Investing on your own in the stock market

Thinking about investing in the stock market on your own, without investment advice? It may be a good idea, but you should take the time to make sure you’re properly prepared.

Generally speaking, investing on your own requires more time and knowledge than investing with a professional.

If you want to build your portfolio with individual securities such as shares, you’ll need to perform the appropriate financial and economic analyses of the companies you’re considering investing in. If you have limited time or knowledge, you might consider investing in investment funds, such as mutual funds or exchange-traded funds.

You will be responsible for your decisions and the results, good or bad.

It’s better to use an investment professional if you don’t have a lot of time to gather and analyze relevant information about your investments or track them.

Before you invest on your own in the stock market on a discount brokerage platform, you should:

Determine your investor profile

First determine your investor profile. The profile is based on such things as your objectives, financial situation, risk tolerance and investment knowledge.

Would you lose any sleep if your investments dropped in value? If the market declines sharply, it is often recommended that you don’t panic and that you hold on to your securities so you don’t take an actual loss.

You’ll need your money and have to sell your investments in the short, medium or long term? If you need to sell them in the short term (for example, within a few months), you should probably choose safe, liquid investments.

Your investor profile

Are you a conservative or aggressive investor? This educational calculator estimates your investor profile by taking into account both your financial capacity and your risk-taking ability. Try it now!

Want to invest in shares on the stock market?

Investing in shares on the stock market requires knowledge and expertise, and it carries risks.

Before investing in the shares of a publicly traded company, you need to understand and assess the business, risk exposure, capital structure, financial performance, indebtedness and other facets of the company.

Analyzing these and other aspects is essential to maximize your chances of making a profit on your investment. This analysis requires familiarizing yourself with the company’s financial statements and the information they provide on its performance, financial position and cash flow situation. A knowledge and understanding of key financial ratios  is also important.


Think you can spot undervalued securities? Think you can tell when it’s the right time to enter the market? Think you can “beat the indexes”? Few of even the most sophisticated investors possess these abilities.

End of the warning

A stock’s value is also influenced by many external factors, including the general economic environment, political or financial crises, trade tensions between countries, natural disasters, and public health issues.

Did you know?

A study has revealed that the mean annual return of investors who trade frequently (buy and sell) is 5% lower than that of  investors who hold their investments for longer periods (Barber and Odean, 2000).

Searching for and analyzing information

If you want to buy the shares of a company, read relevant documents that will answer such questions as:

  • What indications are there that the investment will be profitable?
  • What could affect the company’s profitability? Is the company facing legal proceedings? Has a caution been issued regarding its survival?
  • Does the company operate in an industry with good future prospects? What are the company’s competitive advantages and production capacity? Who’s on its management team and board of directors?
  • If it’s a manufacturer, is its equipment state-of-the-art or obsolete?
  • What is the company’s financial position? Publicly traded companies are required to produce quarterly and annual financial statements. The company’s financial statements and other material documents, including prospectusesA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
    It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question.  
    , annual reports, management’s discussion and analyses (MD&As)Management’s Discussion and Analysis (MD&A) is a document that explains management’s point of view on the company’s financial statements, financial condition and future prospects. This report complements the financial statements, but does not form a part of them., annual information formsThe annual information form is an information document that describes the company and its activities at a given time, future outlooks, the risks to which the company is exposed and any other factors that impact the company. and news releases, can be found on the SEDAR+ This link will open in a new window site.

Investing in exchange-traded funds (ETFs)

Don’t have the time or knowledge to select individual securities and build a diversified portfolio that suits your needs?

An exchange-traded fund (ETF) is an investment fund whose securities are, like shares, traded on an exchange. Index ETFs usually track a benchmark (or “underlying”) index.

Here’s what you need to know about ETFs

Are you a rational investor?

You’re familiar with investing and the way stock markets work? You know your investor profile? You’re confident and keep a close eye on your investments? That’s great, but perhaps you should also take a look at your own behaviours. Although some economic theories assume that human beings are rational, it seems that’s not always true.

Whether you’re a beginner or a seasoned investor, here are a few behaviours you may be unknowingly engaging in that can cause you to choose investment strategies that aren’t right for you. Be aware of your biases as an investor.

Do you recognize these behaviours in yourself?

You’re more unhappy with a 5% loss than you are happy with a 5% gain (loss aversion).

  • You choose very safe investments when other, slightly riskier, investments could give you higher returns over the long term.
  • To avoid remorse and losses, you try to do a portfolio makeover and take on more risk.
  • You refuse to sell investments that are worth less than you paid for them, even when the wise thing to do would be to get rid of them.

You sell investments with good returns too early and hold onto stagnating investments too long.

  • You believe that the pendulum will swing back, the high-return investment will eventually come down and the stagnating investment will eventually rebound. 

You overestimate your knowledge and skills. You’re not alone—80% of American male drivers think they’re better than average (American Automobile Association, 2018)!

  • You trade frequently, believing you can spot good opportunities that will allow you to “beat the market.” However, most full-time experienced investment professionals don’t beat the market.

You imitate the behaviours of other known or unknown investors without asking too many questions (herd behaviour).

  • You heed the advice of investment gurus (real or alleged), follow the lead of co-workers or buy recently traded high-volume stocks without considering your own investor profile. Doing as others do can cause you to make investment decisions without thinking too much about them.

You cherrypick data that confirms that you are right (confirmation bias).

  • You pay attention to facts that confirm you’ve invested wisely but downplay facts that indicate the opposite.
  • You stick to what you know, and are much less open to alternative investment strategies that may suit your investor profile.

Did you know?

Social media algorithms try to increase your engagement by showing you content you agree with.


When you’re in a good mood, you anticipate better returns and take more risks.

  • As your vacation approaches, you may find yourself in a good mood and more optimistic, which could affect your judgment. 

You prefer instant gratification.

  • You’d rather take immediate, short-term gains than invest for your retirement.

Consult multiple information sources before investing

Take a step back, be realistic and assess your decisions critically. Choose investments that suit your investor profile rather than follow others’ example or try to beat the market.


End of the insight