RBC Direct Investing has come out with a practice account for self directed online investors called Test Before You Invest. You start with $100,000 in practice money and invest within a fully integrated online environment. They state that it’s a risk-free and smart way to test your investment knowledge.
Some of the features of this online practice account include:
- $100,000 of “practice money” is available per Practice Account
- Activate multiple Practice Accounts—including Investment Cash, Margin and RRSP accounts
- Innovative online tools and resources to help improve and apply your investment knowledge
- Practice many of the things you can do in a real account: buy, sell and switch mutual funds; master different types of stock orders; monitor your holdings over an extended period of time; and more
- Activate your Practice Account for FREE (available exclusively to RBC Online Banking and RBC Direct Investing clients)
As a beginner DIY investor, it’s a great idea to have the option to open a practice account and get a feel for the online brokerage trading platform, as well as to familiarize yourself with buying and selling stocks.
There are some good online tools and research to help you build and monitor your investment portfolio, as well as a wide-variety of products and accounts to help you diversify and find your investment style.
While a practice account could help you build your investing confidence, at some point you need to start on your own with real money. You will certainly make riskier decisions in your practice account, knowing there aren’t any financial implications if you don’t succeed.
The trap here is if you make risky choices and they pay off in the practice account, you might be inclined to continue this strategy with your real money down the road.
It’s sort of like playing poker for free online or with friends. With no real money involved, everyone is a maverick and will go “all-in” at some point to try and win the pot. That’s fine, but if you win with that strategy in a free game and you end up using it in a real game at the casino, you’re going to be in for an early night.
I think RBC: Test Before You Invest is a good idea for novice investors looking to learn the ins-and-outs of online investing. Just try and develop an investment strategy that works for you, rather than using your $100,000 of play money to try and pick penny stocks and day-trade.