A Questrade review for 2020

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by Ratehub.ca January 2, 2020 / No Comments

Table of Contents

With twenty years of industry experience, Questrade is the best online brokerage in Canada. It’s no surprise, either. Questrade has earned the trust of so many Canadian investors over the last two decades. They’ve allowed countless Canadians to make smarter, more affordable investing decisions.

Questrade also provides flexibility. There are options for all levels of risk tolerance, for rookie and veteran investors alike, offering passive and self-directed investing options.

In this Questrade review, we’ll take a closer look at why Canadian investors choose Questrade as a reliable, efficient, and cost-friendly investing, trading, and saving platform.

What is Questrade?

Questrade is an online investing platform headquartered in Toronto, Ontario, operating since 1999. Today, the discount brokerage offers some of Canada’s lowest commissions on trading and investing currently available.

As a virtual brokerage, Questrade only operates online, meaning there are no branches or offices open to the public. This allows the discount brokerage to provide the lowest trading fees in the industry.

Questrade offers a variety of investment options that suit all risk profiles, ranging from low-risk investments like Guaranteed Investment Certificates (GICs) to more volatile options like Forex and the stock market.

Questrade has become incredibly popular as a low-cost option for passive investing as well. It offers its own robo-advisor called Questwealth Portfolios, which allows Canadians to purchase and trade Exchange-Traded Funds (ETFs).

Questrade and Questwealth Portfolios Review 2020

This Questrade review will focus on four sections of the online brokerage: the pros and cons, the sign-up process and account registration, fees and features, and the types of accounts offered.

Pros

Questrade’s pros far outweigh the cons. Below, we’ll take a quick glance at the benefits and drawbacks the discount brokerage has to offer. Fortunately for Canadians, the pros of Questrade far outweigh the cons. Here are a few major advantages of investing through the Canadian online brokerage.

  • Low fees: Naturally, low fees are the staple quality of this discount brokerage. Questrade has the best fees out of any online brokerage in Canada.
  • No annual fees: With the lowest fees in the country, Questrade also comes with no annual fees. Many of Canada’s online brokerages come with annual and sometimes even quarterly fees. Questrade comes with no yearly, monthly, or quarterly fees.
  • Online platforms and mobile app: Questrade offers a very fruitful online experience for customers. As an online brokerage, Questrade offers three virtual platforms: IQ Web, a browser-based trading platform; IQ Edge, a dedicated desktop program; and the Questrade Mobile App.

Cons

Nothing in life is perfect. Below are a few drawbacks that come with using the discount brokerage.

  • Quarterly Inactivity Fee: For accounts under $5,000, Questrade charges $24.95 if no trades are made within that quarter.
  • Minimum Balance Requirement: Opening an account with Questrade requires a minimum balance requirement. Minimum investment requirements vary from account to account. For example, opening certain accounts requires a minimum investment of $1,000.

Sign-Up Process and Account Registration

Questrade’s sign-up process is relatively straightforward. Upon signing up, customers need to distinguish which account or accounts they would like to open before investing. Below is a brief summary of each investing account the discount brokerage offers upon sign up.

Types of savings and investment accounts

Margins stocks purchased with money borrowed from brokerages to purchase shares or make investments. Using Questrade Margins to buy stocks can reap you significant gains or losses, as they tend to be riskier investments.

  • Tax-Free Savings Accounts (TFSAs) can hold various investments, such as GICs, ETFs, Stocks, Bonds, and Mutual Funds. The account earns tax-free interest on investments and returns, as long as the gains remain under the yearly TFSA contribution limitA TFSA acts as an excellent shelter for tax-free investing.
  • Registered Retirement Savings Plan (RRSPs) can hold several types of investments, including Bonds, GICs, Equities, and ETFs, among others. This savings account is suitable for long-term savings and purposed mainly for retirement. Another account offered is the Registered Education Savings Plan (RESP).
  • Robo-Advisor: Questwealth Portfolios is Questrade’s robo-advisor. A robo-advisor manages a portfolio pre-determined on an investor’s risk tolerance and manages it on their behalf. Robo-advisors use an algorithm to manage your investments.
  • Unlike financial advisors or mutual funds, robo-advisors manage ETFs for a fraction of the cost. Questwealth is no different. The robo-advisor manages your investment portfolio and monitors your investments based on your risk profile. There is no need for constant monitoring, financial savviness, or extensive research when investing, just an understanding of your personal risk tolerance.

For the Couch Potato investors, using a robo-advisor is an excellent option, as they do not require constant monitoring. However, consistent control of any investment is always ideal.

Fees and Features

 

Questrade Fees and Services (View All)

Service

Fee

Sign-Up Fee?

None

Basic Trading Commission

1¢ per share (min. $4.95 – max $9.95)

Basic Option Commission

$9.95, $1 contract

Free ETF trading?

Yes

Minimum Investment

$1,000
Minimum Balance for No Inactivity Fee or Annual Fees?

$5,000

Robo-Advisor MER

< $100k – 0.20% 

> $100k – 0.25%

Mobile App?

Yes

Desktop App?

Yes

What’s made Questrade stand out—perhaps even the reason they’ve caught your attention—is their incredibly low fees.

Most investors gravitate to Questrade because of their unbeatable low-cost fees. Recurring fees can add up fairly quickly for active investors, and since online investing platforms charge up to $10 per trade, the use of discount brokerages like Questrade is increasing in popularity among Canadians.

This chart provides a brief overview of Questrade’s fees and features. How investors are charged depending on the account that they open is explored in the next section.

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Types of Savings and Investments

Below are the accounts for saving and investing that Questrade offers its customers.

Tax-Free Savings Account (TFSA)

  • Minimum Investment: $1,000
  • Fees: Varies on investment
  • Risk Level: Varies on investment

A Tax-Free Savings Account (TFSA) is a type of savings account that can hold various investments and earn tax-free interest. GICs, stocks, and mutual funds, to name a few, can be held in a TFSA and earn tax-exempt interest, under the yearly contribution limit.

Questrade also provides Tax-Free Savings Account (TFSA) options in which you can hold several investments.

Registered Retirement Savings Plan (RRSP)

  • Minimum Investment: $1,000
  • Fees: None
  • Risk Level: Varying 

A Registered-Retirement Savings Plan (RRSP) is a registered account designed primarily for retirement planning. An RRSP can hold many investments, many included in this Questrade review. Risk levels vary depending on the type of investment placed in an RRSP. For example, both GICs and equities can be placed in an RRSP and earn tax-free growth, so long as the total amount remains beneath the RRSP yearly contribution limit. Investments withdrawn from an RRSP are subject to taxation—except under certain plans. For example, with certain conditions, the RRSP Home Buyers Plan allows tax-free withdrawal of up to $35,000.

RRSPs can hold several types of investments, including bonds, GICs, equities, and ETFs, among other investing options. This savings account is suitable for long-term savings, purposed mainly for retirement.

Bonds

  • Minimum Investment: $5,000
  • Fees: Varies depending on the investment
  • Risk Level: Varies on investment

Bonds are relatively similar to GICs, except instead of lending money to banks, investors lend their money to various levels of government or corporations. Once the bond’s term is complete, the investment is returned, with additional interest. Bonds commonly diversify an investor’s portfolio. They’re also a safe way to increase the overall yield of a portfolio. The cost of the bond varies and depends on its purchasing price. Questrade bonds require a minimum investment of $5,000, with provincial, high-yield, and corporate bond options.

If you’re interested in learning more about GICs vs. Government Bonds, our comparison article can help clarify the decision-making process.

Exchange-Traded Funds (ETFs)

  • Minimum Investment: $1,000
  • Fees: 1¢ per share, (min. $4.95-max $9.95)
  • MER: 0.20%
  • Risk Level: Low to High

Exchange-Traded Funds (ETFs) consist of various investments, often purchased through the stock market. ETFs allow investors to diversify their investments by putting their money in various options. Think of ETFs as pre-built portfolios. Some of the investments that make up ETFs include Index, Stocks, and Bonds. Other ETF investments include Real Estate, Precious Metals, and more.

Purchasing ETFs comes with a commission fee, known as a Management Expense Ratio (MER). ETFs are adjustable to different investing styles and risk profiles. Purchasing Questrade ETFs does not require a minimum investment, and comes with a low MER starting at 0.20%.

Mutual Funds

  • Minimum Investment: $29.95 per month, with monthly rebate
  • Fees: $9.95 per trade
  • Risk Level: Varying

Similar to ETFs, Mutual Funds allow investors to pool their money in more significant amounts with other investors. Unlike ETFs, mutual funds, enable many investors to share their money in a spread of different investments with investors across Canada. Questrade Mutual Funds come with a monthly fee that is dictated by the investment’s performance. Similar to robo-advisors, mutual funds are suitable for those who prefer passive investing with risk adjustment. 

Precious Metals

  • Minimum Investment: None
  • Fees: $19.95 USD per trade
  • Risk Level: High

Precious metals are rare metals that possess exceptional value. The most common (and valuable) are gold, silver, and platinum. One of Questrade’s many self-directed investing options includes precious metals. At the moment, the online investing platform currently offers only gold and silver purchasing options. Purchasing precious metals is generally done through ETFs, stocks, mutual funds, and other investing methods, but are available by themselves.

Stocks

  • Minimum Investment: $1,000
  • Fees: 1¢ per share (min. $4.95 – max $9.95)
  • Risk Level: Medium to High

Self-directed investing might be the most popular option provided by Questrade. Self-directed stock trading allows customers to purchase, trade, or sell shares from corporations of their choosing. For frequent traders, Questrade’s low commission rate makes a significant impact on the trading experience.

Which Questrade Account Should I Open?

Choosing the right account to harness your investments might be overwhelming, but a generally good place for everyone to start usually begins with a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP).

This is generally the best option for investors, as both accounts can earn dividends, gains, and interest without taxation. However, both accounts come with contribution limits, meaning if you’ve reached your contribution limit, you’ll have to place your investments elsewhere. If you have children, you can place these savings in a Registered Education Savings Plan (RESP).

But if you don’t have children, or, you’ve maxed out their RESP, a non-registered account is your next option. Questrade provides non-registered accounts for investments.

Non-registered accounts are not tax-protected but aren’t taxed until the investments they’re holding are sold. The good news is that capital gains in non-registered investing accounts are taxed less harshly; at 50% of your marginal tax rate, to be specific.

Is Questrade safe?

Questrade is a safe online brokerage option, as Questwealth Portfolios is a safe robo-advisor.

Questrade, as a whole, is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). These two organizations operate similarly to the Canada Deposit Insurance Corporation (CDIC). Investments managed by Questrade come with $10 million of insurance per account, should the brokerage become insolvent.

While your investments are safe in the unlikely event that the brokerage should go out of business, your investments are not protected against loss or changes in the market. This includes investments held in an RRSP or a TFSA.

Should I invest with Questrade?

Every investor has their own goals, ambitions and risk tolerance, so the answer to that question, as you might expect, depends on the person asking it. Every investor has a different attitude towards investing, and especially towards loss. 

That said, Questrade offers something for everyone of all risk tolerance levels. As expressed throughout this Questrade review, the online-investing platform commission fees alone make it an excellent option for people looking to undercut their expenses on trading commissions.

Below are some of the advantages of using Canadian online brokerage:

  • Flexible to all investing personalities.
  • Lowest commission fees for an online investing platform.
  • Investments are insured by the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF).
  • Telephone and online customer service available.
  • Mobile app and desktop software (Questrade IQ Edge) are also available.

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