Strategy 2: Save Regularly to Save More
For those who regularly contribute funds as part of a savings program, both RBC Direct Investing and TD Direct Investing offer to waive inactivity fees for those who contribute at least $100 per month to their investing accounts. Neither BMO InvestorLine nor National Bank Direct Brokerage currently advertise this option.
For those inclined to dollar-cost-average or to make regular investment contributions at defined intervals, this kind of strategy would be similar to what they’re already doing. For beginner DIY investors with very modest portfolios, however, this strategy may hold some appeal to meet savings/investment goals while also avoiding additional fees.
Ultimately, clients should consider that with the predefined contribution plans, at least $1200 per year is being steered into a discount brokerage account in order to save paying $100 on balances under $10,000 to $20,000.
Strategy 3: Save in More Places to Save More
For individuals who prefer to have their registered and non-registered accounts in one place, all of the bank-owned discount brokerages allow for pooling of assets across accounts to contribute to the calculation of the minimum balance. Some, such as BMO InvestorLine, allow pooling by ‘household’ whereas others allow pooling across different accounts to qualify for waiving fees (e.g. clients who have an RSP account and TFSA can combine the balances in both to count towards the “minimum balance” requirements).
In addition to pooling balances across accounts, BMO InvestorLine, RBC Direct Investing and TD Direct Investing allow clients holding additional account types (such as registered accounts) to possibly qualify for having maintenance fees waived. Of course, with other account types it is important to know what fees those accounts have associated with them to see if the extra fees make sense for one’s banking needs.
The Bottom Line
While lower standard commission prices and simplified pricing structures are a welcomed development for many self-directed investors, it is important to understand that there still may be fees that could apply to having an online trading account. This is especially true when one’s trading account balance is less than $10,000 to $20,000.
Fortunately, most brokerages offer opportunities to have additional fees waived even if clients don’t meet the minimum balance requirements. Whether it is by trading a minimum amount, saving on a regular basis or opening another account type it is important for self-directed investors to understand the costs of actively trying to avoid fees and whether the additional efforts make sense.
Ultimately, although commission pricing is now becoming more simplified, self-directed investors should always consider what the total cost of ownership is for a discount brokerage account. Be sure to read the fine print about fees and/or have brokerage account reps explain all of the costs and fees that could apply to your particular account situation and trading style.
Editor’s Note: Given the dynamic nature of the pricing in the marketplace at this time, we will continue to monitor pricing and update this article if/when additional brokerages shift their pricing.
References:
- BMO InvestorLine. (2014, February 10). Commission & Fee Schedule. Retrieved February 19th 2014 from https://www.bmoinvestorline.com/selfDirected/pdfs/FeeSchedule_EN.pdf.
- National Bank Direct Brokerage. (2014, February 18). Commission and General Fee Schedule. Retrieved February 19th 2014 from http://nbdb.ca/~/media/CDBN/PDFs/February%2018%202014%20Commission%20fee%20schedculeNBDB.pdf
- RBC Direct Investing. (2014, January 14). Commissions and Fees Schedule. Retrieved February 19th 2014 from http://www.rbcdirectinvesting.com/pdf/commission-fees.pdf.
- TD Direct Investing. (2014, February 7). Commission Schedule and Statement of Disclosure of Rates and Fees. Retrieved February 19th from http://www.tdwaterhouse.ca/document/PDF/forms/521778.pdf