Questrade vs. TD Direct Comparison 2021
There are more than a dozen online brokers that allow you to trade stocks in Canada, including Questrade, TD Direct Investing, Wealthsimple Trade, BMO Investorline, and HSBC InvestDirect.
Each offers a variety of features that make them appealing to different types of investors. In this online brokerage comparison, it’s Questrade vs. TD Direct Investing.
Table of Contents
Questrade bills itself as Canada’s fastest-growing online brokerage. It’s been around since 1999 and is based in Toronto. The online brokerage is known mainly for its lower trading costs and the ability to buy exchange-traded funds (ETFs) without having to pay a commission. That comes in handy for investors looking to build a low-cost ETF portfolio.
Questrade allows you to trade a variety of investments, including stocks, ETFs, fixed income, mutual funds, options, guaranteed investment certificates (GICs), foreign exchange (forex), precious metals, and contracts for difference (CFDs). Questrade also has a robo-advisor called Questwealth Portfolios.
There are several investment account options to choose from. The basic accounts, such as tax-free savings accounts (TFSAs), registered retirement savings plans (RRSPs), registered education savings plans (RESPs), registered retirement income funds (RRIFs), locked-in retirement accounts (LIRAs), life income funds (LIFs), locked-in registered retirement savings plans (LRRSPs), and margin (individual or joint) accounts are all available.
However, that’s not all. There are also accounts for entities (corporate, investment club, partnership, or sole proprietorship), trusts (individual informal, joint informal, or formal), and forex and CFDs (individual or joint).
Questrade’s fees vary depending upon the type of online trading platform you use and whether you choose active trader pricing. The four platforms are Questrade Trading, the Questrade app, Questrade IQ Edge (for advanced trading), and Questrade Global (for trading on international markets).
Regular traders pay a minimum commission of $4.95/trade and a maximum of $9.95/trade. That’s lower than what most online brokers owned by the big bank’s charge.
As mentioned before, ETF purchases are free but you pay the regular commission of $4.95 to sell them. You also have the option to sign up for enhanced live streaming data for $19.95/month. This fee is eligible for a full rebate depending on how many trades you make a month.
With Questrade’s active trader pricing, you can choose a fixed or variable plan. Under the fixed plan, stock trades and ETF sales are $4.95/trade. Under the variable plan, stock trades and ETF sales are $0.01/share up to a maximum of $6.95/trade.
To get active trader pricing, you need to purchase an advanced live streaming data package that costs $89.95/month.
However, the fee can be waived partially or fully depending on how many trades you make every month.
Questrade Pros & Cons
Pros: The Good Stuff
Low trading commissions: The trading commissions are among the lowest in the industry. Most bank-owned brokerages charge about twice as much as Questrade.
No inactivity fee: On Oct. 1, 2020, Questrade stopped charging this fee on accounts.
No account fees: Many brokers charge a quarterly or annual fee if you don’t maintain a minimum balance in an account. Questrade doesn’t charge this fee.
Cons: The Not So Good Stuff
Minimum balance to begin trading: Questrade has a small stumbling block for new investors. You must have at least $1,000 in your account before you can begin trading. Most other large brokers don’t have an investment minimum at all.
Additional trading fees: You might not be aware that there are exchange fees for trading on electronic communication networks (ECNs) and alternative trading systems (ATSs). These are the intermediaries that connect brokers to the market. Questrade passes these fees onto you. While these fees are minimal and can be avoided, they can add up when you trade a large number of shares at once. Other brokers build this fee into their commission.
Fees for trading mutual funds: Questrade also charges $9.95/trade when buying or selling mutual funds. This isn’t something that the bank-owned brokers charge.
Minimum amount for certain investments: You might not be aware that there are exchange fees for trading on electronic communication networks (ECNs) and alternative trading systems (ATSs). These are the intermediaries that connect brokers to the market. Questrade passes these fees onto you. While these fees are minimal and can be avoided, they can add up when you trade a large number of shares at once. Other brokers build this fee into their commission.
Mobile app: You might not be aware that there are exchange fees for trading on electronic communication networks (ECNs) and alternative trading systems (ATSs). These are the intermediaries that connect brokers to the market. Questrade passes these fees onto you. While these fees are minimal and can be avoided, they can add up when you trade a large number of shares at once. Other brokers build this fee into their commission.
About TD Direct Investing
TD Direct Investing has been around since 1984. It was the first bank-owned self-directed brokerage, and was previously known as TD Green Line Investor Services, and then, TD Waterhouse.
The online brokerage lets you buy and sell stocks, fixed income, ETFs, mutual funds, GICs, options, and precious metals.
In terms of account options, TD Direct Investing offers the following account types: TFSAs, RRSPs, RESPs, RRIFs, LIRAs, LIFs, LRRSPs, margin, cash, prescribed retirement income funds (PRIFs), restricted locked-in retirement savings plans (RLSPs), locked-in retirement income funds (LRIFs), restricted locked-in retirement income funds (RLIFs), and registered disability savings plans (RDSPs).
TD has three trading platforms. Both WebBroker and the app are aimed at investors and traders while Advanced Dashboard is for active traders.
Commissions are $9.99/trade or $7/trade if you make 150 or more trades per month. Free real-time market data is included on all three platforms, but you can get Level 2 market data for various stock exchanges only with Advanced Dashboard. It costs as little as $10 a month although the fee is sometimes waived if you make 30 or more trades per month.
Other fees at TD vary. The one you should be aware of is the maintenance fee. The $25 fee is charged every quarter if you don’t maintain a balance of $15,000 or more. The fee can be waived if your household has $15,000 or more in all accounts, there’s a pre-authorized contribution of $100 or more in any of the accounts, three or more trades were made in the previous quarter, the first account has been open for less than six months, or one of the accounts is an RDSP.
TD Direct Investing Pros & Cons
Pros: The Good Stuff
No minimum balance: If you want to start trading with $1 or $100, you can because there’s no minimum balance required to trade.
Mobile app:TD’s app is for trading as well as banking. The app has high marks for both iOS (4.5 stars) and Android (4.3 stars) devices.
Customer service: Customer support representatives are available from 7 a.m. to 6 p.m. ET Monday to Friday and can provide service in English, French, Cantonese, and Mandarin.
Investor education:TD Direct Investing has a variety of videos and both live and on-demand webinars to educate all types of investors.
Research and trading tools: The brokerage offers up research from Morningstar, TD Securities, and other providers. There are also cool features like projected income for stock holdings, which is a plus for dividend stock investors.
Cons: The Not So Good Stuff
Commissions: TD still charges nearly $10 a trade for average traders. That’s the same as most of the bank-owned brokerages. While the newly launched TD GoalAssist doesn’t charge commissions for TD’s ETFs, Direct Investing still does.
Maintenance fees: While these fees can be waived, not everyone has $100 to put away every month or makes at least three trades per quarter so it can take a while to build up to $15,000 in savings. On the other hand, other brokers have a minimum account balance of $25,000 for the fee to be waived, so it could be worse.
Our Final Thoughts
Questrade and TD Direct Investing both have some great features.
If you want to pay lower commissions and fees, Questrade is the way to go.
But if you’re looking for additional research and some great features, TD Direct Investing has what you’re after.
Frequently Asked Questions
There are several online brokerages in Canada, but only one doesn’t charge trading commissions. That brokerage is called Wealthsimple Trade. While there are no trading or maintenance fees, there are also disadvantages.
Wealthsimple Trade only offers three types of accounts: personal, RRSPs, and TFSAs. There aren’t any RESPs, RRIFs, or margin accounts. Wealthsimple Trade also doesn’t offer U.S. dollar accounts. That means each time you sell an American stock, you have to pay an exchange fee. If you buy another American stock, you pay an exchange fee again.
This is a decision you should make depending on your comfort level. You can get a robo-advisor to make all your investment decisions for you or you can make your own decisions.
If you only use a robo-advisor for investing, your only investment option is a portfolio of ETFs that’s chosen for you. That means you can’t invest in single stocks, GICs, bonds, or other types of investments.
If you use an online brokerage, you can buy a variety of investments. However, you’re responsible for all of your investment decisions.
Self-directed investing means you choose your investments. Automated investing means all the investment decisions are made on your behalf based on some questions you answer when you first sign up.
As a self-directed investor, you decide what portion of your portfolio you want to devote to stocks, bonds, GICs, and other investments. You’re also responsible for rebalancing your portfolio as you save more or different investments you hold rise and fall.
If you choose a robo-advisor to invest for you, it will invest in a portfolio of ETFs based on your risk profile and goals. It will also do the rebalancing for you, which frees up some of your time. However, the costs can be higher than choosing your own ETFs or an asset-allocation ETF.