When I started managing my own investments I did some research on what broker would fit my needs. Based on my research I decided on Questrade. The Questrade reviews were solid, customer support seemed to be one of their priorities, and their main advertising message was lower fees. I have been very satisfied with Questrade through one year of use and would definitely recommend them. Check out my own Questrade review.
I was previously invested in mutual funds at Investors Group. I foolishly asked my advisor in my early twenties what it cost me to be invested with Investors Group. His response was nothing. It didn’t cost me anything to be invested in their products.
This couldn’t be farther from the truth. I was paying almost 2% yearly in fees on mutual funds that underperformed the S&P 500. I am not unhappy that I started investing in this manner because it got me used to the bi-weekly automatic withdrawals that came out of my chequing account. I am now able to continue my investing journey on my own terms.
Let’s take a look at what a 1.16% commission would have cost me over twenty-five years of investing compared to a Vanguard S&P 500 index fund using the fee calculator found on the Vanguard Canada website. With an initial $10,000 investment and an additional $5000 contributed every year, here are the results in fees paid:
The difference is $29,291 over a twenty-five year period. Some mutual funds also charge a deferred sales charge so when you sell you are dinged with another fee that can be substantial.
Not only are the fees substantially less but the S&P 500 has greatly outperformed the Investors Group mutual fund I was offered. The S&P fund returned 14% for the past five years compared to 6% for the mutual fund.
This realization is what drove me to start managing my own investments and open a Questrade account.
Questrade is a Canadian discount broker that offers a full range of services at low fees and commissions. As a Canadian investor, you can easily set up a Tax Free Savings Account or Registered Retirement Savings Plan account. Questrade then gives you the flexibility to invest in any type of investment you want: stocks, bonds, Exchange Traded Funds (ETF), mutual funds, currencies, commodities, or their Questwealth Portfolios.
For the self-directed investor like myself, Questrade offers low commission trades between $4.95 to $9.95 depending on how many shares you are buying or selling. A commission is charged on both buying and selling.
The basic data plan gives real-time quotes, but if you are planning on being a more active trader consider the Enhanced plan. This costs $19.95 a month. This fee is 100% rebatable if you spend $48.95 a month in commissions so it is essentially free if you foresee yourself actively trading stocks. This is not a service I have used so I cannot give commentary on its worth.
ETF & Index Fund Fees
If you are buying an ETF or index funds it is free to buy. You are only charged a commission when selling. I think this is the best perk offered by Questrade. There are ETFs out there for almost any sector of the economy and any region of the world so you can build a well-diversified portfolio from ETF’s alone. Always be aware of what the Management Expense Ratio (MER) fee is for the ETF. Keeping fees low is key to keeping more of your money.
Questrade also keeps administration fees low. There are no monthly fees on their accounts as long as you place one trade per quarter or have over $5000 in your account. You can also group accounts together that are within the same family. If you are starting small and may not have $5000 for a couple of years, linking your account with a family member will save on administration fees.
For set-it-and-forget-it investors the Questwealth Portfolios might be a good option and with a Management Expense Ratio of 0.17% to 0.22%, you get to keep more of your money.
The Questwealth Portfolios also allow you to choose the level of risk you’d like to take on. For more risk-averse investors you can choose a balanced portfolio that has a 40% exposure to fixed income investments like bonds. Questrade will then compile a collection of ETFs they believe match your risk tolerance and will match or beat the overall market performance.
My Questrade Experience
I began managing my own investments in early 2018 using the Questrade broker service. I am happy to report that it has mostly been an excellent experience with a few hiccups at the beginning.
Account Set Up
I currently have five accounts with Questrade: Tax-Free Savings Accounts for my wife and me, Registered Retirement Savings Account (RRSP), Non-Registered Account, and a Registered Education Savings Plan (RESP) account. I am able to manage all these accounts from the same home page which makes things very easy.
I was given five free trades when I signed up with the service which is a nice little bonus but something I feel like most online brokerages will offer. The real draw for me was the relatively low trading commissions, but I think the biggest advantage of the platform is the ability to buy Exchange Traded Funds for free.
Setting up the accounts was easy for me and the documentation is mostly done using electronic signatures. Account setups take only a few minutes and you are in control of your investments. The RESP required me to send in physical documentation which was a requirement of the government and not Questrade.
Funding My Questrade Account
My day-to-day banking is done with Scotiabank. Funding my Questrade account has been easy and can be done in a variety of ways: as bill payment, direct deposit, and on one occasion I mailed physical cheques. I have set up bi-weekly contributions into my TFSA which has run smoothly and is very convenient.
In my non-registered account, I am buying five ETFs at the start of every month. Thanks to Questrade I am not paying a commission on their purchases. If I had to pay a commission on these purchases I would be drowning in fees.
App and Website
The app works well and is where I interact with Questrade the most. It is easy to buy and sell on the app and it runs smoothly although it can be a little slow at times. The app is bare bones however it allows me to do what I need to do and for more in-depth reports I use my tablet or computer to access account statements or activity summaries.
The Questrade website is laid out well and all this information can easily be obtained off their website. They also have a blog and a series of help and how-to videos that explain investing terms and how to use their services.
I have been pleased with the customer service I have received from Questrade. I have conversed with customer service agents via email, telephone and chat. The chat feature is helpful and the waits are usually short. The chat feature is the feature I continue to come back to and use. I have had a wide range of questions answered on the chat window with excellent accuracy and detail.
Questrade was awarded the 2018 DALBAR Seal for Service Excellence just this past week. The DALBAR Seal recognizes institutions that provide “high-quality service delivery to their customers and are leaders within the financial services industry”.
When I signed up with Questrade I had all my money transferred over from Investors Group. I did not want to withdraw the money from my TFSA and RRSP so I transferred it within the accounts which did complicate things slightly.
The process was frustrating as it took three months to be completed. Faxes were sent between the institutions that weren’t legible and neither company were willing to take ownership of the delays. Questrade did offer me another five free trades so at least there was some acknowledgement that it should not have taken so long.
My only other complaint is in relation to their Dividend Reinvestment Plan (DRIP). The DRIP plan is an amazing feature and allows you to automatically reinvest issued dividends right back into the company that paid them. For example, I receive enough money from my Enbridge dividends every quarter to automatically buy another share of Enbridge.
This is done automatically and does not cost a commission which is a great way to get that compounding snowball rolling. The downside is that if you don’t have enough to buy a share, Questrade will not purchase a fractional share. For some companies that don’t pay a large dividend, you won’t be able to participate in the DRIP program as the dividend payments won’t equal a full share. This is especially true to investors just getting started and don’t have enough money to buy big blocks of shares.
You still get the dividend payment that you can invest along with your own contributions, but you are paying commissions on those trades.
Questrade Review Pros and Cons
$0 Index fund and ETF commission
Can’t buy fractional shares. This limits DRIP advantage
Low commission on trades
If you are trading actively you will need to upgrade to the enhanced plan for additional information
Transfer between TFSA’s took very long in my experience
Excellent customer service
Very useable app
Overall I’ve been very satisfied with Questrade as an online brokerage. With commission fees under pressure in the overall broker industry (Robinhood has no commission for trades), I hope Questrade will try and lower fees even further.
I would recommend Questrade as a place to open your own brokerage account and start managing your own investments.
Click the link below and get $50 in free trades when you open a Questrade account.