Canadian Investment Knowledge

Direct Investment Brokerages

The two cheapest direct investment brokerages are National Bank Direct Brokerage (NBDB), and Wealthsimple. They both offer commision-free stock and ETF trades. The only important negatives are that Wealthsimple charges a 1.5% currency conversion fee on USD denominated trades unless you pay $10 a month or have invested $100k with them, as well as doesn't support Norbert's Gambit; while NBDB charges a $100 annual fee unless you have invested $20k with them or are under the age of 31. If you're at least 31 years old, then start with Wealthsimple until you have $20k to invest, and then switch to NDBD to take advantage of cheaper USD denominated trades. If you have $100k to invest and don't want to use Norbert's Gambit, then Wealthsimple is fine.

Another option is to use either of the two previous brokerages for CAD denominated trades, and Interactive Brokers (IBKR) for USD denominated trades. IBKR doesn't offer commision free trades, which rules it out for the cheapest brokerage in the general case; however, it has the advantage when it comes to currency conversion. NBDB charges $9.95 each time you perform Norbert's Gambit, whereas IBKR doesn't charge an additional fee for Norbert's Gambit, as well as offers much lower currency conversion fees at 0.002% compared to NBDB's 1.8%. Note that IBKR has a minimum currency conversion fee of $2.

Remember that every trade involves a spread: the difference between the buying cost and selling cost.

In general, follow these rules:

1. If you're only performing CAD denominated trades: Wealthsimple.
2. If you're infrequently performing USD denominated trades: NBDB.
3. If you're frequently performing USD denominated trades: IBKR + Wealthsimple.

USD Case Studies

Assume SC = Simplified Currency Conversion, NG = Norbert's Gambit.

Fees paid on monthly USD trades: