Practise makes perfect — at least in theory.
Artists and athletes in particular are known to have rigid practice regimens. Musicians practise scales and pieces, actors rehearse lines and golfers spend hours on the driving range and putting green honing their skills.
Not many people, however, would associate practise and investing — until recently, that is.
This summer, RBC Direct Investing launched what it says is the first program in Canada that lets Canadians open practice accounts and buy and sell a variety of investments with $100,000 of no-risk, practice money.
“Practice accounts are a powerful new feature that provides online investors with the opportunity to hone their investment skills so they can make informed and confident decisions,” said Jason Storsley, president and CEO of RBC Direct Investing. “Whether you are an experienced investor or just getting started, you can use practice accounts to experiment with investing strategies without risking your money.”
Do-it-yourself investors can activate an RBC practice account in a couple of minutes. The accounts are integrated into the RBC Direct Investing online site and have access to all the tools and resources available to real online investors.
Investors have $100,000 in practice money and can enter orders, create and track a mock portfolio online, and explore investing strategies before putting their real money on the line.
Investors can choose from a number of practice accounts, such as RRSP, margin and investment cash accounts, and can have as many as 25 of them.
There’s no limit on the amount of time you can have or use practice accounts, and they can be topped back up to $100,000 if you lose money.
Using online tools, investors can develop a risk profile for themselves and an appropriate asset mixed based on their risk tolerance.
They also can receive tips on how to select investments and can view videos on how to read stock quotes, pick mutual funds and trade options.
The RBC site has a guidance and planning section that includes guidelines for achieving specific goals, such as saving for retirement or a child’s education, advanced strategies for keeping one’s portfolio on track through market fluctuations, and instructions on how to use site resources, such as model portfolios.
The site also includes an investment products section where investors can learn about margin and option-enabled accounts, and characteristics and benefits of mutual funds, equities, options, exchange traded funds and fixed income products.
More and more Canadian investors are going online to self-manage their money.
The online investment industry is growing by about 20 per cent a year, and many of Canada’s major banks and online brokerages are experiencing an increase in the number of online accounts being opened and in trading activity and frequency.
Financial experts attribute the rise in online trading to a number of factors, some of which were linked to the recent meltdown in financial markets.
During the recession, many investors simply didn’t want to pay fees to brokers and advisers when they were losing money in their accounts. Also, they may have wanted to take more control over their portfolios, even if they couldn’t control the markets.
Another factor is the evolution of the online brokerage industry over the last decade from merely facilitating trades at a discount to providing investors with a wide spectrum of investment tools and resources.
Many of Canada’s major banks today operate call centres where online investors can get information about the tools on their sites, how to use them and how to execute transactions, but not investment advice.
Some reports estimate that assets in self-directed retirement savings plans will hit almost $500 billion by 2014, half of the country’s projected $1 trillion in RSP assets.
“Self-directed investing doesn’t mean you have to do it all on your own,” said Storsley.
“We want to help our clients build investment knowledge to help them achieve their short- and long-term goals. That’s why we’ve introduced the guidance and planning section which is ideal for clients to learn everything from how to achieve specific goals to advanced investing strategies and concepts.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. He can be contacted at boggsyourmoney@rogers.com.