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Best Online Brokerage Accounts in Canada for 2020

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Best Online Brokerage Accounts in Canada for 2020

If you want to cut your investing fees to the absolute bone, then a Canadian online brokerage is the road you must travel. Compare the best trading platforms in Canada!

Whether youre investing using a robo advisor or financial advisor, you probably realize that youre paying a chunk of change in fees and add-ons. To cut costs, you can manage the money yourself by signing up with one of the best online brokerage in Canada like Questrade (which is our top pick). To help you get started, weve put together a handy guide detailing Canadas best online brokers, as well as some tips on how to choose the best one for you.

An online broker lets you buy and sell stocks online within your trading account. They are often called online brokerage or discount brokerage because this method of buying and selling stocks is more cost-effective than a traditional brokerage.

Online brokers operate on the same principle of investing for growth as mutual fund managers and robo advisors. Online brokers offer investment options that are both higher risk and higher return than savings accounts or GICs, and these higher returns help you save for retirement over the long term.

Where online brokers differ from mutual fund managers and robo advisors is how they deliver that service. Mutual fund salespeople and robo advisors rely on a questionnaire and sometimes an in-person meeting to help them determine your ideal asset allocation, and then build a portfolio for you.

Its all DIY with online brokers. Online brokers leave asset allocation and portfolio building to you, and instead of offering oversight and advice, they offer a low-fee environment for you to invest your money.

Online brokers are ideal for investors who follow theCouch Potato Portfoliostrategy because it lets them build their ideal portfolios easily with a handful of low-cost ETFs. You can use your online broker as little as four times per year to build your portfolio and rebalance your asset allocations.

Questrade offers a variety of platforms to help you trade, along with a mobile app that is responsive and easy to use. The Canadian Investment Protection Fund covers Questrade, so your money is in safe hands. Questrade has been operating in Canada for 20 years, and with more than 50,000 online account sign-ups in 2019, theyre one of Canadas fastest-growing brokerages. Its whyQuestrade is our top pickfor thebest overall online brokeragein Canada.

If youre interested in purchasing mutual funds yourself, Qtrade is one of the few discount brokerages with the ability to do so and you wont pay any fees or commissions when buying them.

Maintaining an account with Qtrade is slightly more expensive than Questrade, but still very cost effective, setting you back $100 per year for RRSPs and TFSAs with less than $25,000 in combined assets. Youll pay $8.75 per trade with Qtrade, and there are no account minimums. If you incur fees when transferring your assets to Qtrade, they will cover up to $150.

To better understand what you get with Qtrade we suggest to read and compareQtrade vs Questradein our review.

BMO InvestorLine isnt the least expensive discount brokerage, with fees on accounts under $25,000, and fees to purchase ETFs, but their zero minimum balance requirement andaward-winningplatform are enough to overcome the drawbacks.Read full review

is the online brokerage arm of the Bank of Nova Scotia and is a good choice for investors who want to keep money with an institution with name recognition. The bank has a long history in Canada dating back to 1837 and has hundreds of brick-and-mortar branches.

Scotia iTrade recently re-structured its fee system, making it way more affordable than it used to be.The new fees start at $9.99 per trade and are reduced to $4.99 per trade if you make more than 150 trades per quarter.

Youll also pay account fees when you open RRSPs and TFSAs through Scotia iTrade. Expect to pay $100 until your accounts reach a $25,000 balance; higher balances pay no fees. You can build a portfolio of ETFs with Scotia iTrade using their 49 commission-free ETFs. This platform isnt the most cost-effective for investors with small account balances.

TD Direct Investing has a lower minimum account threshold than other large online brokerages, meaning that an account balance of $15,000 will waive the $100 account fees. There is no minimum account size when opening a TD Direct Investing account, and youll pay basic trading fees of $9.99 per trade.Read full review

Virtual Brokers has several trading platforms to choose from and a huge research center to help you stay ahead of the curve when making trades.Read full review

Wealthsimple Trade does not have an account minimum, so you can open an account for free and add funds when youre ready. Wealthsimple Trade accounts are CIPF-protected for up to $1,000,000. The platform currently supports RRSP, TFSA, and non-registered accounts. Read our fullWealthsimple Trade review.

When using an online broker, youre the boss: you make the investment decisions and choose what to purchase. While you can purchase individual stocks and bonds through your online broker, most DIY investors opt to build their portfolios out of ETFs. This strategy lets you build a highly diversified portfolio without having to go to the trouble of purchasing dozens of individual stocks.

TheseCanadian couch potato model portfolioscan help you get started. Each includes different asset mixes, and you can pick one thats best suited to your risk tolerance. For instance, you could build a portfolio with ETFs that is 60% equities and 40% fixed income:

If you invest your money through an online broker in these three ETFs, you will have a globally diversified balanced portfolio.

What is the benefit of purchasing your own investments directly and rebalancing manually when your investments slip out of their ideal asset allocation? There is one thing that draws in DIY investors: low fees.

The reason that most DIY investors choose to work with an online broker is to minimize the management expense ratio (MER) they pay on their investments. MERs are the management fees associated with individual funds. MERs are expressed as a percentage of your assets and vary depending on the style of investing you choose.

Mutual funds in Canada have some of the highest MERs in the world, at an average of 2.5%. Robo advisors offer a lower MER, usually less than 1%. DIY investing offers the lowest MER possible. The portfolio above has a MER of 0.14%.

The differences in these fees may not seem like much, but they can erode thousands, or even hundreds of thousands of dollars from your portfolio, given a long enough time horizon.

When choosing an online broker, its important to consider how youll use the online broker and choose the broker that will best suit your needs. Here are some examples of factors to consider:

If you plan to build a passive index investing portfolio using only ETFs, choose an online broker that offers commission-free trades or free ETF purchases and low overall fees. In contrast, if you are planning to be a high-volume trader, making up to the minute decisions on which stocks to purchase, a discount brokerage with high-quality software platforms and access to third-party research should be a priority.

Consider your account size when choosing an online broker. If you have a portfolio that is already over $25,000, youll be unlikely to pay fees at any of the brokerages listed. If you are just starting out and only have $500 to invest, some online brokers will not be an option due to account minimums, while others will eat into your returns with steep quarterly fees.

If youre new to investing online, choosing an online broker with excellent customer service and an easy to use interface should be a priority since youll probably have a few questions at the beginning. Seasoned investors may be able to forgo good customer service in favour of excellent research and trading platforms.

If youre planning to build your portfolio using ETFs, its important to pay attention to how much youll pay every time you make an ETF trade. Keeping your per trade fees low is key to minimizing your overall fees, especially if your portfolio is small.

Many online brokers charge quarterly fees on smaller accounts, usually around $25 per quarter on accounts smaller than $25,000. If you have a modest nest egg, you should choose an online broker that does not charge these fees, because they will significantly erode your annual returns.

For portfolios built with ETFs, the ideal scenario is an online broker that does not charge for ETF purchases. There are several online brokers on this list that offer free ETF purchases, and some offer free ETF trades on certain ETFs. Usually, youll still have to pay to sell your ETFs, but youll usually only need to do this a maximum of two or three times per year.

When you transfer an investment account from another financial institution to an online broker, the original institution will often charge a transfer fee to move your money. Some online brokers will pay these fees. For instance, you can transfer almost any type of investment account over to Questradefor any amount and for as many accounts as you like. Questrade will cover the transfer-in fees, for up to $150 per account.

ECN fees are fees that you pay when you place an order with an online broker for either stocks or ETFs, and that order is fulfilled immediately instead of waiting for the price of the stock or ETF to reach a certain point. The fees originate from the exchange networks that fulfill the orders and are usually a fraction of a cent per share. ECN fees vary from broker to broker and could add a few cents to a few dollars on your purchases. For average investors, ECN fees are not significant, and you shouldnt worry about them.

Financial Advisor vs. Online Broker vs. Robo Advisor

You like doing your own research on investing

While online brokerages have customer service lines to assist with using their trading platform, you wont receive investment advice if you go the DIY route. Some online brokers offer market research and investment monitoring, but that functions to help you make better investment decisions not to make that decision for you.

Some robo advisors and most online brokers have low or no account minimums, while financial advisors can require account minimums of $5,000 or more.

You need a high level of personal interaction

Financial advisors offer a high level of personal interaction that many Canadians find comforting and usually involves a 30-minute conversation in person at a brick and mortar branch or office. But keep in mind that human interaction has a higher price tag.

You like a little personal interaction and/or investing advice

With a robo advisor, youll complete a questionnaire to identify your financial needs and goals, and you can book a free call with one of their wealth advisors if you need that extra hand-holding. But there is no brick and mortar branch, and you wont have an assigned wealth advisor.

Low fees are the primary driver behind the popularity of online brokers

You have a unique financial situation or goals

Online brokers are highly customizable since youre the boss, but choosing the right investments will require some research on your end. A financial advisor is trained to take special circumstances into account and choose the right portfolio for you but that comes with higher fees.

You are comfortable with  re-balancing your portfolio at least four times a year

If youre comfortable with re-setting your portfolio back to the original asset allocation in your plan, then go with an online brokerage. If not, a robo advisor can do it automatically for you.

When it comes to getting the most out of your portfolio, the best option is to invest your money yourself, cutting out the middle person and vastly reducing the fees youll pay over the lifetime of your investments. While using an online broker to invest your money may seem intimidating at first, a simple portfolio built out of ETFs will give you the growth needed to reach a comfortable retirement, while keeping you in the drivers seat of your money.

All of the online brokers listed above are good choices, but each has strengths and areas for improvement. However, if youre looking to take the hassle out of DIY investing plus save big on fees,Questradeis your best bet and our top choice for the best online brokerage in Canada. Ultimately, the right one for you depends on your financial situation, but its not a question of if you should switch to an online broker to manage your money its when.

Thank you so much for such a great article and helping me understand different types of Online Brokers !

Im a QTrade client. If QTrade is best for customer service them the Canadian online brokerage world must be in a sorry state.

According to CIPFs website, QTrade is no longer a member as of 2018-07-01

Credential Qtrade Securities Inc. is listed as a member on the CIPFs website.

I have had a QTrade account for several years and thier customer service USED to be exceptional however since they were purchased it has been absolutely atrocious. I am really disappointed and am planning on moving my account somewhere with at least average customer service. This really should be updated in future reports because it has been bad for a while now.

Wanted to share my experience with Virtual Brokers as it may serve as a cautionary tale for other DIY investors.

I built my portfolio using TD Waterhouse. It is all ETFs super low cost. Given my portfolio size there were no annual fees, just buy/sell costs. I rebalance twice a year so I pay ~$500 a year in fees. Id read so much positive press on Virtual Brokers, I thought Id transfer my accounts there as they do not have ETF buy/sell charges.

I initiated the process on Feb 24th, tick tock, tick tock. As of today, though all the accounts are set-up at VB (me RSP, LIRA, TFSA, investment + hubby RSP and TFSA = 6 accounts), only two of the six are transferred.

The service at TD was excellent. The service at VB though very polite is highly ineffective, and I qualify for their Premier service. Was the service at TD worth $500 a year? I am starting to think maybe it was.

Hi, Virtual Brokers Changed their fee structure. Please see

We offer a standard commission plan for beginner and intermediate investors. Pay as low as $1.99 per trade with our new commission structure. But what makes us a great choice is that we offer ALL ETFs Free to purchase!

Ive been a client of Questrade for years. I like their platform, but now I am disgusted they are proposing to charge me a $25 inactivity fee if I do

not trade for 3 months. I like to make my investment decisions on fundamentals, not on having to avoid charges. Im looking for a new broker

that understands that. As there are none in Canada, maybe now is the time for me to transfer to Asia or USA.

FYI, you can avoid Questrades inactivity fee if you have at least $5,000 in combined equity in your account. I hope this helps!

I am looking for a discount Canadian broker that deals with Canadian stock exchanges and has no minimum deposit. Is there such a thing?

Can I invest in Mutual Funds also through these platforms ?

Yes, you can purchase mutual funds through these platforms but before you do its important to understand the way mutual fund fees work in Canada.

Most mutual funds come with built-in trailer fees ongoing commissions paid to a dealer representative (bank advisor) and the mutual fund company. For an equity mutual fund this is typically around 1% and this drives up the total MER of your mutual fund to around 2% (average in Canada).

The trailer fee is meant to pay for the cost of ongoing advice from your advisor, but in reality many Canadians are not getting ongoing financial advice. In effect, theyre paying the fee for no advice or service.

Enter the discount brokerage. Here you can buy and sell stocks for fairly cheap (and no ongoing commissions), and buy ETFs for free (with Questrade) for a very small fee.

What you dont pay is a trailer fee for ongoing advice because a discount brokerage assumes youre a do-it-yourself investor and dont need advice.

All that said, you CAN buy mutual funds through these platforms, but understand that youre paying an embedded trailer fee for advice that you will never receive.

which platform to use to purchase Mutual Funds and Index Funds ?

Good write-up but what about Interactive Brokers Canada? Im with BMO IL but as I understand it, IB has a smoking deal on currency conversion. Example: say you have $50,000 CAD and you want to convert that into USD. With BMO and other banks you would pay 1.6% or $800 CAD. IB on the other hand charges you 1*0.2 basis points or $2 USD, whichever is greater, so the FX fee is = 0.0001*0.2*$50,000 CAD = $1 CAD, therefore the minimum $2 USD charge would apply in that situation.

Yes, Interactive Brokers does have a terrific deal on foreign currency conversion rate at 0.2 bps.

Their platform is more appropriate for advanced, frequent traders but the FX deal is intriguing.

The one challenge is that it can take some time to wire money to IB to perform the currency conversion and then wire it back to your main brokerage. A lot can happen with the markets in that time, which could far outweigh any savings on currency conversion.

A better option would be to use a broker that allows you to perform Norberts Gambit on the same trading day to reduce the risk of markets making a big move while your transaction is waiting to settle.

Hi, Thanks for the great information. I have a TD web broker account and I think 9.99 a trade is too much. Also on top of that paying a $30 monthly fee to get the advance screen (trade less than 30 trades a month). I am looking in to in Questtrade and HSBC. Can you please give your thoughts. And if you can you comment on streaming package, level II us and Canadian packages, prices, etc.

With Questrade you can access level 2 quotes and data (Canada and U.S.) for $89.95 per month. You get a full rebate if you spend more than $399.95 in trading commissions, though.

Are there any discount Canadian web brokers that will hold warrants, debentures and non-traded BCFs as part of a portfolio?

Questrade allows you to trade warrants and rights, notes and debentures, and non-DTC eligible securities. Heres a link to the page on their website that lists these items and their cost:

The Scotia itrade pricing is incorrect. Their fee is $9.99 standard and high-balance/active trader fee is $4.99

Thanks for alerting us! The fees that are listed in the article are from about a year ago. The new fees do indeed start at $9.99 per trade and are reduced to $4.99 per trade if you make more than 150 trades per quarter. Ill update our article. Thank you!

This is a no brainer. Wealthsimple Trade is far and away the best online brokerage, if only for the ZERO $ commission trades. I will admit that it does have its short comings (and no shortage of them) but is a HUGE step in the right direction. We in Canada have been robbed by unreasonably high trading fees for way too long. Hopefully the others will follow suit and sharpen their pencils when they start losing business to WST, as it will only get better with time and customers. Once again.FREE TRADES!!!!!!!