When it comes to discount brokers in Canada, one of the best options available is Questrade. Yes, there are a number of discount brokerages out there, and you can probably even open a brokerage account with your bank. However, not all of them come with the ease of use and the low trades associated with Questrade.
I use Questrade myself for my TFSA, RRSP, $family RESP, and a non-registered investment account. This Questrade review goes into detail on why I consider Questrade to be the best Canadian discount broker.
Costs Associated with Questrade
Because most traders are interested in the bottom line, I’d like to start with the costs associated with Questrade. Any broker is going to charge some sort of commission or fee. However, Questrade is very competitive in its pricing. You won’t have to worry about hidden charges.
Commission Free ETFs
One of the best things about Questrade is the fact that you can trade ETFs for free. Completely free. Starting in February 2013, Questrade started offering ETFs at no charge. As one of the investments growing in popularity, the fact that ETFs are free is a big deal.
Low Commission on Stocks
Stocks trade with $4.95 per trade commission, plus 1 cent per share. However, there is a $9.95 maximum charge on your order, so you don’t have to worry about things getting out of hand. This is Canada’s lowest commission structure. It’s also possible for you to trade stocks for a flat fee of 95 cents if you subscribe to an advanced market data plan from Questrade. This is an option that can suit active traders, since many active traders want access to this type of market data anyway, and the trades can be much cheaper when you trade actively. The $4.95/$9.95 maximum is best for buy and hold traders who are building a long-term portfolio.
International stocks cost 1% of their trade value in commissions. You can also trade Canadian IPOs for the same cost as regular stocks, but you need to add another $25 to that, and have a minimum order size of $5,000.
Commission Free Bonds and GICs
After buying all your stocks, you should look to bonds and GICs to help reduce risk to your portfolio. Questrade eliminated the fee when buying and selling bonds and GICs. This is a huge savings, as the old fee was $30 on each purchase, which would hardly seem worth it with interest rates so low.
More Ways to Invest
Questrade also offers options at $9.95 per trade plus $1 per contract (or $6.95 plus 75 cents per contract with the market data plan). You can also get involved with forex trading, where the commission is based on the spread, and not directly charged to you. Debenture trading costs $30 per trade, and you will pay $19.95 per trade for gold.
For those who like mutual funds, the cost is $9.95 for online trading. You have to add another $25 trader fee if you call in. However, with ETFs trading free, it might make more sense to go that route for funds, rather than use “traditional” mutual funds.
Your best deal is going to be stocks with Questrade. However, the other pricing options aren’t out of line for the industry.
You can get more pricing information from the Questrade site. This includes some information on the inactivity fee of $19.95 each calendar quarter if certain conditions aren’t met.
Signing Up for a New Account
Questrade offers you the ability to sign up quickly and easily. As with opening any financial account, you have to provide some personal information, so it makes sense to gather your needed information ahead of time so that you complete the process a little bit quicker. Here is what you need to open your account:
- Social insurance number
- Bank account information
- Employer details (or other source of income)
- Other basic personal information including name, address, birthdate, etc.
You will need to create a user ID and password when you start signing up. You can use this information to return and complete your application if you are interrupted for any reason during the process. The online submission is quick and secure. While you could print out your application, that just leads to the chance of mistakes and illegibility, not to mention the possibility that the information is lost in the mail. Use e-Signature and submit online, and the process is secure.
You will need an initial deposit to get started, and the minimum depends on what you are trying to accomplish. Just to trade stocks, there isn’t a minimum, although you should keep in mind that your account needs a $250 equity balance to remain in good standing. You will have higher minimums if you want to trade forex, or if you want a margin account. Other types of trading require even higher minimums.
It’s easy to fund your account with the help of EFT, broker-to-broker transfer, wire transfer, pre-authorized deposit, and cheque. You have to be careful about sending USD amounts to your Questrade account, though. You will need a pre-authorized deposit agreement in that case, since EFT isn’t available.
It’s also worth keeping in mind that Questrade will accept and hold USD in registered accounts. If you want to avoid conversion fees, and you use USD, Questrade can be a great choice.
Once you have your account, it’s fairly easy to navigate the site, log in later, and access your account. It is kind of annoying that you have to keep using the drop down box on every page in order to visit your accounts. This gets a bit tiresome if you have multiple accounts.
Questrade spent a lot of time updating and upgrading its trading platform. Now there are three main options for trading:
- Web: You can use IQ Web, the web-based platform that uses Silverlight. This allows for fluidity and security, but the main downside is the fact that Microsoft recently announced that it will be retiring its support for streaming Silverlight by 2020. So at some point this might not be the best option. Otherwise, though, there is plenty of power and usability with this version of the platform. There is an option for Linux users and others that don’t like Silverlight: IQ Essential, which is HTML5 based.
- Desktop: What’s great about the IQ Edge desktop version is that you can open unlimited workspaces to better utilize your customizable trading environment. You can also chose from a whole menu of options trades, which makes it easier for many traders.
- Mobile: As you might expect, this is Questrade on the go for your mobile device. You can get if for Android, iOS, Blackberry, and Windows phone. Plus, you can get it as an HTML5 web app.
Want Hands off Investing? Try Questrade Portfolio IQ
Portfolio IQ is a robo-advisor option being offered by Questrade as a low-cost way for you to open an account that will be managed by investment professionals. Rather than paying transaction fees when assets are bought and sold, you pay a flat fee, based on the size of your portfolio. Using ETFs, and algorithms based on the principles of Modern Portfolio Theory, Portfolio IQ can help you put together a portfolio based on your current risk profile.
It’s possible to open an account with as little as $1 and get started with investing. Questrade won’t even charge you fees until your account balance reaches $1,000, but the amount sits in cash until you reach this minimum balance. At that point, you will pay a flat fee of 0.7% per year (with a $99.95 minimum). As your balance improves, your management fee will decrease. By the time your account reaches $1 million (a common benchmark for retirement), the fee will drop to 0.35% annually. When you consider that many professional money managers, and even many other benefits plans charge in excess of 2% annually, the fee schedule from Questrade seems very reasonable.
Some of the other benefits of Portfolio IQ include:
- Customized portfolios: As your needs change, and as your risk profile changes, your portfolio changes. There is a degree of customization to Portfolio IQ that can benefit you.
- No transaction fees: You don’t have to worry about transaction fees, and that includes no-fee RSPs. Everything is covered under the umbrella of the low annual fee.
- Combined household assets: You can also combine your household assets so that you can get lower fees. This means that you can see agreement between different accounts from people who share a residence. This is a great way to make sure that your overall portfolio is properly managed, and to ensure that you get lower fees.
- Detailed reports: You can get detailed performance reports and projections to see how your portfolio is getting on. This is a good way to measure your progress, as well as see if you need to make some tweaks to your profile so that your portfolio can be adjusted.
- Tax loss harvesting: The managers at Portfolio IQ will take a look at the trades made, and will ensure that you get the best possible tax benefit from your portfolio.
Portfolio IQ is available entirely online, and the web site is easy to use. You can manage your money, and check your balance whenever it makes sense for you. The interface is intuitive and attractive. And, if you are dissatisfied with your experience, Questrade promises that you can get a refund of your last quarterly management fee, up to $100.
How to Use Portfolio IQ to Grow Your Wealth
Portfolio IQ works best when combined with dollar cost averaging and a set it and forget attitude. Since the tweaks of the portfolio are made by professionals that understand the importance of the long-term, it’s possible for you to use Portfolio IQ in your efforts to build wealth for the future.
One of the best things you can do is open an account (including qualified accounts) and then arrange to automatically invest a set amount of money each month. This will allow you to build the habit of regular investment. Plus, you’ll be investing more efficiently, since the costs are lower, and you have tax harvesting a part of the setup.
This is a product meant for long-term investing. This means that you shouldn’t use Portfolio IQ for many short-term goals. Instead, use it as a plan for the long-term. You should plan to make regular contributions over a period of between 20 and 40 years, in an effort to grow your wealth.
Because the management used is based on proven theories of portfolio management, and because there are professionals involved, you don’t need to actively trade. Indeed, if you are careful to leave the money in for a long period, you can take advantage of the fact that investments, when consistently grown over time, are the best way to build wealth over time.
Portfolio IQ is a welcome addition to the Canadian financial scene. This robo-advisor option offers a middle way for Canadians to get some expert help with their long-term investments, and do so without the need for a huge portfolio.
Questrade Offer Code for $50 In Free Trades
With an offer code for $50 in free trades (CanadianFinance) and trades only costing $4.95-9.95, it’s a great choice for those who want to keep their fees low, but especially for those who do not meet the minimum dollar balance or minimum trades per quarter that other brokers require to give you their lowest commissions.
You’ll receive $50 in free trades be using promo code CanadianFinance. This will likely happen automatically if you use this link, but you’ll want to confirm it’s in your offer code box to get the $50 worth of free trades.
Overall, Questrade is a great option for most Canadian investors, I’ve used them for a few years now and highly recommend them. Please leave a comment if you’ve used Questrade and want to add your own experiences to my Questrade review.