How To Choose the Best Discount Broker

Choose Discount BrokerDiscount brokers are not usually created equals and the differentiating factors might only vary slightly in the fine print but the result can cost you a lot of money in the end if you are not careful.

The Best Discount Broker for YOU

The best discount broker for you might not be the right one for your spouse, friends or family. Due to all the fine prints on trading and account fees, it’s really important to know the fine prints at each of the discount brokers and clearly understand what you need. It’s not always about the trading fees … The platforms developed are essentially software that can also help you manage your portfolio but giving you pertinent information on your portfolio.

I used to be with Scotia iTrade but I switched to RBC Direct Investing as Scotia iTrade did not provide what I needed anymore (for free). One of my portfolio goal was to diversify with US Conglomerates in US dollar and it wasn’t possible without a fee at Scotia iTrade. A friend of mine, however, was happy with Scotia iTrade as it provided free ETF transaction. As you can see, YOUR GOALS are really important when choosing a discount broker.

Criteria for Choosing The Best Discount Broker

Below are all the criteria you need to evaluate to choose the best discount broker for you.

What is it costing you?

Stock transaction fee: This fee has the most small prints across all discount brokers. Understand them because it will be one of your primary fee.

ETFs transaction fee: Competition is stiff and some discount brokers offer free commission on ETF transaction. Search for them if it’s important to you.

Options transaction fee: Will you be doing options trading? Know your fees up front.

Non-Registered annual fee: Any annual fee for having an account? There might be a minimum fund required to avoid fees. Often times, it’s across all the accounts.

RRSP annual fee: Find out what the annual fee for having a RRSP account is. If it’s advertised as free, make sure there are no limit or that you are comfortable with the limit.

TFSA annual fee: Again, look at the fees associated with this account if any.

RESP annual fee: Find out if you will incur a fee to save for your children’s education. There are plenty of free opportunities out there.

Minimum account funding: Is there a minimum that you need to start with to open an account.

The other features that matter

RRSP Dual Currency: This one was very important to me. Make sure you know if you can hold the companies in US currencies as opposed to CAD currencies with a conversion rate.

TFSA Dual Currency: Can you hold US separate from CDN? You can avoid currency exchange fees.

Non-Registered Dual Currency: Can you hold US separate from CDN? You can avoid currency exchange fees.

Spousal Account: Can you have a spousal account and share the minimum account fees?

Money Transfer: How can you transfer money to the discount broker? I ended up opening a bank account with RBC (at no cost) to easily transfer money.

IPO Notification: Can you be notified of IPO and preferred shares offering? Great preferred shares offer do not last long.

Mobile Support: It is convenient nowadays to have access to your portfolio on mobile. Personally, I did place a trade on my mobile.

Synthetic DRIP: Can you purchase more shares with the dividends earned?

Rate of Return Provided: Can you easily see your true rate of return on your investments? Not that if you transfer between brokers, they should be able to maintain the initial purchase information on your shares. They did for me at RBC Direct Investing.

Access to Bonds & GIC: Can you buy bonds and GIC through the online site?

Portfolio Tools: Find out what’s unique about their tools. RBC Direct Investing let you compare your portfolio to indexes.

Customer Support: How is the customer support? Find out from friends or other sources.

Access to Research: What I miss from Scotia iTrade is their research. It was well organized and fit with my investor style.

Take the time to do your research. Due to the competitive nature of getting clients, there are regular changes and consolidation. Make a spreadsheet and list your discount broker candidates. In the end, you’ll find YOUR BEST DISCOUNT BROKER.

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