Let's Buy Some Weed!

A lot of millennials are thinking about investing money in the cannabis industry. It seems like it is just a matter of time before legalization hits the USA. So how does a newbie get into trading the pot stocks?

Get yourself a bank appointment.

The first thing you will need to do is to open up an investment account. I am writing this as a Canadian, and our banking products have different names from our American neighbors. If you are investing in weed you've got to decide if is this for short-term goals (five-ish years or less), or if this is retirement money? Here are two options and their pros and cons:RRSP's aka Registered Retirement Savings Plans are a great investment tool, because anything contributed to them reduces your taxable income. Let's say you make $40,000 a year, but where you live you are taxed less (a different tax bracket) if you made $38,000. By investing your weed money in an RRSP, you are not only buying pot stocks, you are actually reducing your taxes! However, when you pull that money out it is then considered income, and is tax billed as so. Ouch. Better take that money out when you are in a lower tax bracket! TFSA aka Tax Free Savings Accounts (Basically a Roth IRA) are my personal favorite. Particularly the self-directed variety account. The Canadian and USA TFSA and Roth IRA have this in common:If you have one, you can contribute a set amount to your account each year. Every year this amount rolls over. In the USA, I believe the yearly contribution is $5,500, but check with your local provincial/state and federal government for current values (it changes.) In Canada your contribution limit depends on the year you were born. Fun, eh? If you were 18+ years old in Canada in 2009, you have more money contribute room than your younger peers!

I like TFSA's because my old Canadian ass can contribute over $60,000 that can grow tax free. When I purchased some of my stocks they were only pennies and dollars, now they are worth much more. Despite the fact I have made some good investments generating thousands of dollars, I did not have to pay taxes on any of it. Not even when I took the money out of my account.There are more rules and regulations regarding how these work that I don't care to explain. But this is why you need to go to the bank. Learn about these accounts, any fees, and make a list of questions for the bank. Brace yourself, they WILL try to sell you a bank product, aka give you credit. To buy cannabis shares you will likely need a self-directed account, which means you can pick your stocks. If you tell them you are investing in cannabis the bank will likely try to talk you out of it, and give you a fun quiz. This quiz is called "what kind of bank investment account are you?" It's all about risk.If you are considering investing in cannabis, remember there is no such thing as a sure thing. If weed stocks is the only step you have taken so far in planning for your financial future, please read up on personal finance and speak to a trusted financial advisory. I've made a lot of money, but I have also seen half a year's salary vanish in the time it takes to drink a cup of coffee. Actually, I still recommend reading about personal financing, and investing. If you think you are going to become a day or swing trader, be prepared to lose a ton of cash. Honestly, it's the best way to learn. I recommend investing long in cannabis. Any investing professional will tell you that the winners in finance are longtime holders, and that goes for any stock. Edit: Okay, so there are some online platforms you can use to invest, I would recommend using a bank for first timers. Once you are more seasoned as an investor, then seek out other investment institutions.

Buying the Actual Stock

Now that you have your account, it has cash in it, and you are logged into your online bank's website, so you can buy some cannabis stocks! There are a number of ways you can buy shares of companies. Again, if you are a total newbie I recommend buying a cannabis Exchange Traded Fund or ETF. I will not recommend specific stocks, because this article is strictly entertainment. However, I will share that I own the HMMJ, which is the Canadian marijuana ETF. The benefit is that the ETF actually owns nearly all the big companies who produce medical cannabis in Canada. It also pays a dividend, which at this time individual cannabis stocks do not. Popular marijuana companies rights now are Canopy Growth Corp NYSE:WEED, and Aurora Cannabis NYSE:ACB and Tilray NASDAQ:TLRY.

Due diligence and time are your friends.

I highly recommend that you do some research into stock trading prior to purchasing stocks, mutual funds, and ETFs. Because banks are so resistant to offering cannabis in their bank-directed investment products, honest cannabis investors get pulled into the Vegas-like world of trading. Robert Kyosaki, author of Rich Dad Poor Dad preaches the importance of learning the language of investing. As a new investor you are the largest risk factor in this formula, not the stocks or the stock market. The more you learn, the better informed you will be as an investor. Thus lessening your potential to be an expensive liability. I will admit, I have an expensive financial education from Trial and Error University. In addition to learning, you also need to embrace time. Investments are like trees, and for many of them they will grow, and not just get bigger, but bare fruit (pay dividends). There will be some losers, but looking back there were many times I sold a stock in haste, because of its lacking performance, whereas now that stock has actually performed well. My point is, time is often the remedy to a bad deal, but increasing your knowledge will let you know when you water the tree (buy low), and when to prune that sucker and move on. If you want to see how people overreact to stock trading, check out Stock Twits. I do not recommend following any advice from the so-called gurus. However, Investing.com and Investopedia are both great websites with educational content on investing.

Implement a strategy and follow it.

This is the most important part. In addition to having a real investment goal, as I mentioned earlier, you will also need to craft your own custom investment strategy. Because this article is for newbies, I will recommend the most conservative strategy. This would be the cost averaging method of investing. As a responsible adult, I am sure you have a written budget, which includes money set aside for investing. Every month, buy as many of your chosen stock or ETF, regardless of the price. According to the reputation of this strategy, mathematically you will acquire more shares for less cash over time.A strategy/plan is real. You should be able to write it down, and it should be easily understood. If you plan on becoming a swing trader, or day trader you absolutely need a written strategy. Remember the biggest risk factor is reactive decisions, made from your own ignorance.

So that is how you get into investing in legal recreational and medicinal cannabis! I hope you found this article interesting, and you are now inspired to learn more about personal finances and investing.