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Canada Stock Profit Calculator
Stock Profit Calculator
How to Use WOWA’s Stock Profit Calculator?
To calculate your profit or loss in trading a stock, start by entering the average purchase price, Number of shares, purchase commission/fee, average sale price and dividends you received from that stock. You can use WOWA’s Stock Average Calculator for computing the average purchase price and average sale price.
The stock profit calculator calculates your cost base by multiplying the purchase price by the number of shares purchased and adding commissions paid to your trading platform (broker) for the purchase. So your cost base is what you paid for those shares. Proceeds of the sale are what you receive from selling your shares. It is calculated as the sale price multiplied by the number of shares minus any commissions/fees paid for this sale.
By subtracting the cost base from the sale proceeds, you derive the capital gain or loss from which your capital gains tax is calculated. Since you might have traded a dividend stock to derive your actual profit or loss, we add dividends received from this stock to your capital gain (loss). Finally, the return on investment is found by dividing the profit (loss) by your initial investment (cost base).
What are stocks?
Stocks, also known as shares or equities, represent ownership in a company. When you own a stock, you own a portion or share of that company's assets and earnings. Stocks are financial instruments that individuals and organizations can buy and sell in various financial markets, such as stock exchanges.
When a company wants to raise capital, it can issue stocks to the public through an initial public offering (IPO) or by offering additional shares. Investors can then purchase these shares, becoming shareholders of the company. Owning stock entitles shareholders to certain rights, such as voting on corporate matters and receiving dividends, which are a portion of the company's profits distributed to shareholders.
The value of stocks can fluctuate based on various factors, including the company's financial performance, market conditions, industry trends, and investor sentiment. Investors buy stocks with the expectation that the value will increase over time, allowing them to sell the shares at a higher price and earn a profit. However, stock prices can also decrease, resulting in losses for investors.
Investing in stocks can be done through brokerage accounts, where individuals can place orders to buy or sell stocks. It's important to note that investing in stocks carries risks, as the market can be volatile, and individual companies may face challenges or even fail. Many investors diversify their portfolios by investing in a mix of stocks from different industries to mitigate risk.
Stocks are an integral part of the financial markets and are traded by a wide range of participants, including individual investors, institutional investors (such as mutual funds and pension funds), and traders who engage in short-term buying and selling for speculative purposes.
Which exchanges are active in Canada?
In Canada, there are several exchanges where stocks and other securities are actively traded. The primary stock exchanges in Canada are:
Toronto Stock Exchange (TSX):
The TSX is the largest and most well-known stock exchange in Canada. TSX is also among the ten largest exchanges in the world. It lists various companies from various sectors and is considered the primary exchange for Canadian stocks. Larger companies on the TSX compose the S&P/TSX Composite Index.
The largest sector in the Toronto stock exchange is the financial services sector. The financial services sector comprises Canadian bank stocks, Canadian insurance stocks and Canadian asset management stocks. The second largest sector on the TSX exchange is the energy sector.
TSX Venture Exchange:
The TSX Venture Exchange, operated by the same company as the TSX, focuses on smaller and early-stage companies. It provides a platform for these companies to raise capital and grow their businesses.
In addition to these primary exchanges, there are also alternative trading systems (ATS) and other marketplaces in Canada, including:
Canadian Securities Exchange (CSE):
The CSE is an alternative stock exchange focusing on small to mid-sized companies, particularly those in emerging industries like cannabis, technology, and blockchain.
Aequitas NEO Exchange:
The NEO Exchange is operating as Cboe Canada. It is a relatively new stock exchange in Canada, providing a platform for listings and trading. It emphasizes market integrity and transparency.
Alpha Exchange:
Alpha is an alternative trading system in Canada that offers trading in equities, derivatives, and other securities. It is owned and operated by the TMX group which also owns TSX.
Omega ATS:
Omega is another alternative trading system that facilitates trading in Canadian securities.
What are the most common investments in Canada?
In Canada, the most common types of investments include:
Stocks:
Investing in stocks allows individuals to purchase shares of publicly traded companies, as explained earlier. Stocks offer the potential for capital appreciation and dividends.
Bonds:
Bonds are debt securities issued by governments, municipalities, or corporations. When you invest in bonds, you are essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.
Mutual Funds:
Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. They are managed by professional fund managers who make investment decisions on behalf of the investors.
Exchange-Traded Funds (ETFs):
ETFs are similar to mutual funds but trade on stock exchanges like individual stocks. They track specific indexes, sectors, or asset classes and offer diversification and flexibility to investors.
Real Estate:
Real estate investments in Canada can include residential properties, commercial properties, or real estate investment trusts (REITs). Investing in real estate provides the opportunity for rental income and potential property value appreciation.
Guaranteed Investment Certificates (GICs):
GICs are low-risk investments offered by banks and other financial institutions. They provide a fixed rate of return over a specified period, making them a popular choice for conservative investors.
Registered Retirement Savings Plans (RRSPs):
RRSPs are tax-advantaged retirement savings accounts. They allow individuals to contribute a portion of their income to the account, and the contributions are tax-deductible. Investments within an RRSP can include various types of assets like stocks, bonds, mutual funds, and GICs.
Tax-Free Savings Accounts (TFSAs):
TFSAs are another tax-advantaged savings vehicle in Canada. TFSA contributions are limited and made with after-tax money, but investment earnings and withdrawals are tax-free. TFSAs can hold a variety of investments, including stocks, bonds, ETFs, and savings accounts. It's worth noting that the best investment can vary depending on an individual's financial goals, risk tolerance, and investment preferences.
Additionally, alternative investments like private equity, venture capital, and cryptocurrencies have gained popularity in recent years. Still, they may carry higher risks and are not as commonly held as the aforementioned investments.
Should I buy individual stocks, ETFs or mutual funds?
Deciding whether to invest in individual stocks, ETFs, or mutual funds depends on several factors, including your investment goals, risk tolerance, time commitment, and knowledge of the financial markets. Here are some considerations for each option:
Individual Stocks:
Investing in individual stocks involves purchasing shares of specific companies. This approach requires conducting thorough research and analysis of individual companies to make informed investment decisions. Investing in individual stocks can be suitable if you have a deep understanding of the company's fundamentals, industry trends, and the time to monitor your investments regularly. It can provide the potential for higher returns but carries a higher level of risk compared to diversified investments like ETFs or mutual funds.
ETFs (Exchange-Traded Funds):
ETFs are investment funds that trade on stock exchanges and aim to track the performance of a specific index, sector, or asset class. ETFs offer diversification since they typically hold a basket of stocks or other assets. They can be a good option for investors seeking broad exposure to a particular market segment or asset class without needing to select individual stocks. ETFs also offer liquidity and flexibility and often have lower fees compared to mutual funds. They are suitable for investors who prefer a passive investment approach with built-in diversification.
Mutual Funds:
Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities managed by professional fund managers. Mutual funds can offer diversification across various asset classes, including stocks, bonds, and other instruments. They are suitable for investors who prefer a hands-off approach and rely on the expertise of professional managers. However, mutual funds often charge higher fees compared to ETFs and may have minimum investment requirements.
Ultimately, there is no one-size-fits-all answer to whether you should invest in individual stocks, ETFs, or mutual funds. It may be beneficial to consider a combination of these options based on your investment goals, risk tolerance, and personal preferences. Diversification is generally recommended to help spread risk across different investments, and you may consider seeking guidance from a financial advisor who can provide personalized advice based on your specific circumstances.
Disclaimer:
- Any analysis or commentary reflects the opinions of WOWA.ca analysts and should not be considered financial advice. Please consult a licensed professional before making any decisions.
- The calculators and content on this page are for general information only. WOWA does not guarantee the accuracy and is not responsible for any consequences of using the calculator.
- Financial institutions and brokerages may compensate us for connecting customers to them through payments for advertisements, clicks, and leads.
- Interest rates are sourced from financial institutions' websites or provided to us directly. Real estate data is sourced from the Canadian Real Estate Association (CREA) and regional boards' websites and documents.