Comparative analysis: The best online stock broker in Canada

By Kate Bregovic, a professional stock and ETF trader based in Eastern Canada.

At the moment, there is a lot of uncertainty and volatility in the world of finance because of the coronavirus recession. However, one thing is sure, the future of the industry will involve technology.

Stock brokers already are one of the indispensable solutions used by investors. Canada has some excellent online stock broker options to offer. But you need to remember that while all of them are good, they aren’t equal. Therefore, you need to choose your broker very carefully in order to achieve the best returns on your investment.

What are online discount stock brokers and how do they work?

It’s very important to understand that an online stock brokerage is not a real broker. This means that when you are using this service, you aren’t hiring a middleman to manage your stock investments. These online platforms simply provide you with an easy route to buy and sell ETFs, GUCs, mutual funds, stocks, bonds, etc.

But it’s you who is in charge of making choices and doing all the selling/buying. Therefore, you retain complete control of your investment with no risk of falling a victim to conmen.

This method is not only safer but also allows you to avoid costly commissions that come with hiring a traditional broker.

Online discount broker platforms are a base of operations you can use to make investing easier. You are the one who will need to do research and pick which all-in-one ETFs or dividend stocks to invest in. The platform allows you to save time and money while making investments. However, remember that you will be the one who needs to make choices, unlike when dealing with a traditional broker.

Using online stock broker platforms is easy. You need to register an account and then transfer money to it. The transfer should take 2-7 days depending on your bank. Note that it’s essential to choose the platform wisely so you can be sure your money is safe. The good news is that Canadian investment firms are actively boosting their cybersecurity. Therefore, the risks of investing through them are minimal. In fact, digital operations can be traced more effectively. Therefore, investing via a secure online platform might be safer for your bank account overall.

But to be sure that you are getting the best possible deal, you’ll need to study every available option thoroughly. Start by reading a detailed broker comparison for Canada. It will provide you with a wealth of information about the biggest and most trustworthy platforms.

Comparison of online stockbrokers in Canada for 2020

1. Questrade

Questrade is, pretty much, the best Canadian online broker for all your needs. It offers great service, great app, and great ETFs. It’s also a very low-cost broker platform, so you get maximum savings when using it. 

This platform has an account minimum requirement of $1,000. However, you won’t have to pay any annual fees or extra fees charged to buy ETFs. So, if you make an ETF-only portfolio, it’s essentially free for you. Also, Questrade will cover transfer fees for any RRSP or TSFA you choose to transfer.

This online broker has been in business for decades. Currently, it’s one of the most reputable and trustworthy companies in the industry. Moreover, you get extra security from the fact that Questrade is covered by the Canadian Investor Protection Fund. Also, note that Questrade has won multiple awards.

But bear in mind that Questrade is a platform for active investors. It literally charges a quarterly fee of $24.95 if your account is inactive (meaning has less than $1,000 or doesn’t have at least one trade every quarter).

2: Qtrade Investor

Qtrade Investor is a close second to Questrade, but it’s more expensive. Technically, there isn’t an annual fee charged by this platform. However, if your RRSP and TFSA (combined) are under $25,000, you’ll have to pay a $100 annual fee.

Also, the platform allows for free trading ETFs and mutual funds. But other types of trading come at a flat rate of $8.75. Qtrade will cover transfer fees for your RRSP and TFSA up to $150.

Note that the trading flat rate will be lower ($6.95) if you have over $500,000 in assets or complete over 150 trades per quarter.

This platform is also protected by the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Qtrade is also renowned for the design and ease of use of the platform itself.

3: BMO InvestorLine

BMO InvestorLine is a sub-division of BMO. This means that this is a great online brokerage platform for those who prefer to be more traditionalist. With such a powerful name behind the platform, it’s no surprise that it delivers premium quality service. It even provides a wide library of third-party research. This can help you greatly in making wise investment choices.

However, these top-quality services come at a price. In this case, the “price” is literal as BMOP InvestorLine is a much more expensive service compared to Questrade or Qtrade.

There is a trade fee of $9.95 per every single trade you make through the platform. All non-registered accounts less than $15,000 are charged an annual fee of $100. But registered BMO InvestorLine accounts will cost you nothing to open, regardless of the type of account.

4: WealthSimple Trade

WealthSimple Trade is a new platform. This broker only launched in 2019 and has yet to accumulate any significant power. However, it is the cheapest option currently available among top Canadian online brokers.

There is no doubt that this platform will soon climb closer to its older reputed competitors. It’s already renowned for fast growth and technological innovation. And as the COVID-19 pandemic is pushing forward the use of fintech, WealthSimple is rapidly accumulating new clients.

This online discount broker is cheap because it doesn’t charge a trade fee for ETFs. Also, you don’t have to pay anything for opening or closing your account with this platform.

Essentially, the only time when you’ll be paying for the use of this platform is if you order paper statements. If you choose to get your statements by email, they will be free. However, to get them on paper via mail, you’ll have to pay $20.

In addition, there is no minimum account requirements. Therefore, literally anyone can become an investor with WealthSimple.

However, this platform is still new and small. It only has a limited selection of ETFs. Therefore, your actual investment options won’t be very good. Note that you’ll only be able to make a RRSP, TSFA, or a non-registered personal investment account when using this platform.

What if you want to invest in USD?

Investing in Canadian Dollars is good, but quite often investors need to use the USD as well. Considering that US stocks often offer higher returns, not using this investment opportunity is a mistake.

However, you need to remember that every time you use the USD, you have to complete currency exchange. This usually costs between 1.5% and 2%. WealthSimple is one of the most affordable options for this particular cost.

You’ll need to remember this extra charge when choosing your online discount broker and ETFs. If your all-in-one ETF includes some US stocks, you won’t be able to escape this kind of fee at all. However, such portfolios are usually designed in a way that FX costs are a minimal loss.

But if you plan to go big on investing in the US, you’ll need to create a separate USD account. This way, you should be able to cut down the costs of foreign currency exchange. But if your primary account is in Canadian Dollars, you’ll be losing some on exchange anyway.

People who get paid in the USD are the lucky ones. They can transfer money to their investment accounts directly without any extra fees.

Who needs to use the services of online brokers?

Online trading platforms are highly flexible and allow you to customize your account to any specifications. This is what makes them good for any kind of investor. It doesn’t matter if you are a complete beginner or an expert with a creative investment strategy. You will be able to use a top-grade Canadian online stockbroker to make any kind of investing.

The platforms are also good for both active and passive investors. But note that some platforms charge a fee for inactivity. They also often offer perks for being very active. Therefore, you should study the options to see which fits your investment style and plans best.

In the meantime, do not forget that you don’t have to stick to one broker only. Each platform has its strengths and weaknesses. You should do your best to build up a portfolio that has as many strengths as possible.

Using online brokerage platforms isn’t as easy as using robo advisors for investing. This is because in the latter case, the robo advisor does all research and work for you.

However, these platforms are much more affordable. Therefore, any money-savvy investor should learn how to do their own research and use an online broker. The research part won’t be difficult even for novices today as there are many sources available.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.