How to Choose a Self-Directed TFSA Brokerage Account to Minimize Fees and Costs

Tax Free Savings Accounts, or TFSAs, first began in 2009 with a maximum annual contribution of $5000 for a Canadian who was 18 years of age or older. With that low an initial contribution level, they didn’t really offer much scope for self-directed investing. In each of 2010, 2011, and 2012, another $5000 in contribution room was added. Starting in 2013 $5500 per year in annual contribution room has been added. So a person who was 18 or older in 2009, and who has been a Canada resident every year from 2009 to the present, can now contribute or have contributed up to $31 000 $25,500 to a TFSA, not including any re-contribution of withdrawn funds. With $31 000 $25,500 plus earnings to manage, it makes sense for some investors to keep their TFSA in a self-directed brokerage account. When choosing a brokerage account, one aspect to consider is the fees and costs for holding and using the account. Here’s a review of which accounts have minimal or no fees and which accounts have high costs and commissions.

Please note there are actually two types of Tax Free Savings Accounts:

brokerage accounts, and those that can only hold a very limited number of investment choices which I call standard Bank TFSA accounts. For more information on the fees for basic bank TFSAs, please see the article How to Choose a Standard Bank Tax Free Savings Account, TFSA, with Minimal or No Fees.


Fees, Costs and Commissions for Self-Directed TFSA Brokerage Accounts

How to Choose a Self-Directed Tax Free Savings Account, TFSA, Brokerage Account with Minimal or No Fees

Some investors have a non-registered emergency savings account with 3-12 months income worth of cash and liquid assets, a topped up work pension plan, and a topped up RRSP. They often consider the TFSA as another long-term investing tool. These investors usually set up a self-directed TFSA brokerage account. They intend to buy stocks, bonds, ETFs and mutual funds from a wide variety of issuers. The self-directed account gives them the investing flexibility and diversity they demand.

BMO InvestorLine CIBC Investor’s Edge Qtrade Questrade
Set-up Fee  0  0  0  0
Transfer Fee  $135  $135  $125  $125 ($25 for partial)
Closing Fee  $135  $135  $75  0
Annual “Maintenance” Fee  0  0  0  0 if $5000 or if 1 trade per 3 months, or $19.95/3 months
Commissions to Buy Shares, ETFs $9.95 for everyone  if $50,000 assets
$29 if less
 $6.95 if $100,000 assets
$9.95 if $50,000 assets
$28.95 if less
 $9.95 if $50,000
$19 if less
 $4.95-$9.95
RBC Direct Investing Scotia iTrade TD Waterhouse
Direct Investing
Virtual Brokers
Set-up Fee  0  0  0  0
Transfer Fee  $135  $150  $135 $125 plus tax
 $150 (partial $50)
Closing Fee  $135  0  $135 $125 plus tax  0
Annual “Maintenance” Fee  $25/3 months but 0 if $15,000 or various conditions are met  0 0
Update: July 2016:
$25/3 months but 0 if $15,000 or various conditions are met
 CAD TFSA $0
USD TFSA $50/year
Commissions to Buy Investments  $9.95 for everyone  if $50,000 assets
$28.95 if less
 $9.99 if $50,000 assets
$24.99 if less
 $9.99 for everyone  if $50,000 assets
$29 if less
 $0.99-9.99+6.49 per trade depending on assets

* InvestorLine has a minimum contribution to open any type of account of $5000. This appears to apply to TFSA accounts.

UPDATE: FEBRUARY 2014
In January and February of 2014, RBC Direct Investing, TD Waterhouse Direct Investing and BMO InvestorLine all removed the minimum balance requirement for accounts to qualify for $9.95 online trades. I expect CIBC Investor’s Edge and ScotiaBank iTrade will eventually reduce their requirements also but it hasn’t happened quite yet. Please check their websites for up-to-the-second details.

UPDATE: JULY 2016
CIBC Investor’s Edge offers $6.95 trades to all customers regardless of account size.

NOTES:
Generally you should expect to review your account statements online if you do not wish to pay any additional fees.

By Transfer Fee I mean the cost to transfer the TFSA to another financial institution. Generally transfers within an institution, for example from BMO InvestorLine to BMO, do not incur a fee.

Unfortunately fees and costs may be changed at almost any time. Before actually opening an account, contact the financial institution to confirm all costs. I’d hate to cause you a costly mistake if the brokerage raises its fees just after I issue this report!

Sources for the 2014 February Update

  • BMO InvestorLine: https://www.bmoinvestorline.com/public/pdf/schedule_en.pdf
  • CIBC Investor’s Edge: https://www.investorsedge.cibc.com/ie/benefits/fees-and-commission/fees.html
  • Qtrade: http://www.qtrade.ca/investor/en/aboutus/services/fees.jsp
  • Questrade: http://www.questrade.com/pricing/admin_fees
  • RBC Direct Investing: http://www.rbcdirectinvesting.com/commissions-fees-schedule.html
  • Scotia iTrade: http://www.scotiabank.com/itrade/en/0,,3694,00.html
  • TD Waterhouse Direct Investing: http://www.tdwaterhouse.ca/document/PDF/forms/521778.pdf
  • Virtual Brokers: https://www.virtualbrokers.com/contents.aspx?page_id=12

Related Reading

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Do you have brokerage TFSA? Did any costs come as a surprise? Please share your experiences with a comment.

2 thoughts on “How to Choose a Self-Directed TFSA Brokerage Account to Minimize Fees and Costs

  1. It would be very helpful if you can use a few common scenarios to illustrate how much fees to expect as a self-direct TFSA holder

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