Online discount brokerages answered the prayers of do-it-yourself investors who got tired of the traditional wealth management framework and high fees. The easy way to picture traditional investing is when you go to your bank to purchase a high Management Expense Ratio (MER) mutual fund.
The old-school version of DIY investing was done through full-service brokers who help you buy a mix of assets while charging ridiculous commissions.
The new face of DIY investing is simpler and cheaper. From the comfort of your home, you can easily use your phone to access your discount brokerage app, buy your choice of ETF, stock, or options, and pay little to no commissions per trade.
Trading commissions charged by online brokers have fallen further in recent times as competition has increased. Even better, many Canadian discount brokers now offer commission-free trades on ETFs – either only on the buy-side (e.g. Questrade) or, in some cases, for both buy and sell transactions (e.g. Wealthsimple Trade).
Given that the purpose of self-directed investing is the lowering of fees and maximization of returns, this is a welcome development.
Online Brokers Offering Commission-Free ETFs
Some of the best online discount brokerages in Canada, which are great for both beginner and experienced investors, and offer some level of commission-free trading in ETFs, are listed below.
1. Wealthsimple Trade
Wealthsimple is Canada’s most popular robo-advisor. It has hundreds of thousands of clients and over $15 billion in assets under management.
It launched its brokerage service, Wealthsimple Trade, in 2019, and it is probably one of the best things to happen to Canadian do-it-yourself investors in a long while.
Wealthsimple Trade offers zero commissions to buy and sell thousands of stocks and ETFs on major Canadian and U.S. exchanges.
ETF Trade Commission: $0 per trade, whether buying or selling.
Stock Trade Commission: $0 per trade, whether buying or selling.
Account Minimum: None ($1)
Account Types Offered: Non-registered investment accounts, RRSP, and TFSA accounts.
Referral Program and Promotions: Sign up for a Wealthsimple Trade Account here and pay $0 fees when you trade stocks and ETFs. You also get a $25 cash bonus when you deposit at least $150 in your new account.
Robo-Advisor service: Wealthsimple Invest.
2. Questrade
Questrade is one of the most popular online brokerages in Canada and has one of the lowest fee schedules in the industry. Questrade was founded in 1999 and has over $30 billion in assets under administration.
ETF Trade Commission: $0 when buying and a minimum of $4.95 per trade when selling. This applies to all Canadian and U.S.-listed ETFs.
Stock Trade Commission: 1 cent/share with a minimum of $4.95/trade and a max of $9.95.
Options Commissions: Same as for stocks + $1 per contract.
Account Minimum: $1,000
Account Types Offered: TFSA, RRSP, RESP, LIRA, LRSP, RIF, LIF, Margin accounts, FOREX, and CFDs.
Robo-Advisor: They offer a robo-advisor service known as Questwealth Portfolios. You can learn more about this service in this Questwealth Portfolios Review.
Promotions: Open a Questrade Account here and get $50 in free trades when you fund your account with at least $1,000.
3. Qtrade Investor
Qtrade is another online brokerage to look at if you are looking to invest using ETFs.
ETF Commissions: It offers 105 commission-free ETFs ($0 when buying and selling). For ETFs not on the free list, you pay $6.95 to $8.75 per trade.
Stock Trade Commissions: $8.75 per trade or $6.95 if you place 150+ trades/quarter or have a $500,000 account balance.
Options Commissions: Same as for stocks + $1.25 per contract.
Account Minimum: $1,000
Account Types Offered: Cash, TFSA, RRSP, Margin accounts, RESP, LIRA, LRSP, RRIF, and LIF.
Other Features: Young investor (18-30 years) pricing is available at $7.75/trade, no account minimum is required, and no quarterly admin fees apply if eligible. In general, an inactivity fee of $25 per quarter applies unless your account balance is up to $25,000 or you contribute to it regularly.
Robo-advisor: It is related to the robo-advisor Virtual Wealth. Learn more about Qtrade in this review and how to get 50 free trades when you meet the eligibility requirements.
4. National Bank Direct Brokerage
A subsidiary of National Bank, National Bank Direct Brokerage, offers all levels of DIY investors competitive fees for online trading.
ETF Commissions: $0 on all Canadian and U.S. ETFs trades – both when you buy and sell.
Stock Trade Commissions: $0 per trade.
Options Commissions: Same as for stocks + $1.25/contract ($6.95 minimum per transaction).
Account Types Offered: RRSP, Cash, Margin accounts, LIRA, LRSP, RRIF, RESP, LIF, RDSP, and TFSA.
Other Features: An annual admin fee of $100 is waived when your total assets exceed $20,000 or if you trade at least five times a year.
Robo-advisor: It offers a robo-advisor service referred to as InvestCube.
5. CI Direct Trading (formerly Virtual Brokers)
CI Direct Trading (formerly Virtual Brokers) is a division of CI Investment Services Inc. (formerly BBS Securities Inc.).
ETF Commissions: $0 when you buy and a minimum of $1.99 (max. of $7.99) when you sell. Applies to all U.S. and Canada-listed ETFs.
Stock Trade Commissions: 1 cent per share; $1.99 min. and $7.99 max. Active traders with over 150 trades per quarter pay $3.99/trade.
Options Commissions: $7.99 + $1.25 per contract ($3.99 + $1.25/contract for active traders).
Account Minimum: $1,000
Account Types Offered: TFSA, RESP, LIRA, RRSP, RRIF, LIF, and margin accounts.
Other Features: An inactivity fee of $24.95 is charged per quarter if you do not place any trades and your account balance is lower than $5,000.
Robo-Advisor: It also provides a robo-advisor service called CI Direct Investing.
6. Scotia iTrade
Scotia iTrade is a subsidiary of the Bank of Nova Scotia.
ETF Commissions: $0 commission-free trading on about 50 Canadian ETFs (both buy and sell). $4.95 to $24.99 per trade for ETFs not on the commission-free list.
Stocks Commissions: $9.99 per trade; $4.99 per trade if you make over 150 trades/quarter.
Options Commissions: Same as for stocks + $1.25 per contract.
Account Types Offered: RRSP, TFSA, RRIF, RESP, Cash, LIF, LIRA, Margin accounts, and Cash Optimizer Account.
Other Features: Inactivity fee of $25 per quarter unless you have a $25,000 balance across accounts.
All the discount brokerages above have their pros and cons, and you should take a look at their small prints and other related fees before committing funds.
The Dilemma of Fees and Returns
It is no secret that the Management Expense Ratio (MER) levied on mutual funds eats into your long-term returns.
While DIY using a self-directed brokerage account can help to stave off the high fees and potentially boost your long-term returns, this may not materialize if you trade too often.
Even at $10/trade, trading fees add up!
If your online broker offers a $0 commission round-trip, trading actively becomes very attractive and comes with its own potential problems. You may become tempted to start timing the market or fall prey to investors’ behavioural biases.
Other Low-Fee Investing Options in Canada
Other options to lower your investment fees include:
A. Robo-Advisors
They are online portfolio managers who are significantly cheaper than traditional wealth managers. They use low-cost ETFs (similar to the ones you buy on an online brokerage) and automatically rebalance your portfolio.
The cheapest robo-advisor in Canada is Questwealth Portfolios.
Questwealth
Professionally managed ETF portfolios
Multiple accounts & low fees
Auto rebalancing and div reinvesting
Invest $10K free in 1st year
B. Index Funds
You can also invest by using index funds. Index funds are similar to mutual funds; however, they are passively managed and charge lower fees. They are a great way to generate market returns, which is often more than what actively-managed mutual funds can boast of.
Here’s a list of Index Funds new investors can use for their portfolios in Canada.
Here’s an article that breaks down how index investing works.
Related Posts:
- Best Robo-Advisors in Canada
- Comparison of Robo-Advisor Fees in Canada
- What You Need To Know About Investment Fees
- What is a Bond
- ETF’s Explained
- The Main Investment Risks All Investors Face
- Moka Review: How To Automate Your Investing
FAQs
Wealthsimple Trade is the best trading platform for commission-free trades for both stocks and ETFs. You don’t pay trading fees when buying these products, except for applicable FX fees if you buy or sell assets denominated in U.S. dollars.
Vanguard ETFs can be purchased without paying trading commissions when you use Wealthsimple Trade, Questrade, National Bank Direct Brokerage, and Qtrade (depending on which Vanguard ETF).
You forgot BMO.
https://www.secure.bmoinvestorline.com/selfDirected/pdfs/no_commission_fee_etfs_en.pdf
It’s a joke that Questrade as free ETFS. They charge a per share fee that they pass on for transmitting the order. A 3000 share order cost me $30 at Questrade, $9.95 at BMO Investorline.
Hi Larry, can you talk about this more? What is this per share fee? How do I see this fee to know it exists or is it baked-in?
Disnat (Desjardins) should really be included on this list. $0 commissions, similar to National Bank, slightly lower/easier to avoid account fees (annual fees, inactivity, etc), and overall a little better interface, in my opinion
@Tom: Good point. I will consider adding it when this article is updated.