If you want to cut your investing fees to the absolute bone, then a Canadian discount brokerage is the road you must travel! The old school way of doing things included picking up a phone and telling someone you wanted to buy or sell a number of shares of a stock or units of an ETF. Obviously this way of doing things would require substantially more manpower and consequently, is much more expensive. When most people think of buying and selling stocks on the internet they think of some guy with his nose pressed up against six monitors on his desk, madly scrolling through layers upon layer of numbers and weird ticker symbols like APPL.
I use my discount broker account about four times a year to simply re-balance and update my portfolio. If you want to skip the rest of this article and just get right to the discount brokerage that I recommend and trust my own hard-earned money with, the zero-hesitation answer is Questrade.
View the colorful image design below click to enlarge , or scroll further down to view it in HTML format. Now, the table above was actually much more difficult to accurately fill out than I would have guessed before beginning the project. For one thing, these companies all have different ways of charging fees and commissions — making an apples-to-apples comparison very difficult.
For example, some brokerages have almost no account maintenance fees, while others charge quarterly or annual fees — but these can be erased with a minimum balance in the accounts. Still others will erase these account maintenance fees if a certain number of trades per quarter are met.
You can log in, buy one unit of an ETF, and log out again, and cancel any non-activity charges to your account. There are other tables out there on the Net that compare discount brokerages, however my chart below does so from the perspective of a low-cost index investor.
There is no way the average investor — or almost any investor — should be making that many trades per month if you believe the mounds of academic research, that is. Holding US Dollar-denominated accounts used to be a big deal for index investors because it let us have easy access to the great ETFs that were only listed on the New York Stock Exchange. Unless you get paid in US Dollars, there is really no reason you need to worry about this feature.
Using options is beyond the pale for the vast majority of Canadian investors that I ever talk to, and the point here is to keep life simple! The first step to keeping your fees in check is keeping these account costs as low as possible.
Being able to purchase ETFs for free and control your own index investing for almost no cost is a real game changer. Some discount brokerages will only allow certain ETFs to be traded for free, while others will only allow you to buy ETFs for free — and charge their regular per-trade fee when you sell.
I personally rarely have more than times a year when I have to sell any ETFs. This might change for some people as they hit retirement and begin to withdraw more often. How much does it cost to buy or sell a share of a company or a unit of an ETF? Keeping these fees low so that you can keep more of your hard earned investment dollars working for you is imperative over the long term.
The best time to plant a tree was fifty years ago. The second best time is today. If your preferred discount brokerage has account minimums that are so high that it discourages you from starting to invest, then it sort of defeats the whole purpose right? What customer service options are available? Others prefer to send emails, while still many like the safety of picking up the phone and talking to someone on the other end.
The problem is that this feature is very difficult to quantify. These fees can add up in a hurry, but some discount brokerages will cover these costs up to a certain amount if you come on over to play ball in their park. As you can tell, for the average person who purchases an average amount of shares or units every month, ECN fees are nearly irrelevant.
The big green machine is our top choice and what we use to manage our own money. While there were some concerns with their customer service going back a few years ago, they have been making strides in this area. Virtual Brokers certainly has a lot to recommend it, such as:. Scotia iTrade offers a limited menu of ETFs for free transactions, while RBC is currently the only one listed that will pay your transfer fees to come over to their side of the fence.
Elite trading platforms and increased research capacity are par for the course once you reach trades per month territory. Credential Direct entered the Canadian scene back in , and has found a bit of a niche in offering services to credit union customers across Canada. That being said, it just looks like an imitation of the big banks with slightly lower trading costs and fewer bells and whistles. Customers rave about its customer service standards and slick platform. Another large bank, another ho-hum discount brokerage offering.
If you are looking to keep things simple and cut your costs to the absolute barest of minimums, then figure out what your priorities are and how they match up to our above chart. Below is a live text version of the comparison above. Top Online Brokers In Canada No No No No. Questrade Summary The big green machine is our top choice and what we use to manage our own money.
Virtual Brokers certainly has a lot to recommend it, such as: Finding the Best Fit For You.More...