The Best Online Brokerages in Canada for 2021
Many Canadians want to make their own investment decisions instead of relying on financial advisors or robo-advisors. They’ve started building their own portfolio of exchange-traded funds (ETFs) and individual stocks in an attempt to take control of their financial future. The way to do that is to open an online brokerage account.
In this Wealth Rocket article, we'll peruse through the best online brokerage accounts in Canada, providing detailed reviews on how much they cost to use, how they work, and much more.
The Best Online Brokerages in Canada
The best online brokerages have many similar traits. They have fair trading commissions and account maintenance fees, a mobile app, offer a large variety of account types, and provide excellent customer service.
The best online brokerage in Canada varies depending on who you ask, but here are our favorites.
Questrade is one of the most popular online brokerages in Canada. It’s known for its low commissions (starting at $4.95/trade) and the ability to buy exchange-traded funds (ETFs) for free.
You can also get access to more sophisticated trading platforms. To qualify for active trader pricing, you must subscribe to a data package. The monthly fee starts at $89.95, but it’s possible to get a full or partial rebate.
While most brokers don’t charge for mutual fund trading, Questrade charges $9.95 each time you want to buy or sell a fund. However, Questrade no longer charges an inactivity fee.
2. Qtrade Investor
Qtrade Investor is commonly confused with Questrade, but they’re two different brokerages. Qtrade charges lower commissions than most brokers ($8.75/trade). It also offers preferred pricing for investors under 30 ($7.75/trade) and active traders or those with $500,000 or more in assets ($6.95/trade).
The brokerage doesn’t charge for buying and selling 100 different ETFs with a minimum order value of $1,000, which is a nice perk.
The quarterly administrative fee of $25 is waivable if you have $25,000 in assets, make two or more trades per quarter (or eight a year), make a recurring monthly contribution of $100 or more if you’re under 30, or if the account is less than a year old.
3. Scotia iTrade
Scotia iTrade’s commissions are similar to what other bank-owned brokerages charge: $9.99/trade. Commissions are just $4.95/trade for those who make 150 trades or more per quarter. There’s also a premium trading platform called Scotia iTrade FlightDesk for more experienced investors.
Investors who make a certain number of trades per month or reach a certain threshold in terms of assets can qualify for the Scotia iTrade Club. There are gold and platinum levels. Members also have access to a dedicated client service line, savings on account fees, and free access to FlightDesk.
4. Wealthsimple Trade
Wealthsimple Trade is one of the newest online brokerages. It’s appealing because it doesn’t charge commissions on stock and ETF trades. That makes it easy to buy a number of stocks in different industries and build a diversified portfolio without paying any commissions.
There are drawbacks, however. There are only three types of accounts you can open (an RRSP, TFSA, or taxable account). Also, you can only trade stocks and ETFs. For a beginner, this is probably fine. But it’s not for someone who wants to trade options or fixed-income investments.
5. CIBC Investor’s Edge
CIBC Investor’s Edge offers lower fees than most other bank-owned brokerages at just $6.95/trade. Those who make 150 or more trades per month pay only $4.95/trade. There’s also no minimum account balance to begin trading.
A downside for sophisticated investors is that CIBC doesn’t offer the variety of trading platforms that other brokerages do.
6. BMO InvestorLine
BMO InvestorLine charges $9.95/trade for all investors, and there’s no minimum balance to open an account.
Those who make 15+ trades/quarter or have $250,000 or more in assets qualify for the BMO 5 star program, which offers preferred rates and pricing, access to a professional-level trading platform, and priority service.
For investors who want some guidance from registered investment advisors but still want to make their own investment decisions, BMO InvestorLine adviceDirect is available to them.
7. Virtual Brokers
Virtual Brokers’ commissions are as low as $0.01/share, but the minimum is $1.99/trade to a maximum of $7.99/trade. Active investors (150+ trades per quarter) pay $3.99/trade. And there are no commissions when buying ETFs, but only when selling them.
The brokerage also offers some sophisticated trading platforms for active investors that start at US$250 a month.
9. TD Direct Investing
10. National Bank Direct Brokerage
National Bank Direct Brokerage’s trading commissions are as high as $9.95/trade to just $0.95/trade for active investors (100+ trades each quarter). It pays to be under 30 because commissions are $4.95/trade. The brokerage does offer free trades for ETFs listed on Canadian and U.S. exchanges as long as you trade 100 or more units.
The major downside is that there isn’t a trading app. That means if you’re on the go and see a trading opportunity, you need to find a computer.
What is an Online Brokerage?
An online brokerage allows you to buy different types of investments through the broker’s website or app. Before online brokerages existed, you would usually have to call your broker to make a trade.
The great thing about online brokerages is that you can hold mutual funds, ETFs, stocks, bonds, GICs, and other investments all in one trading account. If you open an RRSP, TFSA, RESP, or non-registered account at a bank, you can usually only hold cash, GICs, or mutual funds.
However, you can normally hold only one type of investment in each account and not all three. You also can’t buy stocks without a brokerage account.
Many online brokers will also provide you with free webinars or videos, research reports, stock screeners, and much more.
How Does an Online Brokerage Work?
To make a trade, you log into your account either through the brokerage’s website or trading app. Then you look up the type of investment you’re interested in purchasing.
If you want to buy a stock, for example, there may be a buy/sell item in the dropdown menu or a button.
All you have to do is click on it, type in the number of shares you want to buy, and place the order. The broker will then execute the order, and you’ll own shares of the company within a few seconds.
How to Choose an Online Brokerage
When there are a number of brokerages to choose from, you may come down with a case of analysis paralysis. If you don’t want to pay any commissions, then your choices are very limited. If you want a sophisticated stock trading platform, then you have a lot more choices. It helps to narrow things down by looking at your needs and the costs of having an account.
Your needs and wants will play an important role in choosing a brokerage. If you want research reports, the ability to open every type of registered account, trading tools, and expect to trade options, a brokerage that offers those features and services will be right for you. You have to decide what broker meets all of your needs.
Commissions and fees will also be a factor in what brokerage you choose. If you expect to trade often, the one that charges higher trading fees than its competitors might not be the best option if you’re concerned about costs and the impact on your overall returns.
Frequently Asked Questions
It depends on how comfortable you are with making your own investment decisions. A brokerage can be a good way to get your feet wet in the world of investing.
Opening a brokerage account now can save you the hassle of moving your investments to an online broker later. However, you might want to start investing in a mutual fund or ETF instead of putting all of your money in an individual stock.If you don’t have enough money to have the account maintenance fee waived at your favorite broker, it might not be worth the cost of opening a brokerage account.
Yes, online brokerages are safe. If you’re worried about a broker going bankrupt, the Canadian Investor Protection Fund (CIPF) will protect your investments up to a certain limit.
The limit for individuals is $1 million for all combined general accounts (such as margin accounts and TFSAs) combined, $1 million for all combined registered accounts (such as RRSPs, LIRAs, LIFs, and RRIFs), plus $1 million for all combined RESPs.
However, keep in mind that the CIPF doesn’t protect your investments if they decline in value. All of the brokers mentioned in this article are CIPF members.
The best online brokerage depends on a beginner’s wants and needs. Do you want to pay no fees? Do you want to trade ETFs for free? Do you want to trade in a variety of registered accounts? Do you want access to stock research reports and on-demand webinars?
Unfortunately, not every brokerage offers all of these, so you’ll have to choose the one that has what you want. Most of the brokers mentioned in this article cater to new investors, so you have a lot of choices.