What Are Your Stocks and Shares Options?

Stocks and shares form the backbone of most investment portfolios, offering a gateway to diverse sectors of the economy—from healthcare to technology to logistics. Unlike other asset classes, stocks vary significantly in their risk profiles, making them a versatile choice for investors. This article explores the various options available for investing in stocks and shares, focusing on DIY investing and advised investing.

Two Main Investment Approaches

When it comes to investing in stocks, you generally have two primary options:

DIY Investing
Advised Investing

DIY Investing

The landscape for DIY investing has transformed dramatically, particularly in the USA, where a price war among brokerage firms has led to zero trading fees for many platforms. Unfortunately, in the UK, investors still face trading fees of up to £10 per transaction, which can be disheartening.

Choosing a Brokerage

Several large brokerage firms dominate the market, including:

Charles Schwab
TD Ameritrade
Fidelity

In addition to these established players, newer platforms like Robinhood and M1 Finance offer user-friendly interfaces that make buying and selling stocks quick and easy.

For Canadian investors, the market is evolving, albeit at a slower pace. Major players include Questrade, Qtrade Investor, and Interactive Brokers. A comprehensive comparison of Canadian brokers can be found here.

Steps to Get Started

Once you’ve set up your brokerage account, here are the steps to follow:

Develop Your Investment Strategy: Research extensively and consider subscribing to investment newsletters. For example, check out articles like Dividend Investing During a Market Crash and Is Now a Good Time to Invest?.

Screen for Halal Stocks: If you’re looking for Sharia-compliant investments, consider taking a course on halal stock screening here.

Practice Trading: Use your broker’s practice account to familiarize yourself with the platform.

Start Small: Begin trading with small amounts to build your confidence.

Refine Your Strategy: As you gain experience, develop your own investment style.

Advised Investing Options

For those who prefer a hands-off approach, advised investing offers two main routes:

Roboadvisors
Investment Managers/Funds

Roboadvisors

WahedInvest is a leading Sharia-compliant roboadvisor, particularly in the USA. It offers a hassle-free investment experience, charging between 0.49% and 0.79% based on your investment amount. They also provide a unique FTSE USA Sharia ETF, allowing you to invest across a range of halal stocks.

Other notable roboadvisors include:

ShariaPortfolio: Offers a flat management fee ranging from 0.40% to 1.50% depending on assets managed.
Wealthsimple: A Canadian option that provides a Sharia-compliant equity-only portfolio, charging 0.5% up to $100,000.

Investment Managers/Funds

Unlike roboadvisors, investment managers actively manage portfolios, selecting stocks they believe will perform well. Some prominent options include:

Amana Funds: Offers four main funds tailored to different risk appetites, with fees ranging from 0.88% to 1.31%.
Azzad Funds: Provides mutual funds and separately managed accounts, focusing on Sharia-compliant investments.
Iman Funds: Similar to Azzad, offering mutual fund products through stockbrokers.

Canada: Investment Options

In Canada, the landscape mirrors that of the USA, with both roboadvisors and managed funds available.

Roboadvisors

Wealthsimple: Offers a Sharia-compliant equity portfolio, directly investing in 50 US stocks.
WahedInvest: Also available in Canada, providing a similar service to its US counterpart.
ShariaPortfolio: Offers a Canadian version with competitive fees.

Funds/Investment Managers

Global Iman Fund: The most established Islamic mutual fund in Canada, tracking larger US companies.
Ansar Financial: A Sharia-compliant property company offering dividends.
Manzil: A newer entrant providing home financing and investment products with low fees.

Conclusion

Whether you choose to invest in stocks and shares through DIY methods or opt for advised investing, understanding your options is crucial. Each approach has its unique benefits and challenges, and the right choice depends on your individual preferences, risk appetite, and investment goals. By exploring these avenues, you can build a diversified portfolio that aligns with your financial aspirations.