Add a little power to your dollar

June 29, 2008

Are stock trading commissions eating away at your profits (or increasing your losses)? Ticked off at paying at least $29/trade at one of the big bank discount brokerages? Well there are some new players in town! They are MUCH cheaper and offer similar features. Who are we talking about? From my research, there are 3 major (cheap) discount brokerages in Canada that are worth mentioning which include: E-Trade, Interactive Brokers, and Questrade.

If you are looking for an RRSP account to invest in mutual funds, then you have 3 options, big bank, E-Trade, or Questrade.
If you’re looking for an RRSP account (with little interest in mutual funds) that has no fees, low minimum deposit, low commissions and you trade less than 790 shares at a time and LESS THAN 50 trades/year, then Questrade is your best bet.

I myself use QuestTrade and absolutely love it! $4.95 commission on every trade, with no monthly fees? Who wouldn’t fall head over heels with this deal. The only draw back is the required 3 passwords to access 3 different sections of the trading platform, but come on… when you are saving roughly $100 dollars per month this is hardly a legitimate complaint.

If you’re looking for an RRSP account but with a larger balance and typically trade greater than 790 shares at a time and MORE THAN 50 trades/year, then CIBC Investors Edge is best.
If you’re looking for a non-registered trading account with ridiculously low commissions and margin interest, then Interactive Brokers is a no brainer. There is a $10USD / month minimum fee with IB which means that if you spend less than $10USD in commissions in a month, they will charge the difference to your account. For example, if you spend $6 USD (6 USD trades) in commissions in a month, they will charge you an extra $4 USD. These monthly fees are tax deductible. IB also offers extremely cheap currency exchange. The biggest downside of IB is that you have to pay for your real time data.

Alot of people are making the mistake of jumping on the easiest rather than the best option available when choosing a discount brokerage (i.e. their banks). Don’t be fooled! Ironically, when I first took my investments step I signed up with my bank because it seemed like the easiest thing to do. They kept asking and throwing out smiles at you like a shark stalking its prey — The fact of the matter is that they offer no differences from Questtrade or Etrade.

When it comes to finding out what best fits your needs: be patient, learn, and do your research before you jump in head first. Take the opportunity of having the endless power of information at your fingertips: The Internet.

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Posted in Discount Brokers, Investing