There are plenty of online brokerages to choose from -- how do you pick the best? Which financial products should you be grabbing -- and which shouldn't you touch? How about different kinds of investing you can do?
Globe Investor personal finance columnist Rob Carrick took your questions about online trading.
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Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998.
11:58 Globe and Mail: Hello, everyone, thanks for joining us. I'm Sonali Verma, an editor at Globe Investor. We'll be starting in a couple of minutes.
12:00 Globe and Mail: We have a lot of questions, so let's get straight to them.
Marianne Ono writes from Toronto:
I currently hold an RRSP with index e-funds, which is a cheap way for me to invest small amounts on a regular basis. However as the money accumulates, I'd like to start shifting lump sums to ETFs, for their low management fees. My question is whether it's generally difficult or expensive to move money between RRSPs in different brokerages. How stiff are the penalties (across the industry)?
12:01 Rob Carrick: Hi Marianne.
Thanks for your question, which gives us a lot of meat for discussion First to your query about moving RRSP accounts. Yes, brokers may charge an account exit fee, and it could be as much as $125 or so at worst. To avoid this fee, here's what you do. Call up the broker you want to move to and ask if it will cover the cost of your transfer. This offer is often made around RRSP season to attract new clients. Note: there are sometimes minimums applied to the size of the account you're transferring over.
Now, let me ask you a question: Why are you planning to move money from your e-funds into ETFs? For those who don't know, TD's e-series of index funds (you can only buy them online through TD Waterhouse or TD Asset Management) are a darned good deal. In fact, they made the list of best investing bargains I published in my Portfolio Strategy column a few months ago (click here to read it: http://tgam.ca/cK). These e-funds have higher fees than ETFs, but not much higher. In fact, they're the next best thing to ETFs. So here's what I suggest you do…check out how much you're going to pay to buy ETFs using the proceeds from your e-funds and then see if that's a fair bargain when viewed against the lower fees you'll get from ETFs. Remember: e-funds may have higher fees, but you can buy and sell them at no cost. With ETFs, you'll typically pay $10 to $29 per transaction, depending on how big your account is
12:05 François Gariépy writes: Hi there -- I would like to know who is the best broker who will give me information about the economy and will suggest a porfolio based on sector's repartition.
12:06 Rob Carrick: Hi Francois. I think the best brokers for giving you information on the economy are BMO InvestorLine, RBC Action Direct and TD Waterhouse. Basically, we're talking here about firms owned by big banks with economics departments that do first-rate research.
Now, you say you want an online broker that suggests a portfolio for clients. You probably know this, but it's worth repeating that online brokers don't provide any personalized advice whatsoever. That said, BMO InvestorLine, Qtrade and RBCDI are among the firms that provide portfolio-building tools where you describe your needs and investor profile, and you're then matched up with a mix of mutual funds or ETFs.
Note: these portfolios are not tied to any particular calls on the best sectors, but rather on your personal investing profile. If you want something more sector-based, check out the online broker Disnat and its Disnat GPS feature.