How to Buy Google Stock (GOOGL) – Forbes Advisor Canada
Google is much more than a search engine. As part of its parent company, Alphabet, Inc., Google has become one of the largest technology companies in the world, with cloud computing, software and more.
Its stock price has risen alongside its rapid growth. From early January 2021 to the same period a year later, GOOGL’s share price increased by more than 50%, and in the third quarter of 2021, the company recorded a 41% increase in revenue by a year to year.
If you’re wondering how to snag some of that growth for your portfolio, here’s everything you need to know about buying Google stock.
How to Buy Google Stock
1. GOOG vs. GOOGL: what’s the difference?
Before you get too far into buying Google stock, you must first decide what kind of Google stock you want to buy. It’s true. Stocks of Google, or rather its parent company, Alphabet, Inc., come in two main flavors: GOOGL and GOOG.
The difference between them is whether the shares have voting rights. GOOGL is what is known as a Class A common stock, which gives its shareholders the ability to vote on corporate matters. GOOG, on the other hand, is a Class C stock and has no voting rights. Both classes benefit from appreciation in value, just like any other stock.
(There’s also a class B share of Google that has superpowered voting powers – 10 votes for each class A share. These are held almost exclusively by Google founders Larry Page and Sergey Brin and ex -CEO Eric Schmidt to keep control of the company, so you’re unlikely to have the chance to buy a stock.)
As you’d expect, its extra voting rights mean GOOGL can trade at a premium to GOOG. Since the split in 2014, however, their prices have been quite similar, and perhaps more importantly, the percentage increase in share value has been nearly identical. This means that you will ultimately decide whether you want to have a token voice in Google’s business or not.
2. Select a brokerage
If you don’t already have an investment account, you’ll need to open one at a brokerage or with an investment app. To speed up your research, check out our list of the best online brokers and investment apps to find quality choices with low investment minimums and fees.
In addition to choosing the right brokerage for your needs, consider the type of account you want. Investing for your golden years? Put your Google shares in a Registered Retirement Savings Plan (RRSP) and you won’t have to pay tax on the growth of your investment until you withdraw the proceeds. Create wealth for short-term goals? Choose a taxable brokerage account instead.
3. Decide on an initial investment
Because you probably can’t afford a full share of GOOG or GOOGL, at least not right away, you’ll need to decide how much (and how) you want to invest. Ask yourself these questions to determine your ideal initial investment.
- What is your budget ? If you don’t have enough to cover expenses and save for retirement and emergencies, you might want to put off buying Google stock. Once you have them under control, you can invest the remaining funds in Google stocks.
- What is Google’s price? GOOGL and GOOG are trading in thousands of dollars per share, reaching almost $3,500 (US$2,700) at the start of January 2022. Fortunately, two brokerages in Canada, WealthSimple and Interactive Brokers, allow you to buy so-called fractional shares which offer you part of the ownership of an individual stock.
- What is your investment strategy? You can choose to invest a lot of money at once or slowly acquire the property over time with small, regular purchases. This last strategy, called dollar cost averaging, can help you pay less per share on average over time. But more importantly, it gets your money into the market as quickly as possible. Remember: time in the market is often more powerful than market timing.
- What other investments do you have? As an investor, you have probably built or will build what is called a portfolio. This means that your Google investment will complement other holdings, such as stocks in other companies or maybe even some bonds or funds. Consider how Google (and the type of business Google is) fits into your overall investment environment.
4. Examine Google’s performance
Before you buy your GOOG or GOOGL stock, you’ll want to research the company’s financials to get an idea of its performance, risks, competitors, and future plans.
As a publicly traded company, Google submits quarterly and annual filings, known as Form 10-K and Form 10-Q, respectively, to the United States Securities and Exchange Commission (SEC). You can view these documents on Google’s Investor Relations site or by searching the SEC database.
To help you navigate this information, you can turn to expert analysis, such as that available on Globe Investor, the Financial Post and Forbes or even the online brokerage platform you use, such as Questrade or BMO InvestorLine. which often come with their own in teaching resources.
5. Place your order
When you have opened an account and deposited money to invest, you can buy shares by entering the stock symbol of the company (GOOGL or GOOG) and the dollar value you wish to invest or the number of shares you want to buy.
Most brokers allow you to place market orders, where you buy or sell stocks at the current price. Or you can place a limit order and set a specific price to buy and sell the shares.
Google trades on the Nasdaq stock exchange, which means you can buy and sell stocks between 9:30 a.m. and 4:00 p.m. ET Monday through Friday. Your brokerage may also offer extended trades before or after business hours.
6. Keep currency conversion fees and taxes in mind
Although your brokerage will take care of the paperwork needed to execute the US stock trade from Canada, you should keep in mind that you will be subject to taxes and currency conversion fees, which you buy or sell your Google shares.
A currency conversion fee between 1% and 4% will be charged as part of the process of converting your Canadian dollars to US dollars for the purchase of your Google Stock, as well as an additional fee of 1% to 4% to convert back your money in Canadian dollars. when you sell. This all adds up to the exchange rate at the time you buy or sell the stock.
You can bypass these fees with a US dollar bank account by keeping the money you use to buy US stocks in US dollars at all times. You can also perform Norbert’s Gambit.
This maneuver consists of buying a stock or an ETF interlisted on the American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then you have your brokerage firm “log” your Canadian shares and convert them into US shares of the same stock, you then sell your US stocks in US currency and You can use the resulting US dollars to buy any US stock or ETF you want, like APPL, without converting Canadian dollars.
Meanwhile, as a Canadian, you are subject to 15% withholding tax to the IRS if you earn dividend income on a US investment, unless that investment is in an RRSP or mutual fund. registered retirement income (RRIF). These investment vehicles are specifically tax-exempt through a treaty between Canada and the US government, which does not include other Canadian registered accounts such as a Registered Education Savings Plan (RESP).
Additionally, in the unlikely event that you earn US$5 million or more on your US-based investments, you will have to pay estate tax to the IRS upon your death.
7. Examine the performance of your investment
Even with a stock like Google, you don’t want to set autopilot and never see your investment again. You will need to check back periodically to make sure it is helping you make satisfactory progress towards achieving your goals.
To see how your investment stacks up against the rest of the market, you can compare Google’s performance to that of a benchmark, like the S&P 500. You can also track its financial data using the same documents with which you did your preliminary research. .
How to Sell Google Stock
When you’re ready to sell your Google shares, the process is as simple as buying your shares. Simply log into your broker’s trading platform and enter the stock symbol and number of shares or dollar amount you wish to sell.
If you’ve seen significant increases in value, you may want to meet with a tax professional before selling your Google stock. They can help you develop strategies to minimize any capital gains taxes you may incur.
Fortunately, capital gains from US stocks are only payable as part of your Canadian income tax and you will only pay 50% of the gain. Unless the main asset of the company in question comes from US real estate. In this case, you will have to pay capital gains tax to the IRS, not just the CRA.
How to invest in Google with an index fund
Investing in any individual stock, even Google, is a risky bet. That’s why financial advisors recommend a diversified approach that involves investing in dozens or even hundreds of stocks. One of the easiest and cheapest ways to do this is through index funds and exchange-traded funds (ETFs) that seek to replicate the performance of major stock indices, like the S&P 500. These funds offer exposure to hundreds of investments in just one stock.
Fortunately, Google is easy to find in many index funds. It occupies about 7% of the Nasdaq 100 funds and 4% of the S&P 500 funds.