Questrade To Offer Free ETFs


I’ve been a little quiet recommending discount brokerages lately since my old tried and true choice over at Questrade has been at a slight disadvantage for a couple months.  They were still a great company that I have only had good experiences with (and I had no real reason to leave) but when a couple of their competitors introduced the idea of commission-free ETF trades, I was a little jealous to say the least.  I mean, the free eBook I wrote about passive investing and how to make sure you keep investment returns in your pocket by keeping things simple – is a perfect fit for commission-free ETF trades.  Now granted, when other discount brokerages released their lists of ETFs, the options were limited, and there were definitely some caveats, but I was really hoping Questrade would jump on board.

Related: Questrade Review

The good people behind the Green Q have not disappointed!  Questrade announced this week that they would allow people to purchase ETFs without any commission at all!  This is even better than their normal $5-per trade line.  In my mind, the ability to purchase ETFs without paying a commission takes away the main advantage that mutual funds had over ETFs.  A lot of smart people would recommend keeping your money in mutual funds if you wanted to invest monthly since most people aren’t investing enough on a monthly basis to justify the bite commissions would take out of their investing capital.  This advantage is gone when you can buy ETFs for free!  I love the free market, and when I get to benefit from competition as a consumer.

Questrade was quick to point out that this wasn’t exactly “no strings attached” though.  Here are the caveats they put in place:

  • You’ll pay the ETF commission at the time of purchase, but we’ll rebate you in two business days
  • There are no minimum number of shares you have to buy. Hold them for as long as you’d like
  • Buying ETFs for free is only available if you’re trading on one of the Questrade IQ platforms
  • ECN fees or any other incidentals charged by the markets are your responsibility
  • Your standard commissions will apply when you sell an ETF

Fight For My Low-Cost Business!

Basically this means that ECN fees will still charge you a few pennies, and that you will still pay to sell an ETF, but if you’re a young index-devotee like me, that’s almost irrelevant.  Why would I want to sell my ETFs that have me invested in 6,000 or so companies around the world?  I’ll just keep the faith that businessman will continue to figure out ways to make money, the world’s economic system won’t collapse (if it does, my RRSP will be the least of my problems), and consequently, the value of companies will go up.  Now, it is no secret that brokerages make their money on people that trade back and forth in the stock market, and if you do that you will paying some money to sell ETFs.  To me though, I have no intention on cashing in any of my investments for at least 25 years, and probably more like 30.  In that situation, the small commission that I will pay in order to sell will almost 0% and close enough to not worry about!

Any and All ETFs!

While Questrade wasn’t the first discount brokerage to initiate free ETF trading, is in the only one I’m aware of right now that places no restrictions on which ETFs you can buy.  This means that unlike their competitors every ETF listed on the NYSE and TSX can be bought with $0 commission!  Those ETFs that index guys like Andrew Hallam and Dan Bortolotti (The Couch Potato Investor) are now free to purchase.  Kudos to the entire investment industry for realizing that there are more and more cost-conscious investors out there that will reward a company for recognizing their needs.

Also, big props to Questrade for their timing on this one.  Instead of Canadians stuffing their RRSPs full of high MER mutual funds in the coming weeks, they can fill it with ultra-low-cost, efficient investments instead.  No need to panic and call your financial advisor in a cold sweat.  Simply set up a plan that allows you to invest money into your tax-advantaged accounts (RESP, TFSA, RRSP) throughout the year, and then just watch your ETF pile grow and grow!

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14 Responses to Questrade To Offer Free ETFs

  1. anonymous says:

    Commission-free ETFs at Questrade!!!

    The concern to me, since you pay the commission upfront and then there is a rebate in 2 days. So does that commission that you pay up front used when you calculate your ACB? This rebate in 2 days maybe just that, a rebate of the amount of commission you paid.

    To me, it makes sense that if you pay the commission up front, that it needs to be used when calculating your ACB, which needs to be kept track of in non-registered accounts.

    • Teacher Man says:

      Now that is a good question anonymous! To be honest I’m not too worried about it personally because I’m a long way from being able to max out my registered accounts right now. I’ll see if anyone over at Questrade can answer that.

  2. BeachBoy says:

    I just bought ETFs for all my portfolio a week ago.. damn could’ve saved over $50!

    • Teacher Man says:

      I was planning to but held off after Christmas spending came in a tad bit over budget (not by much, just enough to delay my next buying opportunity a little). The great thing is that now I can invest monthly as opposed to quarterly since the commissions won’t eat into things at all!

  3. Vincent says:

    I believe Virtual Brokers has been offering free ETFs buying with no restrictions on which ETF you can buy for a few months now.

    • Teacher Man says:

      They had restrictions on last I checked…

      • Vincent says:

        I just started trading on Virtual Brokers a couple of weeks ago, using Andrew Hallam’s Globe and Mail portfolio and I haven’t noticed any restrictions as of yet. Any idea what type of restrictions? It is still time for me to switch if necessary.

        • Teacher Man says:

          You can get a list of the ETFs here Vincent: https://www.virtualbrokers.com/contents.aspx?page_id=99

          Still a pretty good list overall, but Questrade’s promotion is obviously superior. Great model to base your investing on btw!

          • Vincent says:

            Thanks Teacher Man! Andrew Hallam’s last book did a good job at convincing me to go 100% ETF.

            To continue on the broker subject, I must admit the Virtual Brokers website is quite confusing when it comes to ETF but I can assure you that you can buy all ETF commission free and the standard commission apply when you sell ($0.01 per share with a min of $0.99).

            The list you linked previously are ETF commission free buying and selling.

            The “commission free ETF buying” is actually how Virtual Brokers made first place at the Globe and Mail Online Brokers Survey (http://www.theglobeandmail.com/globe-investor/online-broker-rankings/a-new-winner-the-globes-14th-annual-online-brokers-survey/article5506780/).

            I was with Questrade before and was seduced by Virtual Brokers’ offer, but I realized that it is not widely known even after the Globe survey.

            Hope this help,

          • Teacher Man says:

            Ah, thank you Vincent. So we have VB to thank for setting the overall market – a market I know get to traverse with Questrade’s easy-to-use platform and great customer service. I think VB is a great company too btw, but I’ll stick with my tried and true! Can’t go wrong either way by the looks of things.

  4. jake says:

    great question! I’ll be interested in a response from someone over at the green Q as well!

  5. Gotta love the free market forcing companies to offer competitive products. This is great, I’ll keep it in mind for the future.

  6. […] respectively so they are extremely cheap to hold for the next several decades (when combined with no-commissions purchases on Questrade I’m almost getting to invest for free!).  This is a fairly large advantage over the Canadian […]

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