How to Buy Facebook Stocks (META) – Forbes Canada Advisor
How to Buy Facebook Stocks (META) – Forbes Canada Advisor

How to Buy Facebook Stocks (META) – Forbes Canada Advisor

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With nearly two billion daily active users on its platform and nearly $155 billion ($120 billion USD) in annual sales, Facebook is a global phenomenon and a revenue-generating giant. Please note that Facebook recently changed its name to Meta Platforms, Inc. If you’re interested in adding some Meta stocks to your portfolio, here’s how to get started.

How to Buy Facebook Shares (META)

1. Open a Brokerage Account

If you want to buy Facebook or any other stock, you’ll need an intermediary account to handle the transaction. The services, fees, and investment options available differ from broker to broker, so be smart to shop around to find one that fits your preferences. Check out our list of the best online brokers to get started.

2. Choose an Account That Fits Your Goals

Once you’ve chosen the right brokerage platform, decide what type of account you need. Your choice of account should match your investment objectives.

  • Retirement account. Registered Retirement Savings Plans (RRSPs) are tax-deferred savings accounts that allow you to save for tax-free retirement. However, you must pay taxes when you withdraw the amount, including withholding tax if you withdraw before the end of the year when you are 71 years old. There is also an annual contribution limit.
  • Taxable account. Although taxable brokerage accounts do not offer special tax benefits, you can withdraw funds at any time, for any reason and contribute as much as you want. This gives you flexibility when it comes to general purpose wealth building.

3. Decide How Much to Invest in Facebook

When buying individual stocks, there are several factors you should consider. To determine how much money to invest in Facebook, make sure you ask yourself the following questions:

  • What’s your budget? Before buying stock on Facebook, consider your other budget items. Once you’ve paid your bills, make sure you’ve saved enough for retirement and that you have a solid emergency fund.
  • What is the current price for FB? Like all stocks, Facebook’s stock price is constantly fluctuating. Of course, you can buy one share of FB, but consider that you can also buy a portion of the stock, known as a fractional share. two brokers, Interactive Brokers and WealthSimple, allow Canadian investors to buy fractional shares.
  • What is your investment strategy? You can choose to make one Facebook purchase at a time or you can use dollar cost averaging by buying the same dollar amount of stock on a regular basis, no matter how much the stock costs at the time. Dollar cost averaging can help reduce volatility risk and save you money on costs per share over time.
  • What about your other investments? How does FB fit into your overall investment strategy? Do you own many other large cap technology stocks, or will Facebook be your first investment in the sector? Ensuring you have a diversified portfolio that represents several different industries and company sizes can help ensure a healthy portfolio.

4. Determine Your Order Type and Place Your Order

You can have your broker buy Facebook stock at the current price or use a more sophisticated order type, such as a limit order or stop order. This type of order only buys the stock after the stock price drops below a certain threshold.

Facebook is traded on the Nasdaq stock exchange, and its shares can be bought or sold between 9:30 a.m. and 4 p.m. ET, Monday through Friday. If your brokerage platform offers those options, Nasdaq allows both pre-market and after-market trading.

The Nasdaq’s pre-market trading hours are 4:00 a.m. to 09:30 a.m., and after-hours trading is from 4:00 p.m. to 8:00 p.m. ET. If you place an order outside the hours permitted by your broker to trade, the order will be processed once trading has resumed. Your broker will handle all the paperwork related to trading.

5. Beware of Currency Conversion Fees and Taxes

If you use Canadian dollars to buy US shares, your broker will charge you 1% to 4% as a currency conversion fee on top of the regular exchange rate when you buy the stock and when you sell it.

It is possible to avoid these fees, either by depositing your money in US dollars and depositing funds in a US dollar bank account with a Canadian bank or by performing a maneuver called Norbert’s Gambit with the help of your broker.

The so-called first step is when you buy a stock or ETF that is listed on the American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then you ask your broker to “list” your Canadian shares and convert them into American shares of the same stock, you then sell your American shares in US currency and can use those US dollars proceeds to buy any American stock or ETF you want, such as Amazon, without converting.

For taxes, you will be subject to a 15% withholding tax if your US investment yields a dividend. You will not be taxed by the IRS at all if your investment vehicle is in the RRSP because this specially registered account is recognized by the IRS, which does not apply to every registered account in Canada.

6. Meta Performance Evaluation

Once you own Meta shares, you should periodically review your investments and their performance.

To evaluate the performance of any stock, start by reviewing the annual percentage return. This will give you a number that you can compare with other assets when you measure how well your investments in META are performing.

Compare Facebook’s performance to a benchmark index like the Nasdaq 100 or S&P 500. This shows you how Facebook is performing compared to the stock market in aggregate.

Because Facebook is publicly traded, Facebook is required to file an annual Form 10-K report and a quarterly Form 10-Q report to disclose its performance and financials.

Facebook provides this information on its investor relations website, and it can also be found in the US SEC database. If viewing these reports feels like you’re trying to read a foreign language, try reading expert analysis of these reports from sites like Globe Investor. The information that Facebook discloses, plus the expert analysis you read, can help you determine if this is the right stock for your investment needs.

How to Sell Meta Shares

“Buy and hold” may be your best investment strategy, but eventually you may want to sell your Facebook stock. Selling shares works the same way as buying shares.

Go to your online brokerage platform, then enter the Facebook ticker symbol, the number of shares or dollar value you want to sell and select the type of sell order. They work more or less the same way as the purchase order types we discussed above.

If you profit from your investment in Facebook, you may be subject to capital gains tax. The amount you owe depends on your annual income and how long you held your Facebook stock. Partnering with a tax professional or certified public accountant (CPA) can help you determine how capital gains taxes may affect the sale of your META stock or other investment.

As a Canadian investor, you will probably only owe capital gains to the CRA (50% of growth value) and not the IRS. The IRS only expects a capital gain from you if you own a 5% or more stake in an American company and that company’s primary asset is U.S. real estate.

In addition, if you earned $5 million USD from your US investment, your estate will be owed estate taxes when you die.

Invest in Facebook with an ETF or Index Fund

Buying Meta Platform shares is just one way to add companies to your portfolio. You can also invest in Facebook by buying shares of an index fund or an exchange-traded fund (ETF). Both are available through your online broker.

This type of fund pools a large number of stocks together in a single fund, making them less risky than individual stocks. Instead of relying on Facebook alone, with funds you can diversify your holdings in hundreds (or even thousands) of different companies, increasing your overall growth opportunities without betting on a single company.

It is also important to note that Facebook is a major component of many index funds. For example, it is on the list of the top 10 companies by index weighting in the S&P 500, which means that buying an S&P 500 index fund will give you a good amount of exposure to META while still diversifying and protecting your investment.

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