Its time for uc to start diversifying. I have a lot in property (as we have rentals), but we really are overdue growing our financial investments.
Though early in my career I sold mutual funds, I now know they are really not the best way to participate in the market because of their high management fees. Even at ING Direct where we bank, the 1.07% MERs for indexed mutual funds are too high for my liking (thats a $10/year cost for every $1000 invested). These management costs destroy your return. Never mind that the managers paid these MERs off the top of your investments do a pretty crappy job at investing. By far (75%+) don't perform better than the market index anyway. So no mutual funds for me.
As well, I want to be a bit more selective with what I hold, so don't want to be limited to just a few set funds. I want real choice. So I'd prefer to do some general market indexing through an ETF, but then also get in on the stock of a few steller companies.
So, what broker is best? Everyone will have their reasons for going with a certain broker. And often people just go with their existing financial institution. As Scotia hasn't brought a brokerage service to ING yet, I have shop around. But I would suggest doing this anyways, just to find the right fit of brokerage for you.
The first consideration for me was, I wanted a cheap rate per trade (so no $20+ trades). When I actively traded it was pennies to transact, or you even got paid if adding liquidity, so regular brokerage fees still make me cringe. At this point I'm not planning on making many trades, so I want low cost on low trading volume. And I also don't have a huge amount to start with either, so low fees can't be based on a high account balance. And wherever I went, real time data had to be built in, so timing trades is simplified.
My criteria for no high cost trades automatically eliminated all the major banks and the credit unions (and CU partners, like Qtrade). Through them, trades are priced at $20+ unless you are an "active trader" with lots of trades a quarter, or have a high account balance (think $50k+). Disnat was the only one close to true discount rates, but at $10/trade was still a little high.
Next, I started looking at the online only players. Virtual Brokers made the cut with low trading fees ($6.49/trade), but real time data comes at a price of $15/month. That means I'd have to use quotes from somewhere else, which is too much of a hassel, so they were out.
Then there was ShareOwner ($10/trade, $40 maximum for trades in several stocks done at one time). Interesting pricing concept, but not what I was looking for. And they limit you to only a certain selection of companies, not cool. Out.
That left me with just just two choices: Questrade ($0.01/share with $4.95/trade minimum and $9.95 max) and Interactive Brokers ($0.01/share trades with a $1/trade minimum and $10/month minimum cost, 0.5% of trade value max).
What does that look like in the real world? Well, at one trade a month, of up to 500 shares, it works out to $5 at Questrade and $10 at IB. Two trades of up to 500 shares would be $10 at either. Pretty similar.
So digging deeper, Questrade has $1000 minimum to open an account, for IB its $10000. That is a significant barrier to entry at IB for many right there. Then there is platform. Both sound great, but reports from trader friends are that IB has the definite edge here.
Then there was the matter of registered accounts, like RSPs and TFSAs, which I had not originally considered a factor. Looks like all brokers do them except IB, so that took them out of consideration.
So Questrade wins!
For me, not wanting to commit to a minimum monthly cost, only doing 1-2 trades a month, and wanting to hold my investments in a TFSA, Questrade was the clear choice. Definitely would recommend them if you are in a similar situation.