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Questrade Offers Commission Free ETFs and Weekend Links





Seems that the competition is rising among the low cost stock brokerages in Canada!  The hot ticket these days seem to be free ETF trades which started with Scotia iTrade followed by Virtual Brokers.  Both brokerages have their own selection of ETFs available for free trades.

It was only a matter of time before low cost provider Questrade got into the game – which they have, but have stepped it up a notch.  Questrade is offering no commissions on purchases of any ETFs, however, there will be their regular $4.95 commission on selling.  For those of you unfamiliar with Questrade, here is my Questrade review.

How Does it Work?

This is straight from the Questrade website:

  1. You’ll pay the ETF commission at the time of purchase, but we’ll rebate you in two business days
  2. There are no minimum number of shares you have to buy. Hold them for as long as you’d like
  3. Buying ETFs for free is only available if you’re trading on one of the Questrade IQ platforms
  4. ECN fees or any other incidentals charged by the markets are your responsibility
  5. Your standard commissions will apply when you sell an ETF

Who benefits?

I can see this new incentive working best with index investors who buy, but rarely sell.  This is a great way to keep portfolio fee drag as low as possible.  Perhaps the biggest advantage of this offer is that investors can choose any ETF without restriction.  Here is an example of a low cost index ETF portfolio using Vanguard and iShares ETFs.

I’m not sure if this deal is enough to convince an investor to switch from their current brokerage, but it’s a great deal for current account holders like me!

 Weekend Links

Sony points collector?  Sign up for the free Mastercard for 10k points @ Canadian Money Forum

Housing Affordability Metrics @ Michael James on Money

3 Ways Larger Families Can Save on Accommodations When Vacationing @ Sustainable Personal Finance

The proper use of RRSPs: the one formula approach @ Retire Happy Blog

3 Golden Rules to Rid Yourself of Debt @ My Own Advisor

Is Your Portfolio Truly Diverse? @ Canadian Finance Blog

Group RESP Plans are Loaded with Fees @ Canadian Capitalist

How Mobile Technology Can Improve Your Health @ Boomer and Echo

Can You Make Money from Survey Sites? @ Financial Highway

Buying Time @ Canadian Dream Free at 45

How To Eat Healthy & Inexpensively @ The Digerati Life

Easy Things You Can Do to Save You Money @ Lazy Man and Money

What to Do After Paying Off Debt @ Money Smart Life





17 Comments, Comment or Ping

  1. 1. Vincent

    The guys at Virtual Brokers have been offering no commissions on purchases of any ETFs since November. Selling cost 1ct per share with a minimum of 99cts.

  2. 2. Elbyron

    I was going to say the same as Vincent. What I didn’t like about VB’s offer is that the $0.01/share has no maximum, so someday when I need to withdraw, it could cost me quite a lot (in the range of 0.03% – 0.10%). Questrade’s max of $9.95 looks a lot more appealing, but I’ve heard a lot of complaints about that company, and although VB’s customer service has been impossible to contact lately, I think in the long run they’ll have the better support.

  3. 3. Elbyron

    Another consideration for some is the fact that Virtual Brokers charges a $50 annual fee for holding US dollars in your TFSA. Questrade has been offering free USD trades in registered accounts for quite a while now.

    Plus, I think Questrade lets you journal your stocks (please correct me if I’m wrong), so you can do a Norbert’s Gambit for cheap currency conversion. That really helps if you want to invest in the US ETFs that have much lower MERs than their Canadian equivalents.

  4. I’ve been with Questrade for a number of years and I have been quite pleased overall. They seem to me to be the best of the independent brokers, as they’ve been around for a few years and seem to have solid software. They’ve also switched to their own clearing service from Penson which already seems to be speeding up their services.

  5. 5. Green Guy

    Sounds a bit like a gimmick considering that even if you are buy&hold investor you need to re-balance your portfolio from time to time (read- sell something).

    Maybe I’ll wait till Waterhouse jumps on the bandwagon, hopefully it will be sooner than later!

  6. 6. Echo

    Thanks for the mention, FT!

    @Vincent and @Elbyron – From my research, Scotia iTrade has 50 eligible ETFs, Virtual Brokers has 100 eligible funds and QTrade Investor has 59 eligible funds. Questrade is the only one to offer free purchases of ANY North American ETF.

  7. Thanks for the mention MDJ!

    Have a great weekend!

    Mark

  8. 8. Vincent

    @echo – their communication is failing obviously because you are not the only one to tell me this, but yes they have been offering commision free buying of ANY ETF since November.

    They made first place on the 2012 Globe and Mail broker survey for that reason. Here is Dan Bortolotti’s post about it(which is how I found out): http://canadiancouchpotato.com/2012/11/22/virtual-brokers-becomes-the-etf-leader/

    They also have 100 ETF that you can buy and sell for free.

  9. 9. Echo

    @Vincent – thanks for the update. Not sure why VB is keeping that a secret.

  10. I’ve been using Questrade for a few years now and certainly recommend it, as you point out in your review, to anyone that wants to try their hand at trading with minimal deposit. As well, the TFSA trading account is a great feature which allows you to trade within the realms of a TFSA – a nice plus if you want to try investing in some more volatile stocks as the upside is that you skip out on the capital gains taxes on any big gains (of course, on the other hand, you lose the ability to deduct losses). Using the TFSA also means less of a headache at tax time if you’re trading often – some discount brokerages won’t provide a gains/losses report which means you have to calculate it all manually for your personal tax return. In a TFSA, since the gains/losses are not subject to tax, you don’t have to worry about any reporting requirements when it comes to activity. In short, Questrade continues to provide strong service offerings.

  11. 11. Elbyron

    @Josh
    The TFSA trading account is hardly unique to Questrade. Virtual Brokers and many other banks and brokers offer the ability to buy/sell stocks, ETFs, and mutual funds inside a TFSA. Not all of them offer holding USD funds inside the TFSA though, or at least not for free!

    I certainly agree that using a TFSA is a great way to avoid the headaches at tax time!

  12. 12. Mike

    Given that most readers of this blog are generally up to date I have a brokerage question.

    My father is retiring and moving back to Canada and pulling a substantial amount of his retirement fund back with him ($400,000) in cash. It is obviously of great importance to find the least expensive way to transfer this sum. He doesn’t have an account with an online brokerage and my feeling is that this will be the least expensive possible method.

    Anyone up to date on what the best way to transfer this would be? Brokerage? Strategy?

  13. 13. Andy

    Not worth the hassle for etf investors in my opinion. I tried (emphasize TRIED) to open an account at VB to take advantage of this deal….huge mistake. Was in the opening process for a month, only half the accounts I requested ended up opening, customer service is horrendous if you get through after a 45 minute wait and the platforms are buggy. Decided to switch to rbc after I was able to get all of my questions answered on a SUNDAY. Ultimately why trust your money to a disc broker who can’t even take care of their own customers…..for 50 bucks in commissions per year for an etf investor? I make way more than that on my MBNA cash back card. Bottom line you get what you pay for with vb, quest trade etc

  14. 14. Jason

    went from questrade to virtualbrokers for the free etfs….spent 4 weeks opening a virtual broker account and went back to questrade….then by the time virtual brokers got around to giving me account questrade started offering the free etf purchasing. Questrade customer service is not perfect but I definitely recommend questrade for customer service you can actually contact

  15. 15. ANONYMOUS

    How are these commission free etf’s taxed for capital gain/loss calculations?

    You pay up front the commission of 4.95-9.95 plus the ECN fees. Then a couple days later you get the commission (4.95-9.95 rebate). How is this treated for taxes.

    Do you still use the 4.95-9.95 part commission in your cost basis? Basically, is that ETF rebate just a rebate in itself causing no reduction in your cost basis?

  16. @Anonymous, commissions will increase your ACB of the buy, so in this case, the reduction of ACB will be eliminated.

  17. 17. Bernie

    “Buying ETFs for free is only available if you’re trading on one of the Questrade IQ platforms”

    Is there a cost to these IQ platforms?

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