Examples of TFSA Portfolio Fees and Commissions Using InvestorLine and Investor’s Edge

Recently, a reader asked for some examples of the costs, fees and commissions of hosting a Tax Free Savings Account at a discount brokerage after it is set up. I thought I’d start by reviewing some scenarios using the two big bank brokerages I am most familiar with: BMO InvestorLine and CIBC Investor’s Edge. Here are some examples of the TFSA costs, fees and commissions.

Remember You Don’t Have to Buy Stocks in a Brokerage Account


You may want the money back out of your TFSA on short notice or fairly soon (1-3 years). If you have $10,000 or more you should still consider using a discount brokerage.

You do not have to buy only shares and stocks through a brokerage account. You can also buy GICs, term deposits, deposit cash in a daily interest savings account fund, or buy bonds.

The advantage of buying GICs through a brokerage is that you can choose from GICs offered by a variety of banks and trust companies.

The disadvantage of

  • buying GICs is that the minimum required investment is usually $5000.
  • buying bonds is that the minimum purchase requirement may be too large. It often exceeds $10,000.
  • a daily interest savings account fund is that you may be required to buy a minimum of $1000 of the fund (CIBC) or $5000 of the fund (BMO); also the interest rate is lower than you can get for a TFSA deposited directly in a savings account at other places such as People’s Trust or ING Direct.

Examples of Costs for Investing in a TFSA at BMO InvestorLine

Case 1: A Couch Potato TFSA at InvestorLine

This investor only has a $15,000 TFSA account. He does not have any other business with BMO or any other accounts at InvestorLine. He does not make purchases and sales frequently so he is not qualified for any volume discounts.

Let’s imagine our investor has $15,000. The investor wants to take a “couch potato” approach. He decides to invest $5000 in an ETF that mirrors the entire TSX, $5000 in an ETF that mirrors the NYSE, and $5000 in a GIC because he doesn’t trust bond funds right now.

This investor’s costs will be:
$29.00 to buy the TSX ETF units
$29.00 to buy the NYSE ETF units
$0 to buy a GIC from a wide variety of financial institutions (NOTE: the minimum investment is $5000.)
Total: $58.00

NOTE: This does not include the fees charged by the ETFs themselves. Those fees will vary depending on the ETF and are reported in the prospectus or Fund Facts for the ETF.

If he does not sell or buy any new assets he will not pay any more money to InvestorLine even if he leaves his portfolio alone year after year. (He will pay ETF fees.)

If he wants to do that, he should re-invest the GIC at no cost each time it matures. He should also set up the ETFs to DRIP if possible and if not, he should collect any distributions from the ETF into his GIC each time it matures and re-invest them that way.

His portfolio may vary widely from its initial 3-way split if he never buys or sells his ETFs. If he chose to sell some units from one ETF and buy some units in the other ETF, though, he would incur another $58.00 in charges. So re-balancing once every year, for example, would cost $58.00. (There is no cost to buy a GIC and GICs cannot be cashed early. GICs at InvestorLine all are paid out in cash when they mature and must be manually re-invested.)

Case 2:  A Couch Potato TFSA at InvestorLine with Other Assets

This investor has several accounts with InvestorLine. The total assets in the accounts are over $50,000. She qualifies for discount trading costs based on her account values. As above, she is going to be a couch potato.

This investor’s costs will be:
$9.95 to buy the TSX ETF units
$9.95 to buy the NYSE ETF units
$0 to buy the GIC
Total: $19.90.

NOTE: This does not include the fees charged by the ETFs themselves. Those fees will vary depending on the ETF and are reported in the prospectus or Fund Facts for the ETF.

As before, she will not have to pay anything to InvestorLine to keep the portfolio.

To re-balance the portfolio by selling units in one ETF and buying units in the other would cost an additional $19.90 each time. So if the portfolio was re-balanced once a year, it would cost $19.90 a year.

Case 3: A Buy and Hold 3 Stock Investor

This investor only has a $15,000 TFSA account. He does not have any other business with BMO or any other accounts at InvestorLine. He does not make purchases and sales frequently so he is not qualified for any volume discounts.

Let’s imagine our investor has $15,000. The investor wants to take a “buy and hold” approach. He is willing to take the risk of not being very diversified because he has other investments elsewhere. He decides to buy 3 stocks and hold them for years. If possible he will DRIP any distributions. If not, he will let them moulder earning no interest until he has enough to justify buying some new shares.

The investor would pay:
3 x $29
Total: $87

He would pay the same $87 any time he tried to re-balance by selling some of one stock and buying some of the other two; or selling some of two stocks and buying some of the other one. He would probably have to accept not re-balancing or he will be spending a large amount on fees.

Case 4: A Buy and Hold 3 Stock Investor with Other Assets

This investor has several accounts with InvestorLine. The total assets in the accounts are over $50,000. She qualifies for discount trading costs based on her account values. As above, she is going to buy only 3 stocks.

This investor’s costs will be:
3 x $9.95
Total: $29.85

She would pay $29.85 any time she tires to re-balance as above. This is a more reasonable amount to have to pay annually.

Case 5: A Mildly Active Stock Investor at InvestorLine

Now let’s consider another investor. She has also got $15,000 to invest. She has no other investments with InvestorLine and is not active enough to qualify for volume trading discounts.

She buys 6 stocks.
During the year she sells 3 and buys 3 more.

Her costs are
9 x $29 for the purchases
3 x $29 for the sales
Total: $348

This is 2.3% of the value of her original $15,000.

Each time she buys OR sells a stock or part of a holding of a stock, she will pay $29. So if she sells only 1 share of her TD stock, she will pay $29. Or if she buys only 1 share.

Obviously, re-balancing a small portfolio like this could be expensive.

IF the stocks are Canadian she could probably synthetically DRIP them. If the dividend paid, though, is less than the amount required to buy one entire new share, she will not be able to DRIP that stock. So the reality is for a small portfolio it is unlikely she will be able to successfully DRIP her distributions. She will likely have to use them as part of the money she spends the next time she buys a stock. In the meantime they will earn no interest.

If she is just buying a couple of long-term investment stocks such as TD and ENB, this might be an okay approach. Being a mildly active trader with about 6 stocks, however, costs her a lot of money, and the costs can rapidly get out of control if she keeps trading.

Case 6: A Mildly Active Stock Investor at InvestorLine With Other Assets

This investor has several accounts with InvestorLine. The total assets in the accounts are over $50,000. She qualifies for discount trading costs based on her account values. As above, she is going to buy only 3 stocks.

She buys 6 stocks.
During the year she sells 3 and buys 3 more.

This investor’s costs will be:
9 x $9.95 for the purchases
3 x $9.95 for the sales
Total: $119.40

While her costs are more reasonable than those for someone trading at $29 per purchase or sale, they are still high. She should think seriously about why she is trading so much with such a small portfolio.

She would pay $9.95 x number of (buys+sells) any time she tries to re-balance. This is a more reasonable amount to have to pay annually.

Case 7: A Hyper-Active Stock Investor at InvestorLine

With only $15,000 to invest, even if the person traded enough to qualify for $9.95 trades, they would probably be losing money. I would not recommend actively trading in a TFSA account at InvestorLine with only $15,000.

Examples of Costs for Investing in a TFSA at CIBC Investor’s Edge

Case A: A Couch Potato TFSA at Investor’s Edge

This investor only has a $15,000 TFSA account. He does not have any other business with CIBC or any other accounts at Investor’s Edge. He does not make purchases and sales frequently so he is not qualified for any volume discounts.

Let’s imagine our investor has $15,000. The investor wants to take a “couch potato” approach. He decides to invest $5000 in an ETF that mirrors the entire TSX, $5000 in an ETF that mirrors the NYSE, and $5000 in a GIC because he doesn’t trust bond funds right now.

This investor’s costs will be:
$28.95 to buy the TSX ETF units
$28.95 to buy the NYSE ETF units
$0 to buy a GIC from a wide variety of financial institutions (NOTE: the minimum investment is $5000.)
Total: $57.90

NOTE: This does not include the fees charged by the ETFs themselves. Those fees will vary depending on the ETF and are reported in the prospectus or Fund Facts for the ETF.

If he does not sell or buy any new assets he will not incur any other costs from Investor’s Edge even if he leaves his portfolio alone year after year.

If he wants to do that, he should re-invest the GIC at no cost each time it matures. He should also set up the ETFs to DRIP if possible and if not, he should collect any distributions from the ETF into his GIC each time it matures and re-invest them that way.

His portfolio may vary widely from its initial 33.3/33.3/33.4 split if he never buys or sells his ETFs. If he chose to sell some units from one ETF and buy some units in the other ETF, though, he would incur another $57.90 in charges. So re-balancing once every year, for example, would cost $57.90. (There is no cost to buy a GIC and GICs cannot be cashed early. GICs at Investor’s Edge all are paid out in cash when they mature and must be manually re-invested.)

Case B:  A Couch Potato TFSA at Investor’s Edge with Other Assets

This investor has several accounts with Investor’s Edge. The total assets in the accounts are over $50,000 but under $100,000. She qualifies for discount trading costs based on her account values. As above, she is going to be a couch potato.

She also has a friend who has over $100,000 of business with CIBC including her mortgage. This friend would also qualify for the same rates as used in this example.
[“CIBC Investor’s Edge clients with a total balance of $100,000 or more per household* in CIBC products, including investments, chequing accounts, mortgages and more, are eligible for Loyalty Pricing.”]

This investor’s costs will be:
$6.95 to buy the TSX ETF units
$6.95 to buy the NYSE ETF units
$0 to buy the GIC
Total: $13.90.

NOTE: This does not include the fees charged by the ETFs themselves. Those fees will vary depending on the ETF and are reported in the prospectus or Fund Facts for the ETF.

As before, it will cost nothing (except the fees to charged by the ETF companies) to keep the portfolio.

To re-balance the portfolio by selling units in one ETF and buying units in the other would cost an additional $13.90 each time. So if the portfolio was re-balanced once a year, it would cost $13.90 a year.

Case C: A Buy and Hold 3 Stock Investor at Investor’s Edge

This investor only has a $15,000 TFSA account. He does not have any other business with CIBC or any other accounts at Investor’s Edge. He does not make purchases and sales frequently so he is not qualified for any volume discounts.

Let’s imagine our investor has $15,000. The investor wants to take a “buy and hold” approach. He is willing to take the risk of not being very diversified because he has other investments elsewhere. He decides to buy 3 stocks and hold them for years. If possible he will DRIP any distributions. If not, he will let them moulder earning no interest until he has enough to justify buying some new shares.

The investor would pay:
3 x $28.95
Total: $86.85

He would pay the same $86.85 any time he tried to re-balance by selling some of one stock and buying some of the other two; or selling some of two stocks and buying some of the other one. He would probably have to accept not re-balancing or he will be spending a large amount on fees.

Case D: A Buy and Hold 3 Stock Investor with Other Assets at Investor’s Edge

This investor has several accounts with Investor’s Edge. The total assets in the accounts are over $50,000. She qualifies for discount trading costs based on her account values. As above, she is going to buy only 3 stocks.

Her friend, who has over $100,000 in business with CIBC, including her mortgage, also qualifies for the rates in this example.

This investor’s costs will be:
3 x $6.95
Total: $20.85

She would pay $20.85 any time she tries to re-balance as above. This is a more reasonable amount to have to pay annually.

Case E: A Mildly Active Stock Investor at Investor’s Edge

Now let’s consider another investor. She has also got $15,000 to invest. She has no other investments with Investor’s Edge and is not active enough to qualify for volume trading discounts.

She buys 6 stocks.
During the year she sells 3 and buys 3 more.

Her costs are
9 x $28.95 for the purchases
3 x $28.95 for the sales
Total: $347.40

This is 2.3% of the value of her original $15,000.

Each time she buys OR sells a stock or part of a holding of a stock, she will pay $28.95. So if she sells only 1 share of her TD stock, she will pay $28.95. Or if she buys only 1 share.

Obviously, re-balancing a small portfolio like this could be expensive.

IF the stocks are Canadian she could probably synthetically DRIP them. If the dividend paid, though, is less than the amount required to buy one entire new share, she will not be able to DRIP that stock. So the reality is for a small portfolio it is unlikely she will be able to successfully DRIP her distributions. She will likely have to use them as part of the money she spends the next time she buys a stock. In the meantime they will earn no interest.

If she is just buying a couple of long-term investment stocks such as TD and ENB, this might be an okay approach. Being a mildly active trader with about 6 stocks, however, costs her a lot of money, and the costs can rapidly get out of control if she keeps trading.

Case F: A Mildly Active Stock Investor at Investor’s Edge With Other Assets

This investor has several accounts with Investor’s Edge. The total assets in the accounts are over $50,000. She qualifies for discount trading costs based on her account values.

Her friend, who has over $100,000 in business with CIBC, including her mortgage, also qualifies for the rates in this example.

As above, she is going to hold only 3 stocks.

She buys 6 stocks.
During the year she sells 3 and buys 3 more.

This investor’s costs will be:
9 x $6.95 for the purchases
3 x $6.95 for the sales
Total: $83.40

While her costs are more reasonable than those for someone trading at $28.95 per purchase or sale, they are still high. She should think seriously about why she is trading so much with such a small portfolio.

She would pay $6.95 x (the number of buys + sells) any time she tires to re-balance. This is a more reasonable amount to have to pay annually.

Case G: A Hyper-Active Stock Investor at Investor’s Edge

With only $15,000 to invest, even if the person traded enough to qualify for $6.95 trades, they would probably be losing money. I would not recommend actively trading in a TFSA account at Investor’s Edge with only $15,000.


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Do you have a TFSA at a brokerage? Are your costs comparable to those in these examples? Please share your experiences with a comment.

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