The Toronto Stock Exchange (TSX) has grown into the 11th largest in the world, with the market composed of large mining and minerals stocks. The type of businesses that dominate the exchange should be fairly familiar to Australian investors.
How to invest in the TSX
Investing in Canada from Australia is relatively simple and can be done in just 4 simple steps:
1. Choose a broker or trading platform. You'll need to choose a broker or trading platform that gives you access to the TSX, or at least lets you buy and sell the TSX stocks that you're interested in. You should also try to compare at least 3–4 brokers to find the cheapest option before you decide on a service.
2. Open a share trading account. Once you've landed on the right broker or platform, you'll have to open a trading account with them. You can fill out a quick online application with the provider you've settled on.
3. Deposit funds. When your account is up and running, you'll have to load funds into your "wallet" to start trading. Some platforms require you to have a minimum balance of US$1,000 to get started. You may also be required to pay a quarterly account fee.
4. Buy stocks on the TSX. Once your money is loaded into your account, you're ready to start trading. You can buy and sell stocks as well as bonds, exchange-traded funds (ETFs), derivatives and other financial products on the TSX. This will cost you different amounts based on which broker or platform you use.
Compare stock trading platforms
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
What is the TSX?
The Toronto Stock Exchange (colloquially known as the TSX) is a stock exchange based in Toronto, Ontario.
It's Canada's largest stock exchange and the 11th largest exchange in the world by market capitalisation according to Statista.
The exchange has more than 1,500 companies listed on it, including a high proportion of those specialising in the financial and extractions industries. In 2022, the TSX composite lost 8.5% but still outperformed its US peers, with the S&P 500 falling 18.1% and the Nasdaq Composite falling 32.5%.
You can use the TSX to trade shares in companies, investment trusts and ETFs.
As a more advanced trader, you can also use it to dabble in bonds, commodities, futures, options and other derivative products. Just be aware that any trades you make on the TSX will be carried out using the Canadian dollar.
Why should I invest in the TSX?
The Toronto Stock Exchange is the largest stock exchange in Canada and features stocks from several major Canadian companies. It offers access to certain stocks and securities that aren't listed in other markets. In particular, it attracts some of the world's largest natural resources companies, which makes it popular with international investors.
It's easy to find some of the most popular stocks being traded on the TSX by looking at the S&P/TSX 60 Index. It includes 60 of the largest companies on the exchange by market capitalisation. You might also like to invest in this index to earn a net profit based on the average price movements of these 60 stocks.
Who is the TSX best for?
If you're an investor that is either bullish on the Canadian economy or someone who wants greater exposure to commodity businesses, then the TSX could be for you.
Investors that are looking to put their money into some of the major sector winners or are looking to invest outside of Australia might also like the TSX. This is because it is familiar to them in terms of businesses, without adding to the home bias risks. This can happen if you have your home, job and share trading investments all in 1 place.
It will also appeal to those who are looking to take advantage of the Canadian dollar. If it falls relative to the Australian one, it could create an opportunity for investors to buy. And vice versa, if the Aussie dollar falls, it can be a time to sell.
However, growth investors, especially those in technology or healthcare, might not find the stock offerings on the TSX as appealing.
It's also important to note that companies listed on the TSX must have more than US$7.5 million in net tangible assets. To invest in smaller Canadian companies, you'll need to head over to the TSX Venture Exchange (TSXV).
What are the TSX's trading hours
If you're looking to trade on the TSX, you'll be trading during similar hours to the Nasdaq and New York Stock Exchange (NYSE).
All 3 exchanges have the same regular trading hours of between 9:30am and 4pm Monday to Friday, excluding public holidays.
How much does it cost to invest in the TSX?
The amount you'll pay to buy TSX stocks depends on which broker or trading platform you use to make your trades.
Each has its own fee structure for executing trades. You should also keep your eyes out for inactivity and additional fees that some brokers charge. These extra charges can have a big influence on the cost of investing.
Some brokers in Australia charge annual account maintenance fees while others charge high commissions on individual trades. A handful of brokers even offer commission-free trades but may cut corners in other areas to make up the difference. It's up to you to find the best solution for your investing needs at a price point that meets your budget.
Other ways to invest in the TSX
For those looking to gain exposure to the Canadian market but don't want to directly invest in shares, you have a few other options. These include the following:
- Index funds. These track the performance of a "basket" of stocks on the TSX and let you earn money on the average gains of all the shares put together.
- Exchange-traded funds. ETFs are similar to mutual funds except they can be traded on the stock exchange and typically come with much lower trading fees.
- CFDs. CFDs are a type of contract that lets you speculate and bid on how an asset is going to perform on the stock market. The risk with these is they work off leverage, meaning you can lose more than you initially invested. You will also face counterparty risks.
- Bonds. Bonds allow you to lend money to governments or corporations so you can collect a set rate of interest on your loan.
- New issues. These give you the chance to invest in a company going public for the first time. You can get in on the ground floor before share prices go up.
Popular TSX ETFs
You can earn money on the cumulative average value of a number of TSX stocks when you invest in several of Canada's most popular ETFs, such as the following:
- iShares S&P TSX 60 Index (XIU-T)
- iShares S&P TSX Global Gold Index (XGD-T)
- iShares S&P TSX Capped Financials (XFN-T)
- iShares Core S&P TSX Capped Composite (XIC-T)
- iShares S&P TSX Capped Energy Index (XEG-T)
- BMO S&P TSX Equal Weight Banks Index (ZEB-T)
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