Many Canadians looking to start investing aren’t aware that traditional brick-and-mortar investment brokerages charge high investment fees, wearing away at their portfolios that hold funds for goals like retirement. That’s where online brokerages come in. The best online brokerages charge low or no fees for trades, allowing investors to choose from a wide variety of stocks or funds like ETFs, and offering a cost-effective way to tap into foreign markets for further portfolio diversity, too.
Read on to compare the best online brokers in Canada and learn what features to look for when exploring your options.
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National Bank Direct Brokerage
$0 stock and ETF commission structure
Provides investors with industry-leading research and fundamental information, and mobile-based screeners
Digital platform experience
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Average cost per trade
None
Minimum investment
$1,000
Frequently asked questions
Which online brokerage is the best in Canada?
One of the best online brokerages in Canada is Qtrade Direct Investing. Qtrade offers a well-rounded experience for investors of all sizes, coupled with exceptional service levels to new and existing customers. They also have a great mobile app and desktop experience, making it a very user-friendly choice.
What are online brokerages used for?
Online brokerages are typically used by Canadians to invest their money in stocks, bonds, mutual funds and ETFs, often to build a portfolio of assets for a longer-term goal like retirement or buying a house. Online brokers are ideal for investors who want to select or build their own portfolio using a combination of financial products including low-cost index funds (ETFs), for example. If you want to have your portfolio managed for you based on your risk tolerance, consider using a robo-advisor instead.
Are online brokers safe?
Yes; online brokers, like traditional brokers, are regulated by the Canadian Investment Regulatory Organization. The Canadian Investor Protection Fund (CIPF) also protects investors’ assets against broker insolvency, with coverage of up to $1 million for general accounts (cash, margin, TFSA, FHSA), $1 million for registered retirement accounts, and $1 million for RESPs.
What type of online brokerage account should I choose?
When opening a brokerage account, you can choose to open a registered account, such as a TFSA or RRSP. These accounts enjoy tax free gains, the same benefits as registered accounts opened anywhere else. However, opening multiple accounts of the same type will not give you additional contribution room. Make sure the combined amounts of all your TFSAs or RRSPs do not exceed your contribution limit, or you will have to pay a penalty to the CRA.
Alternatively, you can choose to open a non-registered account like a simple cash account. There is no limit on how much you can deposit and invest, but any investment gains are taxable.
What is commission-free stock trading?
Commission free stock trading means you pay no commission fees to buy or sell stocks (as well as for other investment products like ETFs, in some cases). However, there may be other costs such as account fees that are charged if you don’t keep a minimum balance, or foreign exchange fees if you buy foreign stocks using the platform, so it’s important to read the terms and conditions to understand what else you might be paying for.
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Top 10 online brokers in Canada: our picks
Online brokerage | Average cost per trade | Minimum investment | Best for |
|---|---|---|---|
BMO Investorline | $9.95 | None | |
CIBC Investor's Edge | $6.95 | None | N/A |
Interactive Brokers Canada | 1¢ per shareMin. $1.00 per trade | None | CAD and USD investments |
Moomoo Financial Canada | $1.49 | None | |
National Bank Direct Brokerage | None | $1,000 | Minimal fees |
Qtrade | $8.75 | None | |
Questrade | 1¢ per shareMin. $4.95 per trade | $1,000 | |
RBC Direct Investing | $9.95 | None | |
TD Direct Investing | $9.99 | None | |
Wealthsimple Trade | None | None | New investors |
What is an online broker?
An online brokerage is an online platform that enables you to buy and sell stocks, bonds, exchange-traded funds, mutual funds, and more, all within a trading account. The fees associated with this kind of software are much lower than those you’ll pay with a financial advisor, which is why they are also sometimes called discount brokerages in Canada. With an online brokerage, you’ll invest your money yourself, choosing a combination of stocks, bonds, and ETFs to create a balanced portfolio that will reach your long-term goals. There is no oversight with an online brokerage, and aside from a helpful education center, you are responsible for your investments. Instead of paying fees as a percentage of your overall investments, you’ll pay per trade.
Pros and cons of online brokers
Lower fees
The biggest advantage of an online brokerage is that over the long term, you’re saving thousands of dollars in fees with an online brokerage instead of a financial advisor at a traditional broker (like at a bank).
Customizable portfolios
You’re able to choose from a few pre-built portfolios, or you can build a custom portfolio that meets your own unique needs and investment goals.
Limited support
While an online brokerage may offer tools and data to help inform your investment decisions, the act of buying and trading equities and mutual funds falls on you. There’s no real guidance in terms of what you should do with your money. This can be overwhelming for some who prefer simplicity over complete control.
Limited support
Rebalancing your portfolio can be terrifying during market corrections. If you are using an online brokerage, make sure you have the mental fortitude to avoid tinkering with your investment portfolio. A financial advisor can keep you on the straight and narrow during a correction, but with an online broker, you’re on your own.
What to consider when selecting an online brokerage
The main benefit of using an online brokerage is the money you’ll save on fees, but low fees are not the only factor you should consider when choosing the right online broker for your needs.
1. Trading fees
Not all online brokerages charge the same fees, and the fees can change depending on the type of investment you plan to purchase, and how frequently you make trades. If you are planning to build a passive portfolio out of ETFs, then you should look for an online brokerage with free ETF purchases. If you are planning to purchase stocks and bonds individually and trade at a higher volume, you should prioritize an online brokerage that has high-quality trading platforms and access to third-party research.
2. Account fees
Most online brokerages also charge administrative account fees determined by the assets you hold in a single account or the size of your portfolio across all accounts. If you have a smaller portfolio, these fees will heavily erode your returns, so it’s best to choose a brokerage that doesn’t charge those smaller portfolio fees. Wealthsimple Trade, for example, charges no fees to use the account and doesn’t have minimum balance or minimum trade requirements.
3. Account minimums
Some online brokerages also have account minimums, usually around $1,000. However, some online brokerages like Qtrade, Wealthsimple Trade and Moomoo Financial Canada have no minimum deposit requirements.
4. Customer service
If you’re new to investing online, there will be a learning curve when you begin building your portfolio and making your first trades. An online brokerage with a good customer service track record will ensure your questions are answered quickly.
5. Transfer fees
When you move your money from your financial advisor or robo advisor to an online brokerage, the original financial institution will often charge you transfer fees in the range of $150. Some online brokerages will pay these fees for you.
Alternative investing options
Looking for alternative methods of wealth management? Look no further. Below are several popular alternatives to online brokerages.
- Robo-advisors are suitable for beginners or people with little investing knowledge. Similar to (human) financial advisors, a robo-advisor uses an algorithm to invest and manage money on behalf of the client. Fees tend to be higher than self-directed investing but are still cheaper than financial advisors.
- Financial advisors are licensed professionals who manage money and investments for a number of clients. They also provide advice to their clients. In return, the financial advisor’s clients pay a fee. Though the client’s investments receive more attention from a financial advisor, they tend to be more expensive.
- Guaranteed Investment Certificates (GICs) are low-risk investments that provide interest over the course of the investment's term. They are incredibly safe and secure but do not promise very high returns. They are also inaccessible until the term is complete.
For additional investment options, also consider:
- Best Robo Advisors
- Best GIC rates
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