I've often said in the past that it has never been easier to be a Do It Yourself (DIY) investor. You don't need to be a finance expert you just need a few low-cost index funds that invest in domestic and international stocks and bonds.
In fact, you can even get this in a single fund. If you go the one-fund approach, you minimize the decisions you need to make and put yourself on the path to becoming a successful DIY investor.
One thing, I have not discussed before is what is the best platform for Canadian DIY investors to use to manage their investment portfolios. In this article, I am going to discuss why I use Questrade to manage my investments and why I believe it is the best option for Canadian DIY investors.
Questrade's fee-structure incentivizes good behavior
Cost to buy and sell ETFs
You can buy ETFs on Questrade for free
When selling ETFs on Questrade you pay 1 cent per share with a minimum fee of $4.95 and a maximum fee of $9.95
If I Were designing an online brokerage platform, this is exactly how I would price buying and selling of ETFs. By charging no fee to buy ETFs, Questrade has removed the barrier to investing in index funds.
Also, I am totally on board with them charging a commission for selling ETFs. If anything, they should charge a higher fee for selling ETFs. For index investing to be a passive form of investing it requires investors to buy and hold and not sell every time they "think" the market is about to tank.
If you are constantly buying and selling index funds, that is not a passive investing strategy but an active investing strategy and a form of market timing. Which, as I have discussed in the past does not work.
By having a fee for selling ETFs, Questrade is encouraging investors to buy and hold. This will ultimately, save DIY investors from themselves.
Cost to buy and sell individual stocks
The cost to buy and sell individual stocks on Questrade is one cent per share with a minimum of $4.95 and a maximum of $9.95.
Since buying individual stocks is unlikely to lead to an optimal outcome, I like that Questrade does not let you trade stocks for free. Other online brokerages do let you buy individual stocks free of commission. Those firms advertise that as a plus, but in my opinion, it is negative as it encourages people to "trade" rather than "invest".
In my view, Questrade has the right pricing model that incentivizes good behavior and disincentivize bad behavior on the part of investors. In that way, Questrade nudges DIY investors in the right direction.
Other Questrade fees to be aware of
Questrade has an inactivity fee of $24.95 per quarter. This is charged if your account has less than $1,000 and you do not make any trades in the quarter. So, if you have at least $1,000 or you make 1 trade over a 3-month span you don't need to worry about this.
Questwealth portfolio fees
If you are not fully comfortable managing your investments on your own, Questrade has a robo-advisor option where they will construct and manage a portfolio for you. This is a great way to invest in a hands-off way. The fee for this service is 0.25% of your investments for your first $99,999 you invest and then it drops down to 0.2% over $100,000.
So, if you had $50,000, Questrade would manage your investments for $125 per year. If you had $150,000 invested, Questrade would manage your investments for $300 per year.
If your looking to buy and sell individual stocks then Questrade may not be the platform for you. If you have embraced a buy and hold approach and plan on investing primarily in ETFs, then Questrade is the perfect choice for Canadain DIY investors like you. It's why I invest through Questrade.
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.