JPMorgan Chase & Co. (JPM) isn’t just an old and storied name in banking—it’s also one of the biggest publicly traded financial stocks.
Though it may not have the same level of influence it once held over the U.S. financial system— when its eponymous founder single-handedly bailing out the U.S. Treasury in 1895, for instance—it’s still an awfully big financial services company, with very broad and sophisticated operations. There’s nary a segment of the U.S. economy that JPMorgan doesn’t touch in one way or another, which makes it a compelling investment for many investors.
And that’s without even mentioning its recent historical performance: It’s up more than 70% in the last five years. If all of that has you ready to buy shares of JPM, here’s what you need to know.
How to Buy JP Morgan
1. Pick a Brokerage
If you already have a broker that you use for buying and selling stocks, then this step is fairly easy—you’ll probably just want to use your existing platform and skip to step two or three.
If you don’t have a broker, meanwhile, research a few different online brokers and investment apps and carefully consider your options. Check to see what types of accounts each platform offers, like registered accounts, such as a Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP). Registered Retirement Savings Plan (RRSP) and general taxable investment accounts.
Whatever firm you decide to work with, you should check the fees and costs associated with trading JPM and other stocks. Ideally, you want a brokerage that charges no trading fees and has low or zero minimum balance requirements.
2. Evaluate JPMorgan’s Finances
Before you buy JPMorgan stock, take time to examine the company’s finances. This will help you determine whether you’re comfortable with how it’s being managed and the risks involved in its operations.
You can find information about the company’s finances, including the U.S. Security and Exchange Commission (SEC) filings and other disclosures, on the company’s investor relations page or the SEC’s database. You can supplement that with the kind of insights and research you may find at your brokerage or at trusted, Canadian third-parties like Globe Investor or the Financial Post.
3. Figure Out How Much You Want to Invest
Once you know you want to invest in JPMorgan stock, the next question is how much to buy. To decide, think about your overall finances and the role you want your shares to play in your overall portfolio.
Do you have enough to cover your living expenses? How about an emergency fund? Are you saving enough for retirement?
If the answer isn’t yes to those questions, you may want to hold off on buying JP Morgan stock until you’ve shored up your finances some. But if it is, you’re free to invest in the difference in stocks like JPM—and others.
As you move forward, you’ll also want to keep in mind JPM’s share price. Because it recently traded at almost $206 ($160 USD) per share, you may want to buy what’s called fractional shares so you can divide your money around more companies. If you’re planning to do this, be aware that only WealthSimple and Interactive Brokers offer the ability to do this.
4. Determine Your Order Type and Place Your Order
To buy JPMorgan, you’ll need to log into your investment account and place an order. You then have to decide what kind of order you’d like.
For beginning investors, there are two main order types to consider: market and limit orders.
With a market order, you buy shares at whatever the current market price is when you enter your order.
A limit order, on the other hand, lets you set the price you’re willing to pay for shares, and your order is only executed if shares can be purchased for the price you enter. This may be particularly helpful for stocks you expect to experience wild price swings, perhaps even within the time you place your order and when it’s executed.
5. Be Mindful of Currency Conversion Fees
If you’re buying a U.S.-based stock from Canada, you will be subject to currency conversion fees to the tune of 1% to 4% on top of the regular exchange rate. These fees apply both when you buy the stock and convert Canadian to American dollars and when you sell the stock and turn American dollars back into Canadian.
Thankfully, these fees can be bypassed with the following strategies:
- U.S. Dollar Bank Account — Just keep the money used to purchase U.S. stocks in a U.S. dollar bank account at a Canadian bank. This way, you never have to do the currency conversion at all.
- Norbert’s Gambit — This is when you buy a stock or ETF that’s interlisted on American and Canadian stock exchanges. You buy Canadian shares of that stock, then you ask your brokerage to “journal over” your Canadian shares and turn them into American shares of the same stock, you then sell your American shares and can use the U.S. dollars that result to purchase any American stock or ETF you want, like JP Morgan, without converting currency.
6. Be Aware of Withholding Tax
If your U.S. stock pays out a dividend, you will be subject to a 15% withholding tax on the proceeds from the IRS. Thanks to a Tax treaty with America, Canada actually pays less withholding tax than other countries because the standard withholding tax is 30%.
7. Evaluate JPMorgan’s Performance
After you buy your JPM shares, make a point to keep an eye on the stock’s performance as well as any news about the company.
Stock prices change almost every second of the working day—and often into late nights and wee mornings, too. So you’ll want to avoid constantly monitoring it for peaks and dips. Instead, check in on its percentage return over regular periods, say every six months or year, to see how it stacks up to other similar stocks as well as to broad market indexes, like the S&P 500.
You should also remember to monitor how its financials, like the filings you looked at when you bought JPM in the first place, change and grow over time.
How to Sell JPMorgan Shares
As with all investments, inevitably, the time comes for you to sell. To do so, you simply need to log into your investment account again, enter the number of shares or dollar amount you want and select a sell order type.
While this process is pretty easy, you should keep one key thing top of mind: taxes. If you bought shares in a normal investment account (meaning something that isn’t taxed-advantaged like an IRA or 429), you very well may owe taxes if you’ve turned a profit.
If you’re looking at a substantial windfall, be sure to speak with a tax professional about how you can minimize the so-called capital gains taxes you may owe. In the case of Canadians like yourself, you will only owe 50% of the value in capital gains to the CRA, even on U.S. investments, unless you have more than a 5% stake in a U.S. corporation and that corporation’s primary asset is U.S.-based real estate.
You will also owe the IRS estate tax if you have $5 million USD or more in U.S. investments upon death.
Other Ways to Invest in JPMorgan
Trading individual stocks isn’t for everyone. Because you’re focusing your money on just a few companies’ performances, it can require substantial research and risk tolerance to manage successfully.
That’s why financial experts recommend most people focus on index funds and exchange-traded funds (ETFs). These investment vehicles let you buy exposure to hundreds or thousands of companies with a single share.
Luckily, JPMorgan is incredibly easy to find in index funds. It’s the 11th largest component in the S&P 500 by weight, after all. That means in most S&P 500 index funds and ETFs, you’ll have just over 1% of each share devoted to JPM. If you’d prefer to take on a little more JPMorgan exposure in a diversified investment, you may consider sector-based index funds as well.
Disclosure: The author owns shares in JPMorgan as of this writing.