Cheapo investors and no-load ETFs just naturally go together.
In the mutual fund world, a no-load fund can be bought and sold with no commission fee paid to the adviser or firm selling it. The parallel for people using exchange-traded funds is an ETF bought through an online brokerage firm that waives trading commissions for ETFs. No-load mutual funds cost nothing to buy, and so do no-load ETFs.
I actually just coined the phrase no-load ETF, so don't ask brokerage firms about it. Simply enquire if they have a program allowing investors to trade ETFs without paying commissions that may run as little as $10 at some firms to as much as $29 or more. A few firms got into no-load ETFs a while back, but the trend has yet to widely catch on.
No-load ETFs have some appeal for all cost-conscious DIY investors, but beginners especially. That's because they're generally starting with next to nothing in assets. As a percentage of a $5,000 account, $120 in ETF buy commissions per year (that's $10 per month) amounts to a total commission cost of 2.4 per cent. That's way too expensive to be justified.
Let's look at some firms that offer no-load ETFs:
They waive buy and sell commissions on 60 different ETFs from five different companies. Here's a list.
You can buy any Canadian– or U.S.-listed ETF without a commission, and with no minimum holding period. You pay the regular cost when selling, which can be as low as $4.95.
The only bank-owned firm to offer commission-free ETFs offers 50 options from four companies. Here's a list.
You have two options with this firm, the first being a zero-commission program for buying all ETFs. Regular commissions, which are as cheap as a penny a share, apply to sales. The alternative is choosing from this list of ETFs that are completely commission-free.
Being able to buy ETFs at no cost doesn't mean you should create a complex portfolio based on many individual funds. Check out this low-cost three-pack of ETFs I wrote about recently. If bought on a no-load basis, they offer a fully diversified portfolio that will cost you very close to nothing.