How do I invest online in Canada?

If you’re new to investing, this article is for you! It can be difficult to navigate all the investment platforms, such as online brokers and robo-advisors. Of course, investing online on your own requires more knowledge than investing at the bank with a financial advisor. But the potential returns, combined with lower management fees, can make a huge difference over the long term.

When it comes to investing online, there are several options and strategies to choose from. For the purposes of this article, we’ll concentrate on investing in the stock market. More specifically, investing in the stock market via an online brokerage platform or a robo-advisor.

An online brokerage platform, also known as an online broker, acts as an intermediary between you and the stock markets. To buy or sell shares in listed companies such as Apple or Microsoft, you need an account on a brokerage platform. This is a stand-alone investment. You will be able to enter your trades (e.g. purchase Apple shares) and receive the shares when your trades are executed by the broker. You can then hold on to your shares and resell them at a profit, depending on your investment strategy.

Another option, for those who prefer to wait before taking the plunge into independent investing, is to invest online with the help of a robo-advisor. Robo-advisors streamline investment processes by doing everything for you. Depending on your investor profile and investment horizon, a robo-advisor can recommend investment portfolios that meet your needs, in addition to automatically rebalancing your portfolio and reinvesting dividends.

As a Canadian, you can invest in registered or non-registered accounts.

• Registered account : A registered account, also known as a registered plan, is an investment account to which the government grants special tax treatment (tax deferral or tax exemption). Tax is not payable on income prior to withdrawal.
• Non-registered account : A non-registered account is a general investment account that requires you to pay taxes each year on the income earned in the account. You’ll be able to invest in a wide range of assets.

Investing your money with the help of a financial advisor at the bank is a good option for investment novices. But investment choices are generally limited to this bank’s mutual funds and fixed-income investments. What’s more, these investment products have fairly high management fees in Canada (between 2% and 3%, on average). Not to mention that most mutual funds underperform their benchmarks.

On the other hand, investing online using a brokerage platform opens up a wide range of options and investment strategies. If you’re a novice investor, don’t worry, it’s easy to invest online. Of course, investing independently requires more time and knowledge than investing with a financial advisor. But with basic stock market knowledge, a mobile online brokerage app and an all-in-one ETF that matches your investor profile, you can outperform your bank’s mutual funds. In the long term, the difference with the principle of compound interest is enormous.

There are several online brokerage platforms available in Canada, each with its own features and functionalities. Depending on your current financial situation and investment strategy, you can choose the one that best suits your needs.

Here are the main features to consider:

• Minimum deposit: The minimum amount required to start investing online.
• Administration fees: Fees charged to you for using the platform. These are usually quarterly fees.
• Trading fees: Fees or commissions charged for executing your buy or sell transactions. Several platforms now offer free trading.
• Types of investments: Types of investments or assets offered on the platform, such as equities and exchange-traded funds (ETFs).
• Account types: Types of accounts offered on the platform, such as registered accounts (FHSA, TFSA, RRSP, RESP, etc.) and non-registered accounts.
• Mobile accessibility: Some brokers in Canada do not yet offer their users a mobile application.
• Research and analysis tools: Technical analysis tools, research tools and market data reports available on the platform.
• Training and educational resources: Typically courses, webinars or guides to help novice investors invest online.
• Safety: Safety is paramount. Check that the platform is regulated by the Investment Industry Regulatory Organization of Canada (IIROC) and protected by the Canadian Investor Protection Fund (CIPF).
• Trial accounts: Some platforms offer risk-free trial accounts.

User experience is an important element to consider when choosing an online brokerage platform. Ease of use, for both novice and experienced investors, is a priority. Here are some aspects to evaluate:

• Intuitive interface: Easy to navigate and understand the functions offered.
• Performance: Reliability of the website or mobile application, such as the speed of execution of buy or sell orders at the market.
• Mobile application: Availability of a mobile application for investing from anywhere.
• Customer service: Accessibility and efficiency of customer service in the event of problems (via online chat, e-mail or telephone).
• Customization: Ability to customize interfaces, stock price alerts or automatic purchases.

It can be convenient to consolidate all your investments and banking in one place. For example, Wealthsimple offers a high-interest checking account, a managed investment platform, a stand-alone investment platform, a cryptocurrency platform and an online tax filing service. All our products and services are available on the same platform, making it easy to manage your finances.

Whether you’re a novice or an experienced investor, the best online investment platform is the one that suits your needs. Based on the features and functions explained in the previous section, you can find and choose the best brokerage platform for you.

Here is a list of the main online brokerage platforms available in Canada. For each of them, we mention the pricing (administration fees, trading fees, etc.), the types of accounts offered, the types of investments, and more.

Wealthsimple is an investment management company that was founded in 2014 in Canada. Today, Wealthsimple has over 3 million clients and more than C$30 billion in assets under management. It offers a diversified range of investment products and services, including :

• A stand-alone investment platform (Wealthsimple Trade)
• A managed investment platform (Wealthsimple Invest)
• A cryptocurrency platform (Wealthsimple Crypto)

Questrade is an investment dealer that opened its doors in 1999. Since then, Questrade has become the largest independent broker in Canada. The company has $30 billion in assets under management and is a 12-time winner of Canada’s Best Managed Companies competition.

Whether you’re a novice or an advanced investor, Questrade has the trading platforms and analysis tools to meet your needs. Interesting fact: In 2023, Questrade was the first online broker in Canada to offer FHSA to its customers.

National Bank Direct Brokerage (NBDB) is the online broker for National Bank of Canada customers.

BMO InvestorLine Self-Directed is the online trading platform for Bank of Montreal (BMO) clients.

Desjardins Online Brokerage (Disnat) is the discount broker of Desjardins Securities (Desjardins).

CIBC Investor’s Edge is the online broker for CIBC clients. It offers a variety of tools and resources to help you build and manage your investment portfolio. If you’re under 25, you can even negotiate for free under certain conditions.

Qtrade is an independent online brokerage platform in Canada that was founded in 2021. It allows you to invest in several types of investments, such as equities and ETFs, in several types of accounts. Qtrade is a platform with administration and trading fees, but it allows you to avoid fees if your account meets one of their conditions.

RBC Direct Investing is the discount broker for Royal Bank of Canada (RBC) clients.

Scotia iTRADE is the online broker for customers of the Bank of Nova Scotia (Scotiabank).

TD Direct Investing is the online broker for clients of the Toronto-Dominion Bank (TD Bank).

Now that you’ve studied your options and decided which brokerage platform to use, it’s time to start investing online.

Here are the steps to follow:

• Open an online brokerage account – see the list of platforms in the previous section.
• Select account types (FHSA, TFSA, RRSP, non-registered, etc.)
• Choose the type of investments (stocks, ETFs, bonds, etc.)
• Fund your investment account (bank transfers, Interac transfers, programmed deposits, etc.) – check the minimum balance for your chosen platform
• Trade to invest online

There’s no better time than today to start your journey into the world of stock market investing. Of course, investing online can seem complicated. But brokerage platforms are now designed for the general public. What’s more, all-in-one ETFs make it possible to invest passively in the stock market at low cost.

As we’ve seen in this guide, there are several online brokerage platforms in Canada. Each has its own characteristics, so choose one to suit your needs. In particular, check fixed and negotiation costs.