Canadian Housing Bubble: Beginning of the End?

We’ve all seen the headlines (well, those of us who follow this sort of thing), is the Canadian housing bubble beginning to unwind? Prices of detached houses are substantially off from their peak in April in the GTA as well as other previously red-hot markets in Ontario. Worse still, sales volume is also considerably down. Economists from various real estate agencies (who some might label as shills) and many others who frankly have a ton of potential bias tell us that this is either an anomaly or the beginning of a soft landing.

So, is this the beginning of the end? Continue reading “Canadian Housing Bubble: Beginning of the End?”

CIBC Investor’s Edge Review

Review Score:  C+

CIBC Investor’s edge has done much to keep up with their big bank peers to stay relevant as a discount stock broker in Canada.   This review will explain why we think they are a decent choice, but also why we think most investors would be better going with a different broker. Continue reading “CIBC Investor’s Edge Review”

TD Direct Investing Review

Review Score:  C

TD Direct Investing is another offering from the big banks for self directed investors in Canada.  In this review, we will compare TD to some of the other big banks and some of the independent discount brokers, and try to let you know why we think it’s a somewhat inadequate choice by comparison.  Formerly known as TD Waterhouse Discount Brokerage, TD Direct Investing has some big positives, they have a wealth of resources to teach new investors how to trade and their trading platforms are many and varied.  However, we feel that they lag behind some of their big bank peers in innovation and interface.

Sign up

Opening a new account is fairly easy, as it is for most brokerages in 2017.

Fees

TDs fees are similar to the other banks for carrying a trading account and in terms of commissions.

  • You need $15,000 split across all accounts in order to waive a $25/quarter inactivity fee.
  • Stock trade commissions are $9.99.   Higher or equal to most other brokers, so nothing to write home about.  If you trade more than 250 times per quarter, the fee drops to $6.99 per trade.
  • Options trade at $9.99 + $1.25 – pretty much par for the course between the big banks.  It almost seems as if they conspire to fix their prices.  I’m only kidding, of course.
Features, Support and Tools

They offer many of the same features offered by other brokerages that we’ve come to accept as industry standards.

  • RRSPs are allowed
  • TFSA trading accounts are allowed
  • They allow USD balanced
  • DRIP allowed
  • They have very good educational materials for investors who are just begining

However, there are a number of services that are lacking:

  • They only have a smartphone app for bond trading.  This is unacceptable in 2017
  • Unlike many brokers, there is no program to buy and sell any ETFs without commissions.
  • They don’t offer a call back or live chat service.  You have to telephone directly
  • Their website is quite nice, but the trading interface leaves something to be desired

The last few points lead us to our main complaint about TD.  They don’t really offer anything you can’t find elsewhere, they lag behind in multiple categories and they don’t seem to really be innovating.  They more appear to be constantly playing catch-up with their peers.   So they’re not a very exciting broker to have an account with (or to review for that matter)

Bottom Line

TD is a decent broker, but why choose decent when there are many good or excellent stock brokers in Canada? Par or sub-par in many respects, we recommend most of the other Big Bank brokers over TD.  And we recommend several discount brokers, like Questrade, over the big banks.

RBC Direct Investing

Review Score:  B-

Our RBC Direct Investing, formerly known as Royal Bank Action Direct, review will show you that RBC is a decent broker and leads the way among big banks in fee innovation. They offer some interesting an unique features – such as a community section that allows users to communicate

Sign up

By all accounts signing up is relatively painless and there is zero minimum to open an account.

Fees

Their commission fees are comparable to other bank brokerages, but you should note that RBC has led the way among bank brokerages.  They were the first to substantially lower their commission rates and the other brokerages followed suit.  This furthers our firm belief that competition between the various brokers in Canada is very beneficial to investors.

  • $9.95 for a standard stock trade.  $6.95 flat if you perform more than 150 trades per quarter
  • $15000 required across all accounts to avoid a $25/quarter account fee.  You can also avoid this fee by direct depositing at least $100 per month into your account
  • $9.95 + $1.25 per contract for options trading.
  • If you have an RBC rewards credit card, you can use your RBC rewards points to pay for commissions on trades
Features, Support and Tools

The number and quality of features offered by RBC Direct Investing range between standard and subpar.

Types of Accounts

  • RESPs are available
  • RRSPs are available
  • TFSA (trading accounts) are available

Other Info

  • USD cash balances are allowed
  • Income reports are not available
  • The quality of their website interface is not great.  It is fairly dated and it feels like it was made in early 2000s.  A major overhaul would be a welcome addition
  • A decent smartphone app is available.  It has a much more modern design than the website, so if you prefer to manage your finances with your smartphone, this is a plus
  • For accounts larger than $250,000 there is an exclusive service available
  • Support has a live chat, but no call back service which is disappointing.
  • DRIP available
  • Mutual funds are available and have a relatively low commission
Bottom Line

RBC has led the way among the big banks by lowering fees, but lags behind in their trading interface as well.  If you want a big 5 Bank broker, they might be a decent choice, but not our #1 recommendation

Total Value of Real Estate in Toronto

There has been a lot written about the housing bubble, the average home price in Toronto and the rest of Canada.  I thought it might be fun and useful to try and calculate the implied value of all residential real estate in Toronto.   My methodology will only give a very rough estimate as there are a lot of unknowns due to unavailability of Statistics.  I’ve used stats from Statistics Canada and from the Toronto Real Estate Board to calculate the following figures.

Detached Homes in Toronto = 820,895  X  Average Selling Price of Detached homes $1,068,670 =  $877,265,859,650

Townhouses in Toronto =  281,795 X Average Selling price $617,000 = $173,867,515,000

Semi Detached homes = 147,600 X Avg. Price $728,814 = $107,572,946,400

Condos/Apartments = 662,285 X Avg. Price of $442,598 = $293,126,016,430

So, the total “value” of all housing in Toronto is about $1.5 Trillion Dollars.

This figure approaches Canada’s entire GDP of 2.39 Trillion CAD.  It is nearly 5 times Toronto’s GDP

It’s about half the market cap of the Toronto Stock Exchange at $2.78 trillion.

 

Virtual Brokers Review

Review Score: B+

Updated: Feb 2017

Virtual Brokers is one of the best discount brokers in Canada for most users.  This review will show that it is fairly low cost, feature rich and well suited for most investors and a very nice option for active traders.

Sign up

By all accounts, signing up for Virtual Brokers is fairly fast and relatively painless.  You only need $1000 to open an account, but $5000 if you want to qualify for their commission free plan.

Fees

Understanding Virtual Brokers fees now requires you to understand the fee structure for their two different account types. Standard and Commission Free Accounts.

Standard Accounts have the following Fees

  • $9.99 per stock trade
  • $9.99 + $1.25 per contract for options trading
  • $5000 balance required for zero inactivity fees
  • No ECN fees

Commission Free accounts charge $0 per stock trade.  This sounds like a no-brainer, but additional fees make it attractive only to very active investors.

  • $0 per trade, but the account holder must subscribe to a Virtual Broker Data plan.
  • Data plans cost $150 USD per month for Edge Trader Pro and $250 USD per month for PowerTrader Pro.
  • You also have to pay ECN fees which can be onerous

So while the commission free plan may not have commissions on trades, you will still pay at least $150 USD per month.  So, this plan might make sense for very active traders, but you would need to make dozens of trades every month to be saving money on commissions

Features, Support and Tools
  • RRSPs and RESPs are available
  • TFSA are available
  • Mutual Funds can be held in your accounts
  • You can buy ETFs with no commission which is a great feature and should hopefully become standard at all brokerages.
  • A smartphone app is available
  • Detailed income reports are available in your account
Bottom Line

For the average investor, Virtual Brokers is a decent, low cost brokerage.  They offer free ETFs, and many other features.  However, their commission fees are not the lowest in Canada unless you are a very active investor.  In this case, you can make unlimited trades for at least roughly $150 USD per month.  Virtual Brokers is a great broker, but has a few failings that prevent it from being near perfect.

BMO InvestorLine Review B+

Review Score: B+

We feel that, while BMO InvestorLine is not the best online discount brokerage in Canada, they are the best of the big 5 bank brokerages.  As always, keep in mind in this review that your investment goals and needs are quite idiosyncratic and your best broker might differ from someone else’s.

Sign up

Opening an account is easy to do and BMO has made it even easier in recent years.  You can choose between two services

  • BMO InvestorLine Self-Directed. This is the same as virtually any other discount broker.  You sign up and you’re on your own to make trades, do research and manage your investments.
  • BMO InvestorLine AdviceDirect. This type of account is more geared towards investors who want an investment manager.  This account will not be used for this review, but we may discuss it later in our financial planning section.  Note: you need to carry a minimum balance of $50,000 in order to qualify for this account type
Fees
  • Standard Online Stock Trade Commission: $9.95 which is inline with most big bank discount brokerages
  • Options Trading Commission is $9.95 + $1 per option contract
  • You need $10,000 in a standard account or $25,000 in your RRSP account to avoid a $100/year fee
Features, Support and Tools
  • RRSPs accounts are allowed
  • RESP accounts are allowed
  • TFSA Tax free trading accounts are offered as most brokers do these days
  • Mutual funds are allowed in the account
  • Commission free ETF trading is not available.  The only big 5 Bank to currently offer this service is Scotia iTrade
  • They have a decent smartphone app by all accounts
  • They have a robo-adviser ETF program called SmartFolio
  • They have a live chat service and no call back service for support. By all accounts, support is quite good
  • Research tools are exemplary.
Bottom Line: B+

The best of the big bank brokers with great research tools, low-simple costs, a robo trader ETF,  but lacking many of the features that non-big bank brokers offer like commission free ETF trading.

Interactive Brokers Canada Review

Review score: B-

Interactive Brokers Canada is the Canadian version of a very popular American discount brokerage.   The author has used Interactive Brokers since 2007 and has been quite happy with them, but as we will explain in this review – we feel they are the best choice for some Canadians and definitely not others.  It depends on how much you have to invest and your investment strategy.  Also, IB Canada was good back in 2007 and they’ve done a lot to become even better in recent years.

Sign up

The sign up process is much more annoying than some other Canadian brokers, but if Interactive Brokers meets your unique investment needs, it will be well worth it.  Generally, even if Interactive Brokers works for you, you will also need to have another broker for certain trades unless you don’t mind paying enormous fees.

Fees

Interactive Brokers trading commission structure is strange and somewhat more complicated than other brokers.  But it can be the lowest commission of all brokers by far for certain people.  Allow us to explain:

Many trades with Interactive brokers have a commission of only $1 USD. Which is far lower than any other broker in Canada.  If you are buying or selling up to 200 shares of any stock or ETF, you pay just $1 per trade.  This is staggering low cost.  However, every share above 200 traded is priced at 0.5 cents per share with a maximum commission of 0.5% of the trade.  So, if you are trading in very large volume with very low priced shares, you might pay considerably more than brokers with a flat-rate commission.  So, imagine you’re buying 200,000 shares priced at $1 USD.  Your commission would be a whopping $1000 USD!  This fee structure is baffling at times, but it can be worth it for many traders.

$10 monthly fee for accounts with less than $100,000 USD.  This also includes $10 in free montly trades, so this fee is nonexistent if you frequently trade

Features, Support and Tools
  • Offers market data for virtually any market or currency for a price.  If you’re looking to trade shares on some strange foreign exchange, IB is a great broker
  • RRSPs have been recently added, but with a $50 per year fee
  • TFSAs have also been recently added
  • USD balances are allowed.  You can carry balances in virtually any currency
  • Mutual funds are not offered
  • DRIP is not offered
  • Income reports are offered

The trading platform is great and has many many features.  It is a bit complex and hard to learn, but very full featured.  Their website leaves much to be desired.  It can be confusing and very frustrating to use.

Bottom Line B-

Interactive Brokers is a great broker for certain trades and for day traders who trade shares with a high price.  It’s terrible, due to the fee structure, for trading penny stocks. Everything else is quite good except their website.  For some people the review should be A+ and for others it would be a D.  It really depends on your situation

Scotia i-Trade Review

Review Score : C+

Scotia i-Trade is one of the online brokerages that is wholly owned by the big banks.  It is a very good brokerage for higher net worth individuals, but not so great for investors with small sums of money to invest due to fees.  So, if you’re looking for discount broker, look elsewhere (see our reviews), but if you have a balance to invest in the high $100s of thousands, Scotia might still be a good broker for you

Sign up

Signing up is fairly painless, but it is apparently more difficult than signing up for some of the newer kids on the block – like Questrade or Qtrade.

Fees

Fees are much higher for people who carry a relatively small balance and much lower for more active traders with a high net worth.  If you have a balance of less than $50,000 across all trading accounts, you will pay a trading commission of $25 per trade.  This was not uncommon 10 years ago to pay commissions this high at ‘discount’ online brokerages, but today Scotia is one of the very few brokers that still have fees this high.

If you have more than $50,000 in your iTrade accounts, you will pay commission of $9.99 per trade.  This commission also applies if you’re an active trader and you trade over 30 times per quarter.  If you are a very active trader and you trade more than 150 times per quarter, you will get their best commission rate and trade at $4.99 per order.

  • Options trade at $9.99 + $1.25 per contract
  • you can trade from a list of 50 select ETFs for free. Scotia iTrade is one of the few bank brokers that currently allow this
  • inactivity fees charged for balances under $25,000 across all accounts
Features, Support and Tools
  • RRSPs are allowed
  • TFSAs are allowed
  • Smartphone app is decent
  • Income reports are provided
  • they do not have a Roboadvisor ETF
  • you can buy Mutual Funds in your accounts
  • DRIP is available
  • Good Research tools are available, but they aren’t as good as some of the other big banks
  • Support is offered over live chat and a call back service.  By all accounts their support is responsive and helpful
Bottom Line: C+

Scotia iTrade has some positive qualities.  If you’re looking for broker that is associated with a big bank and you have a decent balance across all trading accounts, then Scotia might be for you.  But we would recommend a BMO or RBC over Scotia.  If you’re not dead set on big bank broker, have a look at Questrade (our review) or Qtrade

Qtrade Review A-

Qtrade Review Score: A –

Qtrade, not to be confused with Questrade, is a very good Canadian Stock Broker.  It’s not quite as good as Questrade, which if you read our review, you will find is almost a perfect broker for most Canadians, but it comes very close!  On to our review:

Sign up

Signing up for Qtrade is quite easy and fast.  And their fees are quite low.  It’s a great brokerage for low net worth individuals, especially if you are young (under 30).  You require a Minimum Balance of $1000 CAD to open an account.

Fees
  • Stock trade commissions are $8.75 per trade.
  • Options Trade at $8.75 + $1.25 per option contract
  • ECN fees may apply if your trading is judged to be high volume, so this is a negative
  • $25,000 balance required for no inactivity fees ($100/yr otherwise)
  • Can trade 100 select ETFs with no fees

For individuals under 30, they offer trades for $7.75 commission and you do not need to carry a minimum balance in your account.  You just need to add a minimum of $50 per month to your account.  This is a great way for young people who are interested in self directed investing to get started.

Features and Tools
  • TFSA trading accounts are allowed
  • RRSPs are allowed
  • USD cash balances are allowed
  • Smart phone app is slick, modern and easy to use
  • Income reports are decent and available
  • Research tools are great
Customer Service

By all accounts customer service is good.  With fast response times and helpful staff, we haven’t encountered any serious complaints from the half-dozen or so Qtrade clients we’ve consulted.

 

Final Verdict: A-

Qtrade would be a nearly perfect Canadian broker if their fees weren’t a bit higher than the competition.