Investing Script, Activity, and FAQ

Slides for the script can be accessed here.

  1. Introduce yourself and today’s topic – Investing
  2. Ask the class: What do you think investing means and what is an investment?
  3. Begin with what you will cover: What is investing, why invest, types of investments, common terms, risks of investing, investment strategies, and how to buy and sell investments
  4. Investing: a commitment of funds to obtain future benefits. Simply put, you would put in money you have right now, to gain more money in the future. This is what most people aim for in investing
  5. Future benefits are usually in the form of interest, dividends, premiums/gains, and pension benefits (which can come from the three prior items)
  6. Explain the investment terms shown on the slides. Slides 5-10
  7. Types of investments: This is not all the possible kinds of investments, but just an example of some of the more common ones.


Annuity - An annuity is a type of investment contract that pays you income at regular intervals, usually after retirement.

Bond - A bond is a certificate you receive for a loan you make to a company or government (an issuer). In return, the issuer of the bond promises to pay you interest at a set rate and to repay the loan on a set date.

Canada Savings Bond (CSB) - is a government bond, but no longer available. The government does not plan on issuing any more after 2017.

Exchange Traded Fund (ETF) - An exchange traded fund is an investment fund that holds diverse stocks, or bonds. Exchange traded funds trade on stock exchanges and have a value that is like the total value of the stocks they contain. This means that
the value of an exchange traded fund can change throughout the day. It is similar to a mutual fund since it is a pool of many stocks traded altogether under one fund in the stock market.

Guaranteed Investment Certificate (GIC) - an investment that protects your invested money. You can buy GICs at a bank, and then you are guaranteed to receive what you paid, plus interest at maturity. GICs can have either a fixed or a variable interest rate.

Mutual Fund - A mutual fund is a type of investment in which the money of many
investors is pooled together to buy a portfolio of different securities. A professional manages the fund. They invest the money in stocks, bonds, options, money market instruments or other securities.

Stock - a unit of ownership in a company which is bought and sold on a stock exchange. Stocks are also called “shares” or “equities”. As you are an owner of the company you make money when the company is successful and lose money if it is not.

Treasury Bill (T-bill) - a short-term, low-risk investment issued by a federal or provincial government. It is sold in amounts ranging from $1,000 to $1 million and must be held for a fixed term which can range from one month to a year. It is like a bond.


There are many other possible kinds of investments, they do not have to be stocks or bonds. Stocks and bonds are the main types of investments for most people, but other examples of investments could include: investing money into a new business/start-up, buying foreign currency, buying items of value that are not traded on a market (eg. Art).

Low-Risk Investments – these are investments you would look into investing in when trying to save your money. They offer a very low chance of losing your money, and often the initial investment and returns are guaranteed at a set interest rate. These safe investments include GICs, T-bills, and bonds. Your repayment is almost always guaranteed unless the entire company or government crashes, which is highly unlikely.

High-Risk Investments – there are many risks associated with investing in these. The risks generally involve losing the money you invest. Stocks are an example of high risk investment. Another example is forex, which is the trading of foreign currency, since the prices go up and down very quick.

High-Risk Investment activity –See the chart of Monster Digital Inc. If you were to buy 1000 shares, (1000 units of ownership in the company) at $1.50 per share (point to March on the chart), how much would you have paid? Now imagine you decide to sell your 1000 shares today, what is the price you will get now? (show the current share price at the top of $0.63) That means you have lost over $800! This is why you should always do research when investing in risky stocks, and be prepared to lose some money at times.

On the chart, you can also explain volume – the amount of shares that are being traded each day. 1-day range – the lowest and highest stock price for the day. EPS – earnings per share, how much the company is making per share that they have (net income /number of shares). Mkt. Cap – market capitalization, which is the market value (today’s stock price) of all the shares the company has issued (all of the shareholders together).

Risks of Investing – all investments have some risk. You have to do research and see how much risk you are comfortable with facing. Risks include the loss of your investment money, which is the one most are concerned with. Other risks include: delay in repayment, no payments of interest, or having uncertain amounts of returns.

Risks vs Return – stocks are very popular even though they have a high risk because they have a possibility of high returns to balance their risks. The idea of portfolio diversification minimizes the risk of loss, because if you own many stocks it is less likely that they will all lose money at the same time.

To buy investments on the market there is usually a cost. Mutual funds will have fees when you either buy them, or charge a percentage for the management fees of the professionals, or both. Stock brokers will also charge fees when you perform a trade (buying or selling stocks), this is called a commission and will be either a flat fee or a percent of the amount of money you are using.

Short term investment strategies include buying on margin – borrowing money in order to be able to buy more stocks. There is a margin requirement which the bank will have, meaning a percentage of the stocks you buy have to be with your own money. 50% margin requirement means that you have to pay at least 50% of the purchase with your own money in order to be allowed to borrow.

Short selling is another short term strategy. You are selling stocks you believe will go lower in price that you do not currently own. You borrow these stocks to sell with the intention of buying them back later at a lower price. Refer to the slide example.

Long term – reiterate diversification

Dollar cost averaging is to buy the same stock at different times, to lower the average cost of the stocks. The price each time is different but will average to a certain price, which hopefully is lower than if you were to buy all the shares at the same time.

Buy and hold – buying a stock and holding it for a long period of time, usually with big companies, the stock price generally trends upwards over the long term. When you buy and hold, do not worry about the short term fluctuations in price. You may be losing money on some days and be tempted to sell, but if you are holding for the long term, the strategy is just to wait out the small dips in price.

Getting started with trading – Questrade. This is an example of a brokerage that you can use to invest. You can also start a trading account at the bank that you use.

Questrade offers two types of accounts:

  • Self-Directed
  • Managed.


Because we’re going to be directing our trades ourselves, we want to select “Self-Directed.” For the Self-Directed Account Type, we are going to pick a normal non-registered account “Standard Individual.” (We talked about RRSP/TFSA accounts in the past few weeks). We won’t be messing with options at all, so pick “No” for the Options trading.

After that, you’ll be asked for your name, address, SIN, etc. Go ahead and fill that out and complete your application.

Once you’re done your application, though, there’s still paperwork you have to mail into them. Questrade requires a “Statement of Acceptance,” which you have print out, sign, scan, and upload back to them. They also require a bank statement (I just download mine from Tangerine and uploaded it), as well as an “Attested ID” Basically, you have to photocopy your passport and get a CPA, lawyer, doctor, etc. to sign the paper attesting that you are who you say you are, and then you mail it to their headquarters in Toronto. Alternatively, if you live in Toronto, you can just pop by their head office near Finch Station and show them your ID there.

Conversely you can also open up an account at your local bank branch, and they will help you set up your account there.

Buying & Selling: You can use many different broker options which will charge different amounts of commission fees, with full-service being the expensive option and online being the cheapest ($9-$15 per trade). Most people use online brokers through their bank or third party brokers such as Questrade. There is also the option of investment advisors who can give you investing advice or help you invest, if you give them permission. The advisor will either be paid a fee or may take a portion of your returns.

Investment tips: Try to buy things with low fees to maximize gain, minimize the number of trades you do to minimize fees, passive investment is generally the way to go unless you are very knowledgeable, and do your research before investing, there are many resources online about stocks which are useful, but also make sure to do you due diligence before blindly investing. It is also good to invest in an industry or company you are interested in or know a lot about, because then it can be easier to predict how the stock prices will move. Lastly, buy low and sell high, not the other way around! It is easy to be panicked when your stock drops a little bit, but it is not always good to sell as the stock drops. Over time you will start to develop your own ideas and strategies.



What is Bitcoin? Should I invest in it?

A: Bitcoin is a new form of investments, which are cryptocurrencies. These are digital currency, similar to the Canadian Dollar or US Dollar but do not have a physical form. Your digital coins are stored as secure code. You can exchange your Canadian Dollars for Bitcoin or other cryptocurrencies, much like exchanging CAD to USD. Then when the value of the currency you invested in goes up then you can sell back to CAD to make a gain. There is no clear answer to if you should invest, and you should do your own research, however Bitcoin is very hyped right now and as a result is volatile (unstable) so it would be a risky investment.

What should I invest in?

A: Investing is different for everyone, and everyone has different goals. You should first understand what your goals are. If you are trying to save money and do not want to lose it, you can look into GICs or bonds. On the other hand, if you are okay with the idea of losing money and want to make quicker or bigger returns, you can invest in stocks or other more risky investments. Before doing so, you should make sure to read some articles about what you want to invest in, and keep up with the news of those topics, and do your own research before investing. There is no definite “best” investment.

How can I become an owner of the company just by buying stocks?

A: Stocks are issued by companies to exchange a portion of ownership for your money. So you are actually an owner of that company if you buy their stocks. It does not seem like you are an owner because the company usually has millions of issued stocks, so you are only owning a small fraction of the company, along with many others. Since you are not a big owner, that is why it does not seem like you own the company. However, all shareholders (owners) get a chance to vote on company decisions at shareholder meetings. As a small shareholder you will generally get a letter in the mail and can vote on management decisions through a mailed ballot.

Why should I buy a mutual fund or ETF if it will charge me fees?

A: Although it charges you fees, if will save you a lot of work in researching stocks and help you diversify your portfolio. They allow you to own many different stocks at once, which you may not be able to afford on your own. They are also professionally managed, so you do not have to do as much research on your own about all the different stocks. If you invest on your own, it can cost you a lot of commissions to buy and sell many different stocks at once and requires a lot of researching time. It is ultimately up to the individual to determine if these benefits are worth the fees.