Best Canadian Discount Broker

Discount Brokers

Since I have been investing with dividend stocks back in 2009, I have used 5 different discount brokers (not so discounted back in the day though) and it’s a competitive market out there. One year broker A is ahead and the next it is discount broker B. They catch up to each other and try to outdo each other until they have spent enough money.

Not all discount brokers review is done the same. It’s often geared towards a new investor with little money rather than a seasoned investor looking for specific features. In the case of a dividend investor, it’s important to understand what you need to be successful with putting your dividend at work for compound growth.

While fees are important when you start, nearly all discount brokers provide a similar cost structure once you reach a minimum across all of your investment accounts. Your search for a discount broker needs to cover the following topics.

  • Discount Broker Requirements
    • DIY Investor Requirements
    • Dividend Investor Requirements
    • Index Investor Requirements
  • Discount Broker Comparison
  • Canadian Discount Brokers

Discount Broker Requirements

Understand your strategy and requirements. Below are some example but you may have others to add to the list. Shopping for a discount broker is similar to shopping for a bank or even a car. You are looking for something to match your needs.

DIY Investor Requirements

When it comes to simply being an investor there are some requirements needed to be successful.

  • Transaction costs to keep your overhead low. Important to invest small amounts continuously.
    • Understand the cost of a stock purchase
    • Understand the cost of an ETF purchase
  • The account maintenance cost.
    • Minimum account value to avoid maintenance fees
    • Ability to group spousal accounts for the total value
  • Support dual currency accounts for CAD and USD. The US is the largest economy in the world, why not benefit from it.
  • Support journalling for an effective DLR Norbert Gambit currency conversion.
  • Spousal account for managing all of the accounts in one place.
  • Provided research for investment education
  • Customer support for investors in need.

Dividend Investor Requirements

There are 2 main requirements that I must have with a discount broker for my dividend investing strategy. It must:

  • Support DRIP (Dividend Re-Investment Plan)
  • Provide the DRIP discount

DRIP is a powerful concept as it allows me to always have my money at work and to generate compound growth. Money at work is more important at this early stage for me than to pick my purchase price so I let it ride.

Index Investor Requirements

An index investor will want to invest small amounts in ETFs regularly. That means they need small or free transactions. There are many discount brokers that can offer free ETF transactions but sometimes the picking is limited.

Discount Broker Comparison

This table is strictly set up to highlight what is needed for a dividend investor but any investor can leverage the information as a starting point. If you are an ETF investor, Scotia iTrade or Questrade might work better for you since they have free ETF trading on certain ETFs. The grades may differ from other reviews done by the Globe & Mail or Canadian Business but in the end, it’s all information that you need to be aware of to settle.

While it’s good to have all your accounts with the same financial institution, don’t just settle for the discount broker at your bank if it doesn’t meet your needs.

wdt_IDDiscount BrokersQuestradeRBC Direct InvestingBMO InvestorLineTD Direct InvestingScotia iTradeCIBC Investor\'s EdgeWealthsimpleQtradeInteractive Broker
1Stock Trade Costs$4.95$9.95$9.95$9.99$9.99$6.95Free + ECN$8.95$1 min. or $0.01 per share
2ETF Trade Cost$0 Buy$9.95$9.95$9.99Some Free$6.95Free + ECN$8.95$1 min. or $0.01 per share
3Dual CurrencyYesYesYesYesNot Native?Not SupportedYesYes
4Synthetic DRIPYesYesNoYesYes?No??
5DRIP DiscountNoYesNoYes??No??
8Access To ResearchYesYesYesYesYesYes?YesYes
10Account Minimum$5,000 for all accounts; or Questrade MyFamily; OR under 25 yrs$15,000 for all accounts;$25,000 (RRSP); $15,000 (non-registered)$15,000 for all accounts$25,000 for all accounts$25,000 (RRSP); $10,000 (non-registered); $0 (RESP/TFSA)None$25,000$10 USD in commissions / month, or $100,000 USD

The basics for investors are covered above. If there is something specific you are looking for such as real-time quotes or transaction speed, you will have to inquire further. The red boxes are a clear no for my needs. Around half of my portfolio is in US currency and it’s important that it should be tracked properly and that transactions are executed in the appropriate currency. DRIP is also critical for my investing strategy. With the discount brokers above, that leaves RBC Direct Investing and Questrade and I have an account with both of them. Feel free to contact me if you want details on either.

I started with Scotia McLeod back in the day and then moved to Scotia iTrade as it was introduced only to move to RBC Direct Investing once I started investing in US conglomerates. I have since opened a Questrade account for my spouse mostly since we are starting accounts for her but I also wanted to understand both platforms. At some point, I do intend to consolidate but that’s not a rush as long as I have the full account such as a TFSA in one of them.

Overview of Discount Brokers

Questrade

Questrade is one of the best to get started but it might not be for intermediate to advanced DIY investors. Definitely one of the cheapest for trades.

Scotia iTrade Review (previously etrade Canada)

Scotia iTrade was my first serious platform through the purchase of etrade Canada. I stuck with it as trading was cheaper than Scotia McLoed and I was not far away from the minimum required holdings for $9.99 per trade. My requirements were minimal and I was satisfied. However, as I grew my portfolio and my investment knowledge, it stopped meeting my needs and I moved on to RBC Direct Investing.

RBC Direct Investing Review

RBC Direct Investing is where my fortune currently resides (if I can call it a fortune :)) … Considering it had the best matches highlighted in my discount broker review, I went with it and reviewed it after I was set up. Six months later, I initiated the transfer of my kids RESP and I can say, one more time, that their service is really good.

BMO InvestorLine Review

If you bank at BMO, BMO InvestorLine is probably your first stop. It’s competitive with the other banks offering.

Computershare

The darling of all accounts! Computershare is not sexy but it works. It follows the mantra of start early, go slow and stick to your plan.

 

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