The best no-fee investment accounts

The Simplest Path to Wealth

Updated 2023 January

For self-directed investing you have a choice. If you are single, you may opt for Wealthsimple Trade: not all ETFs are available, neither are joint accounts. If you are married, opt for Questrade — open a joint account, this will eliminate legal/probate expenses. Invest with either Questrade or Wealthsimple Trade: you can transfer from one to the other without paying fees out of your pocket.

Open TFSA, RRSP and Margin/Personal accounts. For TFSA nominate your spouse as your successor; if you don’t have a spouse, nominate your beneficiary. For RRSP nominate your beneficiary.

Questrade self-directed investing: Open an account with $1. If you use this QPass Key 765615961458298 you will get $25 — $250 [$25 for a deposit of $1,000; greater amounts for greater deposits].

Questrade charges zero commission for buying ETFs. It charges 1 cent each unit [min. $4.95, max. $9.95 per transaction] for selling ETFs.

Wealthsimple Trade: Open an account from your mobile with $1. If you use this link you will get the cash equivalent [$5 — $4,500 with an average of $15] of 2 random stocks.

This is a mobile-only app; the laptop version does not have all the features yet.

Wealthsimple Trade charges zero commission for buying or selling ETFs.

Investment: TFSA and RRSP contributions are limited by available contribution room [which you will find on CRA My Account online]. Aim to keep TFSA full always: withdrawal from TFSA is tax-free and does not reduce your pension and other benefits. If you withdraw from TFSA, you can deposit it back next year.

If your income in the last year was $50,197 or less, deposit in TFSA; if it was more, you may deposit in RRSP to reduce income to a lower bracket [invest $1 in RRSP to reduce your taxable income by $1] and use the tax refund to deposit in TFSA. Withdrawal from RRSP is taxable and may reduce your pension and other benefits depending on your income in the year of withdrawal. If you withdraw from RRSP, you can not deposit it back ever, except for certain plans.

Use the money in TFSA, RRSP and Margin/Personal accounts to buy ETFs using limit orders. Apart from paying cash distributions into your Questrade or Wealthsimple Trade account every month or quarter, in the long term the value of your investment grows over the years.

If you need income after 5 years, buy XEI [iShares S&P/TSX Composite High Dividend Index ETF] units. The average annual total return in terms of market price was 0.45% in 1 year and 6.62% since inception in 2011 April. Cash distribution monthly, 4.75% over last 12 months. Risk Medium.

XEI: If you had invested $10,000 when it started this would have been its value over the years

If you need income after 10 years, buy VGRO [Vanguard Growth ETF Portfolio] units. The average annual total return in terms of market price was -11.19% in 1 year and 4.76% since inception in 2018 January. Cash distribution quarterly, 3.0% over last 12 months. Risk Low to Medium.

VGRO: If you had invested $10,000 when it started this would have been its value over the years

For all 3 accounts keep buying more units with the cash distribution left after transferring money for your expenses to Simplii Financial. For Margin/Personal account you can additionally keep buying more units with your savings from each pay period.

Part of the income from ETF units is eligible dividend income: 28.58% for VGRO and 87.94% for XEI. This is the most tax-efficient way to earn till $106,717. If this is your only source of income, you pay zero tax in Ontario on eligible dividend income upto $52,175. A married couple in Ontario can thus earn $104,350 and pay zero tax.

For individual income more than $106,717 you can sell some ETF units. You have to pay tax on only 50% of profit [vs. paying tax on 100% of salary and tips].

Referral links: You can open these accounts without using our links: both you and I will miss out on the rewards. Questrade pays us $25, Wealthsimple Trade the cash equivalent of 1 random stock.

I am not a certified investment advisor. I am an engineer, which makes me better trained to analyze. Suggestions are based on my research and experience. I have invested with the financial institutions above.

Inspired by J L Collins | Talks at Google

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