Robinhood Canada: What Are Canadian Alternatives to the No-Fee Investing App?
DIY investing has increased in popularity over the past few years. And commission-free trading is desirable. Robinhood offers commission-free trades on its app, but is Robinhood available in Canada? And if not, what are some Canadian alternatives that DIY investors can use to keep more of their money by paying fewer fees?
Is Robinhood Available in Canada?
Unfortunately, no Robinhood is currently not available in Canada for Canadians. At one point, they had tweeted out about expanding to Canada, but that has yet to happen. They also had plans to launch in Australia and the United Kingdom, but that also has yet to happen.
As of right now, Robinhood is only licensed to sell securities in the United States to US citizens and residents. But US citizens and residents can trade outside of the United States. The app is supported in all countries except Cuba, North Korea, Syria, Iran, and the Crimea region of Ukraine.
What Is Robinhood?
Robinhood is a commission-free trading app founded by Vladimir Tenev and Baiju Bhatt in 2015. You can buy and sell exchange-traded funds (ETFs), stocks, options, and cryptocurrencies through the app. You cannot buy and sell bonds, precious metals, or mutual funds.
If you want more than Robinhood’s primary offerings, then starting at just $5 a month, you can upgrade to Robinhood Gold. Robinhood Gold offers research reports, analysis, and margin trading.
It’s also important to note that Robinhood only offers taxable accounts. Meaning you cannot invest in your registered accounts such as your 401(k) or IRA.
It is one of the most popular investing apps in the US, so it’s no wonder that it’s getting some attention here in Canada. Currently, 13 million people are using Robinhood. And the increase in users has led to an increase in day trading (not something I would recommend).
Benefits of Robinhood
- User-friendly app and web-based platform
- No minimum balance is required.
- Ability to purchase fractional shares
- The cash account is high yield savings account for your uninvested funds – comes with a debit card and is Federal Deposit Insurance Corporation (FDIC) insured
Drawbacks of Robinhood
- Taxable accounts only
- No ability to trade bonds, precious metals, or mutual funds
- Not available to Canadians
Alternatives to Robinhood in Canada
It’s important to review all account features before choosing a discount broker and investing platform. Sometimes the cheapest option may not be the best fit for you.
Wealthsimple is known as one of the first robo advisors in Canada.
But in 2019, they launched Wealthsimple Trade, a stock trading app (available on both Apple and Android devices) that offers commission-free trading for stocks and ETFs with no minimum balance required. And in 2020 announced that they were introducing a beta desktop version for some of their users.
There are no monthly fees or inactivity fees with Wealthsimple Trade and a 1.5% base conversion free for US trades.
Wealthsimple Trade offers taxable accounts as well as TFSA and RRSP accounts. They have bank-level encryption. And the Canadian Investor Protection Fund (CIPF) protects your money up to $1 million.
Benefits of Wealthsimple Trade
- No minimum balance
- Commission-free trades of stocks and ETFs
- No monthly or inactivity fees
- Ability to sign up for Wealthsimple Crypto (to trade Bitcoin, Ethereum)
- Registered (RRSP & TFSA) and taxable accounts
- Bank-level encryption
- CIPF protects your money
- Beta version of a desktop platform
Drawbacks of Wealthsimple Trade
- Only specific registered accounts offered
- Currently primarily app-based
- No ability to trade options, bonds, mutual funds, or open margin accounts
Wealthsimple Trade vs. Questrade vs. Robinhood
|Trading Commissions||Commission-free trades of stocks & ETFs||Commission-free ETF purchases, $9.95 fee for selling ETFs. Trading fees of $4.95-$9.95 for other commodities||Commission-free trades of ETFs, stocks, options, cryptocurrencies (although there may be a minimal fee when selling)|
|User Interface||App with a desktop version in beta for some users||App and web-based||App and web-based|
|Investment Options||Stocks & ETFs|
Can trade cryptocurrencies through Wealthsimple Crypto
|Stocks, ETFs, options, FX, IPOs, CFDs, mutual funds, bonds, GICs, International equities, precious metals||Stocks, ETFs, options, cryptocurrencies|
Questrade offers commission-free purchases of ETFs with fees for buying other commodities and when selling. They have no monthly fees but charge an inactivity fee of $24.95 per quarter if you did not make any trades that quarter and your account balance is less than $1000.
Your investments with Questrade are protected by the CIPF and Investment Industry Regulatory Organization of Canada (IIROC) up to $10 million. And you can invest in registered and non-registered accounts.
Unlike Welathsimple Trade, Questrade offers RESP, LIRA, RRIF, and TFSA and RRSP registered accounts. They also provide margin and corporate accounts.
However, you’ll need a minimum of $1000 before you can start investing with Questrade. But they do have a robust app and web platform to gain information and make trades.
Benefits of Questrade
- Commission-free purchase of ETFs
- No monthly fees
- Full offering of registered and taxable accounts
- Margin and corporate accounts
- Bank-level encryption
- CIPF and IIROC protects your money
- App and desktop platforms available
- Ability to buy and sell ETFs, stocks, bonds, options, and mutual funds
Drawbacks of Questrade
- Inactivity fee & minimum $1000 to start trading
- Trading fees when selling ETFs or making any other purchase
- No ability to buy and sell cryptocurrency
Increased Competition Benefits the Investor
There is no perfect Canadian replacement for Robinhood, but investment apps and platforms are becoming more competitive all the time. DIY investors can stand to benefit from this increased competition.
We are already seeing the benefits with the launch of Wealthsimple Trade and now its beta desktop version.
Watch for other companies to increase their offerings and decrease their fees to stay competitive. And maybe one day, Robinhood Canada will become a reality.