Updated: Sep 18, 2021
An Alternative to Investing with Big Banks and Their Big Fees
When people think of the stock market, they most likely think of stock brokers on Wall Street, notoriously known for their slippery and shark-like behaviour. They might think of the enormous fees big banks charge for their stock market expertise or the large investment of a personal financial advisor. They may simply think about how complicated the stock market is and feel completely overwhelmed. For certain: the stock market can feel like an intimidating beast to tackle. The average young person knows little to absolutely nothing about the stock market or how to invest. This puts Millennials and Gen Z at a significant disadvantage when it comes to building and maintaining wealth.
Millennials and Gen Z tend to think about more immediate financial concerns and wants. This is unsurprising since the new generation is earning 20% less than baby boomers did at the same age, leaving little room for early retirement planning. Essentially, as baby boomers age, their percentage of total wealth has increased. Meanwhile, millennials have barely seen an increase in net worth and own only 3% of North American wealth. However, this article argues that by practicing financial minimalism and pairing it with the financial literacy offered in this article, young people can take that extra money and pay their future selves first.
The truth is, big banks have been lying to you. Banks prey on our fear of the stock market, convincing us it’s complicated to get you to spend your money on their fees and convincing you to buy mutual funds, which is how banks make their money. But - and this article will prove it to you - investing in the stock market doesn’t have to come with expensive fees and it doesn’t need to be complicated. In reality, it’s about as easy as buying something on Amazon or checking your bank account! You do not need a Wall Street stockbroker or your bank's financial advisor to buy stocks. You can easily buy stocks, ETFs, bonds, etc. for a fraction of the price from the comfort of your own home using an online broker.
Online Brokers: Investing Made Simple
An online broker, or a “discount broker” is a website that allows you to buy and sell securities (such as stocks, bonds. ETFs, and more) at the click of a button. For example, if you want to buy RBC stock (the largest bank in Canada), you don’t need to call an existing RBC investor and convince them to sell their stock to you. Instead, you use an online broker where thousands of people are buying and selling stocks online every second. You see the price of the stock and you can choose to buy it right there - you don’t need to interact with the seller, and your online broker fully handles the transaction. There are lots of online brokers out there and most big banks offer their own version of online brokers. However, even online brokers from big banks tend to come with high fees.
Some of the biggest online brokers in Canada are TD Direct Investing, Q-trade, Scotia Itrade, RBC Direct investing, and WealthSimple Trade Mobile App. Most of these brokers have either high fees or severe limitations. Looking at options that do not have high fees or severe limitations, our pick for the best online broker is Questrade.
Questrade: The #1 Online Broker
Questrade is a Canadian broker that offers Canadian citizens an alternative to investing with big banks and their big fees. Questrade has built a reputation on offering the same quality and service as established banks without having to hand over more money than you’d like. In fact, Questrade offers the lowest commission fees of any other online broker. A commission fee is a fee you pay to your broker anytime you want to buy or sell a stock or any other type of security (ex. ETF). Most of the online brokers mentioned above require a $10 dollar or more commission fee anytime you buy or sell anything. In comparison, Questrade only charges $5 dollars to buy or sell stocks and amazingly, charges you nothing to buy or sell ETFs. This is especially advantageous if you’re investing in smaller amounts - like $1000 - where $10 per buy is a big portion of your budget.
TFSA and RRSP: Fee Free Investment Accounts with Questrade
Questrade also allows you to open a TFSA (tax-free savings account) and/or a RRSP (registered retirement savings plan) free of charge. Where most Canadian brokers charge around $50 dollar fees to even open these accounts, Questrade waives those fees right off the bat. Questrade also offers you the options of self-directed investing or getting a pre-built portfolio for an affordable $0.01 per share or just 0.25% of your investment. So whether you choose to go self-directed or pre-built, it’s clear that Questrade offers their services at a fraction of the price of big banks. Pairing these extremely low prices with the financial minimalism, will allow the average millennial to start investing for little-to-no upfront costs beyond their investment. Additionally, Questrade offers advanced research tools including news, fundamental data and chart pattern tools, portfolio analysis, and the highest level of customer service and security.
Opening a TFSA with Questrade: Everything You Need to Know
As explained by Questrade itself, TFSA’s were introduced by the Canadian government in 2009 to help Canadians accumulate wealth by investing and saving on taxes. Canadian residents who are 18 and older with a valid Social Insurance Number (SIN) can easily set up an account through Questrade. Once your account is set up, a TFSA offers you a range of
There are three main benefits of opening a TFSA with Questrade:
1. Tax-free earnings: A TFSA allows you to earn capital gains and dividends tax-free (with some exceptions).
2. Tax-free withdrawals: While your contributions are not tax-deductible, you won’t be taxed or penalized for any eligible gains when you withdraw funds.
3. Won’t affect government benefits: In retirement, money you withdraw from a TFSA won’t count as yearly income. So, if you’re receiving government programs (Child Tax Benefit, Guaranteed Income Supplement, etc.), your TFSA won’t alter the amount you receive from the program.
Pair these benefits with the low cost of having a TFSA with Questrade and it becomes a no-brainer! Not opening one would be allowing your money to lose value with inflation. With a TFSA you can earn interest on your money, and by investing it, allow your money to work for you instead of just sitting around gathering dust. With Questrade you can easily make adjustments to your TFSA from the comfort of your own home, free of charge, and without the hassle of dealing with big banks (notorious for their slow moving customer service).
Opening a RRSP with Questrade: Everything You Need to Know
Questrade lays everything you need to know about RRSPs in a simple, user-friendly way on their website. As the graphic below demonstrates, a Questrade RRSP is working to save you money and fees at every opportunity. An RRSP with Questrade offers: lower fees for better returns (AKA no account opening fees and no annual RRSP account fees), full online accessibility, free RRSP transfers to Questrade with no minimum balance needed, and the ability to open your RRSP in minutes. All you need is your SIN number and a piece of ID.
Ready To Open an Account?
Excited and ready to open your account with Questrade? Good thing you can open an account in the next few minutes!
1. Choose an account type. Opening multiple accounts at once is possible.
1a. Enter a Valid Questrade Referral Code - QPass key 426108723448609
2. Provide your personal information, including country of residence, citizenship, Social Insurance Number and employment information.
3. Review and confirm the information.
4. Accept the terms and conditions.
5. Transfer funds.
The account opening process takes less than 30 minutes for any Canadian citizen, making it our number one choice for Canadians across the country looking to practice financial minimalism and take control of their wealth.
Comment below - have you used Questrade before? If so, what was your experience like?