arrive by mail within 7-10 business days after the order is placed.

I have just ordered another batch on Tuesday, February 25, 2014. They arrived on Monday, March 3. That’s just 3 business days!

What If I Want Really Fancy Cheques from PC Financial?

You may have become so used to spending money to buy cheques that you have an irresistible need to keep paying for them. Or perhaps you really think the recipients of your cheques gasp in astonishment at the amazing works of art underneath your exquisite penmanship. If so, you may be pleased to know there are cheques you can order for your PC Financial account that cost you money and have elaborate graphics. These cheques are actually sold by Davis & Henderson but the money to pay for them will be directly removed from your chequing account.

If you want to order this type of cheque, you can do so from the Order Cheques screen, by clicking on the button called: custom order now.

Because I never want to spend money on cheques again (although I will likely have to) I have not tested what happens once you click on that button. Perhaps someone who has will be kind enough to share their experiences with a comment. For now, be careful about what you are agreeing to spend if you do click.

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Do you still have to use cheques? Does paying for new cheques make you wince? Please share your experiences with a comment.