Blessed by the Potato

For a long time, one of the big considerations of whether to build an index portfolio out of ETFs or mutual funds (in particular, TD’s e-series funds) was the cost of a trade: when nearly every broker around charged $10/trade, and you had to buy 4 ETFs to construct a canonical portfolio, that could be a few hundred dollars per year in commissions you’d rack up. For smaller portfolios, it just made more sense to go with the e-series.

Then Questrade changed the game with commission-free ETF purchases, and it became a more personal matter of the trade-offs between cost and complexity.

Now all-in-one ETFs have really cut down on the complexity involved. And even if you pay $10/trade, it’s not as meaningful if you’re only having to buy one thing. But the big bank brokerages have come a long way: while National Bank made all ETFs commission free, and BMO recently announced that starting today all trades will be commission-free, the others have all come out with a select list of ETFs that’s commission-free. And while the first few iterations of lists like that were a little less helpful, these days every single one includes a decent all-in-one option.

So the old advice of seeking out Questrade or Wealthsimple Trade or whatever isn’t really necessary. You can pick whatever brokerage you like, and you can find a very low-cost option to invest in. You choice may be constrained by their menu… but that may also help with the analysis paralysis. In alphabetical order:

• BMO: all ETFs (and stocks) are commission free
• CIBC: the list is here, and includes all-in-one funds from a mix of providers (VEQT, XGRO, XBAL, XCNS and VCNS)
• National Bank: all ETFs are commission free
• RBC: the list is here (have to click “see full list” on that page), and includes all-in-one funds from iShares/Blackrock (XEQT, XGRO, XBAL, XCNS)
• Scotia: the list is here, and includes all-in-one funds from a mix of providers (VEQT, XGRO, XBAL, XCNS)
• TD: the list is here, and includes all-in-one funds from Vanguard (VEQT, VGRO, VBAL, VCNS)

Of course, Questrade (or whatever) work perfectly fine as well (and we have to give Questrade brownie points for being the only brokerage able to figure out FHSAs before 2023 ended). But if you want the minor convenience of having your brokerage at the same place as your other banking, then commissions aren’t really a barrier to that any more.