Step 3: Buy Your Asset Allocation ETF
Now that you’ve chosen your asset allocation ETF, the next step is to place your trades at a Canadian discount brokerage. There are currently two brokerages you should consider, depending on the size of your investment accounts:
Option 1 (for smaller accounts): Questrade
If you’re just starting off on your investing journey (and have only a modest amount to invest), Questrade is your best option, as they do not charge annual fees on TFSAs, RRSPs or RESP accounts. ETF purchases (but not sales) are also commission-free, although you will generally pay small electronic communication network (ECN) fees. These ECN fees are charged on most ETF purchases and will set you back $0.0035 per share. For example, if you buy 97 shares of the iShares Core Balanced ETF Portfolio (XBAL) at Questrade, you will generally pay around $0.34 in ECN fees, which is calculated as 97 shares × $0.0035 per share.
Option 2 (for larger accounts): BMO InvestorLine
BMO now offers commission-free trading (buys and sells) on all asset allocation ETFs in our model portfolios (even the Vanguard and iShares options), as long as you don’t buy and sell the same ETF in a single day (so no day trading allowed). This offer sounds too good to be true, and it can be, if your accounts aren’t large enough to avoid BMO’s annual account fees.
For example, BMO charges $100 per year on RRSP accounts below $25,000, and $50 for RESP accounts below $25,000. A $25 quarterly fee also applies for non-registered accounts below $15,000 (that is, unless you also hold a registered account with BMO). TFSAs are the only account type where BMO doesn’t charge an annual fee. In other words, only consider using BMO as your brokerage if you can completely avoid these pesky annual or quarterly fees.