Low cost investing
Canadians have a wide variety of institutions to choose from when setting up their investment arrangements. Costs matter, a penny saved is a penny earned. A wise brokerage choice has the potential to save hundreds of dollars a year.
Do you need a brokerage account?
Discount brokers allow investors to buy and sell securities on-line while typically offering comparatively fewer services and/or support, relative to a full-service broker. The types of products that can be purchased in a brokerage account include:
- individual stocks trading on the Canadian and US exchanges (common shares and preferred shares)
- individual bonds and guaranteed investment certificates (GICs) from the brokerage's inventory
- mutual funds, including index funds, ultimately from the fund companies
- exchange-traded funds on the Canadian and US stock exchanges
In exchange for this service the brokerages charge commissions and various fees. It is worth shopping around! The Globe and Mail does an annual review, The Globe and Mail's 17th annual online broker ranking -- December 2015, that may serve as a good starting point.
Full service brokers
Although full service brokers will charge more to trade stocks than discount brokers, they may have a larger bond inventory and possibly better bond pricing. Investors who trade stocks infrequently or who intend to use an account entirely for fixed income may wish to investigate use of a full-service broker for purchasing individual bonds.
- A penny saved is a penny earned, viewed February 15, 2012.
- Do-it-yourself investors: Watch those online broker fees, Rob Carrick, The Globe and Mail, viewed 27 November 2016.