Best brokers for starting your journey as a DIY investor

Beware bank-owned brokers, rookie investors.

Policies vary among the digital brokers owned by the big banks, but it’s typical for them to charge $25 a quarter for registered and/or non-registered accounts with less than $10,000 to $20,000. These fees provide zero value – they’re simply in place to discourage small accounts.

In the latest Globe and Mail digital brokerage ranking, TD Direct Investing took top spot. But TD charges $25 a quarter for accounts with less than $15,000 in assets. The best brokers for rookie do-it-yourself investors have no account fees of any type, and they either charge nothing to trade or they have commissions that come in below the big banks. Here’s a rundown on some good options for investing newcomers of any age with just a few thousand dollars in hand:

Wealthsimple: No fees or commissions on the Wealthsimple app, and you can buy fractional shares. It’s best for cost-conscious newcomers to avoid U.S. stocks. You either pay $10 a month for accounts that can hold U.S. dollars, or you pay a stiff foreign exchange fee in having your Canadian dollars converted to U.S. currency.

TD Easy Trade: An app that offers 50 free stock trades a year, and unlimited buying and selling of TD’s own family of ETFs. You can’t buy ETFs from other companies, but TD has a reasonable selection on its own.

Questrade: Trades cost a minimum of $4.95, but there are no account fees to worry about. Questrade has one of the most beginner-friendly apps, and you can buy ETFs with no commission. Regular commissions apply when you sell.

CI Direct Trading: Charges an account maintenance fee of $24.95 a quarter, but it’s waived if you have more than $5,000 in your account. Commission-free ETF purchases, and stock trading commissions are as low as $1.99.

Do not scoff at the impact of $100 in account maintenance fees a year. With $5,000 in an account, $100 a year amounts to a 2 per cent drain on your returns. You get zero value in paying that fee.

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Ask Rob

Q: How safe is EQ Bank? They seem to have the best deposit rates.

A: EQ is safe. Deposits with this online bank are protected through parent Equitable Bank’s membership in Canada Deposit Insurance Corp. EQ offers more of a digital chequing account with solid interest than a pure savings account, and its rates are mid-pack right now.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

The Bank of Canada explains how mortgage rates are set by banks and other lenders.

The money-free zone

Going Back is a sappy song about lost innocence, but a lot of great artists have covered it over the years. And, it sticks in your head like glue. I like the version by The Byrds because of the harmonies and guitars, but Dusty Springfield also delivers. That voice. Chrissie Hynde and Bruce Springsteen, too.

ICYMI

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