Beware bank-owned brokers, rookie investors.
Policies vary among the digital brokers owned by the big banks, but it’s typical for them to charge $25 a quarter for registered and/or non-registered accounts with less than $10,000 to $20,000. These fees provide zero value – they’re simply in place to discourage small accounts.
In the latest Globe and Mail digital brokerage ranking, TD Direct Investing took top spot. But TD charges $25 a quarter for accounts with less than $15,000 in assets. The best brokers for rookie do-it-yourself investors have no account fees of any type, and they either charge nothing to trade or they have commissions that come in below the big banks. Here’s a rundown on some good options for investing newcomers of any age with just a few thousand dollars in hand:
Wealthsimple: No fees or commissions on the Wealthsimple app, and you can buy fractional shares. It’s best for cost-conscious newcomers to avoid U.S. stocks. You either pay $10 a month for accounts that can hold U.S. dollars, or you pay a stiff foreign exchange fee in having your Canadian dollars converted to U.S. currency.
TD Easy Trade: An app that offers 50 free stock trades a year, and unlimited buying and selling of TD’s own family of ETFs. You can’t buy ETFs from other companies, but TD has a reasonable selection on its own.
Questrade: Trades cost a minimum of $4.95, but there are no account fees to worry about. Questrade has one of the most beginner-friendly apps, and you can buy ETFs with no commission. Regular commissions apply when you sell.
CI Direct Trading: Charges an account maintenance fee of $24.95 a quarter, but it’s waived if you have more than $5,000 in your account. Commission-free ETF purchases, and stock trading commissions are as low as $1.99.
Do not scoff at the impact of $100 in account maintenance fees a year. With $5,000 in an account, $100 a year amounts to a 2 per cent drain on your returns. You get zero value in paying that fee.
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Rob’s personal finance reading list
They’ve had their fill of tipping
CTV News offered people a chance to vent about tipping expectations at restaurants, coffee places and other retail stores and services. If you’re feeling tipping fatigue, you have lots of company.
Getting to know the FHSA
A financial planner provides a helpful overview of the first home savings account, which is a no-brainer for young people 18 and up who aspire to own a home. If you need quick FHSA briefing, start here.
Best foreign exchange options
A look at a few different ways to convert Canadian money into foreign currencies, including banks and online services. Now, for a look at a trio of credit cards that do not charge the standard 2.5 per cent markup on purchases in currencies other than Canadian dollars.
The right price for tax software is zero
A review of seven free software programs and apps for filing your tax return. There is no reason to pay for tax software any more.
Ask Rob
Q: How safe is EQ Bank? They seem to have the best deposit rates.
A: EQ is safe. Deposits with this online bank are protected through parent Equitable Bank’s membership in Canada Deposit Insurance Corp. EQ offers more of a digital chequing account with solid interest than a pure savings account, and its rates are mid-pack right now.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
The Bank of Canada explains how mortgage rates are set by banks and other lenders.
The money-free zone
Going Back is a sappy song about lost innocence, but a lot of great artists have covered it over the years. And, it sticks in your head like glue. I like the version by The Byrds because of the harmonies and guitars, but Dusty Springfield also delivers. That voice. Chrissie Hynde and Bruce Springsteen, too.
ICYMI
- Here’s what you should do with $1,000, $10,000 or a million dollars
- These Canadians wish they had taken their CPP benefits earlier. Here’s why
- Why men (probably) shouldn’t take their CPP early
- Condo buyers get an unpleasant surprise: a stiff bill for rental equipment
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
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- ✔️ The housing file: A house isn't special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada's big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here's how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle