Google is far more than a search engine. As part of its parent company Alphabet, Inc., Google has grown into one of the largest technology companies in the world, complete with cloud computing, software, and more.
The share price has gone up along with its rapid growth. From the beginning of January 2021 to the same time a year later, GOOGL’s share price has risen by more than 50%, and in the third quarter of 2021, the company reported a 41% year-over-year increase in revenue.
If you’re wondering how to leverage some of that growth into 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 go too far with buying Google stock, you must first decide what type of Google stock you want to buy. That’s correct. 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 a so-called Class A common stock that gives its shareholders the ability to vote on company matters. GOOG, on the other hand, is a Class C stock and does not carry voting rights. Both classes benefit from appreciation like any other stock.
(There’s also a Class B of Google stock with super-voting rights — 10 votes for each Class A share. These are almost exclusively retained by Google founders Larry Page and Sergey Brin, and ex-CEO Eric Schmidt, to… to retain control of the stock company, so you probably don’t get a chance to buy a stock.)
As you might suspect, the extra voting power means GOOGL can trade at a small premium to GOOG. However, since the split in 2014, their prices have been fairly similar, and perhaps more importantly, the percentage appreciation of the shares has been nearly identical. That means you’ll ultimately decide whether or not you want a token voice in the goings-on of Google.
2. Choose a brokerage
If you don’t already have an investment account, you’ll need to open one with a broker or with an investment app. To speed up your research, check out our list of the best online brokers and best investment apps for quality options with low minimum investment and fees.
Consider not only the right brokerage for your needs, but also the type of account you want. Are you investing for your golden years? Put your Google stock into a Registered Retirement Savings Plan (RRSP) and you won’t have to pay taxes on the growth of your investment until you withdraw the proceeds. Building wealth for short-term goals? Choose a taxable brokerage account instead.
3. Decide on an initial investment
Since you probably can’t afford a whole share of GOOG or GOOGL, at least not right away, you need to decide how much (and how) to invest. Ask yourself these questions to find out your ideal starting investment.
- What’s your budget? If you don’t have enough to cover your expenses and save for retirement and emergencies, hold off on buying Google stock. However, once you get the hang of it, you can invest any leftover funds in Google stocks.
- What is Google’s price? Both GOOGL and GOOG are trading at thousands of dollars a share, reaching nearly $3,500 ($2,700) in early January 2022. Luckily, two brokers in Canada, WealthSimple and Interactive Brokers, allow you to buy what are known as fractional shares, which offer you a fractional ownership of a single share.
- What is your investment strategy? You can choose to invest a lot of money at once or slowly build ownership over time with small, regular purchases. The latter strategy, called dollar cost averaging, can help you pay less per share on average over time. But more importantly, your money gets to 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 a so-called portfolio. That means your Google investment complements other holdings, like other companies’ stocks or maybe even some bonds or funds. Think about how Google (and what kind of company Google is) fits into your overall investment landscape.
4. Check Google’s performance
Before you buy your GOOG or GOOGL stock, you should research the company’s financials to get a feel for its performance, risks, competitors, and future plans.
As a public company, Google files quarterly and annual filings called Form 10-K and Form 10-Q, respectively, with the US Securities and Exchange Commission (SEC). You can view these documents on Google’s Investor Relations website or search the SEC’s database.
To help you navigate this information you can turn to expert analysis such as those available at Globe Investor, Financial Post and Forbes or even the online brokerage platform you use such as Questrade or BMO InvestorLine which often with their own built-in educational resources.
5. Place your order
Once you’ve opened an account and deposited money to invest, you can buy stocks by entering the company’s ticker symbol (GOOGL or GOOG) and the dollar value you want 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 stock.
Google trades on the Nasdaq exchange, which means you can buy and sell shares Monday through Friday between 9:30 a.m. and 4:00 p.m. ET. Your broker may also offer extended before or after hours trading.
6. Be mindful of currency conversion fees and taxes
While your broker will take care of the paperwork needed to execute the trade in the US domiciled stocks from Canada, you should keep in mind that you are subject to taxes and currency conversion fees whether you buy your Google stock or not to sell.
Currency conversion fees of between 1% and 4% are charged when converting your Canadian dollars to US dollars when you buy your Google stock, and an additional 1% to 4% when converting your money back to Canadian dollars when you sell. All of this is in addition to the exchange rate at the time the stock was bought or sold.
You can avoid 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 run Norbert’s Gambit.
This maneuver is when you buy a stock or ETF that is listed on American and Canadian exchanges. You buy Canadian shares of that stock or ETF, then ask your broker to “book” your Canadian shares and convert them into American shares of the same stock, then you sell your American shares in US currency and you can use the US dollars for the earnings to buy any American stocks or ETFs, such as APPL, without converting Canadian dollars.
Meanwhile, as a Canadian, you are subject to a 15% withholding tax to the IRS if you receive dividend income from a US investment, unless that investment is part of an RRSP or Registered Retirement Income Fund (RRIF). These investment vehicles are specifically tax-exempt thanks to an agreement between Canada and the US government that excludes other Canadian-registered accounts such as a Registered Education Savings Plan (RESP).
Also, in the unlikely event that you earn $5 million or more from your US resident investments, you will have to pay estate taxes to the IRS on your death.
7. Check the performance of your investment
Even with a stock like Google, you don’t want to go on autopilot and never revisit your investment. You need to check back regularly to make sure it’s helping you make satisfactory progress toward your goals.
To see how your investment compares to the rest of the market, you can compare Google’s performance to that of a benchmark index like the S&P 500. You can also follow the evolution of his financial metrics using the same documents you used to conduct your preliminary research.
How to sell Google stock
When you’re ready to sell your Google stock, the process is as simple as buying your stock. Simply log into your broker’s trading platform and enter the ticker symbol and the number of shares or dollar amount you wish to sell.
If you see large increases in value, you should consult with a tax professional before selling your Google stock. They can help you find strategic ways to minimize any capital gains taxes you may incur.
Luckily, capital gains from US stocks are only payable as part of your Canadian income tax and you only pay 50% of the gain. Unless the main asset of the company in question comes from US real estate. In that case, you must pay capital gains tax to the IRS, not just the CRA.
How to invest in Google with an index fund
Investing in any single stock, even Google, is a risky bet. For this reason, financial advisors recommend a diversified approach, investing in dozens if not hundreds of stocks. One of the easiest and cheapest ways to do this is through index funds and exchange-traded funds (ETFs), which attempt to duplicate the performance of major market indexes like the S&P 500. These funds offer access to hundreds of investments in just one stock.
Fortunately, Google is easy to find in many index funds. It takes about 7% of Nasdaq 100 funds and 4% of S&P 500 funds.