In the fifth installment of my beginner DIY investing series, we’ll learn how to implement an ETF portfolio at Scotia iTRADE.
Scotia iTRADE is a relatively high-cost brokerage for a newbie investor with modest assets, so please carefully review the fees below before making your choice.
$9.99 trading commissions
In order to qualify for $9.99 trading commissions, you’ll need to have at least $50,000 of combined assets with Scotia iTRADE, or a minimum of $50,000 in other Scotia products (such as mortgages or lines of credit with Bank of Nova Scotia). If you’re starting out with a smaller amount, you’ll pay a whopping $24.99 per trade. If you’re in this situation, check out The Globe and Mail’s 17th annual online broker ratings for additional discount brokerage options.
Scotia iTRADE offers about 50 commission-free ETFs. Although this seems like an amazing deal, their current list largely excludes the cheapest plain-vanilla ETFs. There were two ETFs that made the grade though:
- iShares Core High Quality Canadian Bond Index ETF (XQB)
- iShares Core MSCI Emerging Markets IMI Index ETF (XEC)
Upon receiving my recent confirmation notices from Scotia iTRADE, I was pleasantly surprised to find that no trading commission had been charged on my purchase of XEC. Investors may want to also consider swapping out the Vanguard Canadian Aggregate Bond Index ETF (VAB) in my model portfolios for the commission-free XQB.
Source: Scotia iTRADE
Watch those cash balances
Similar to BMO InvestorLine, trading commissions are not accounted for on the day you place your trades (so your quoted cash balance details are slightly inflated). One possible solution to this issue is to subtract the total trading commissions that will be payable for the day prior to placing your final trade.
Avoid the annual RRSP fee
If you have $25,000 or more of aggregate assets with Scotia iTRADE, they’ll waive their annual $100 RRSP fee. Other Scotia products that you hold are not included when meeting this threshold though (only Scotia iTRADE assets count). Once again, if you have below this amount, you may want to look around for a brokerage with a lower account minimum.
U.S.-Friendly RRSP quarterly fees
Regardless of the size of your portfolio with Scotia iTRADE, they will still charge you $30 per quarter for a “U.S.-Friendly RRSP” account. Nearly all of the big bank brokerages have actual U.S. dollar RRSP accounts (and they don’t charge additional fees for the privilege of investing within them), so I would recommend looking around for another brokerage if you plan to hold US-listed ETFs at some point in the future.
For smaller accounts, use less ETFs
Although I’ve shown how to build a 5-ETF portfolio in my tutorial, you can get away with using just three ETFs to cut down on trading commissions. Instead of holding separate ETFs for US, international and emerging markets stocks, simply hold the iShares Core MSCI All Country World ex Canada Index ETF (XAW).
Stay tuned next week when we’ll learn How to Build an ETF Portfolio at National Bank Direct Brokerage.