Rob Carrick: Three ways for investors to load up on ETFs without paying any commissions

Recent developments in the world of investing apps have solved a cost problem experienced by ETF investors.

Exchange-traded funds at their best are an exceptional investing value because of their low management expense ratios. The cost problem is in buying them rather than owning them. A lot of online brokers charge something in the $8-to-$10 range for each ETF purchase, and the same to sell. If you bought a couple of ETFs and added to them on a biweekly basis, the cost for 52 buy transactions could max out at nearly $520. That’s like paying a fee of close to 0.7 per cent on a $75,000 account. Fee-conscious do-it-yourself investors would never do this.

There are now two app-based solutions to the cost problem in buying ETFs frequently.

The newest is GoalAssist from Toronto-Dominion Bank, which lets you buy TD-branded ETFs at no cost via an app for mobile devices. An alternative is Wealthsimple Trade, which offers commission-free trading of stocks and ETFs with no restrictions on which products you can buy.

GoalAssist is more for investors who want a guided approach to investing in ETFs to reach specific financial goals. Wealthsimple Trade works well for ETF investors who know what they want and appreciate a no-cost, no-hassle way to buy it.

The third way to buy ETFs will appeal to investors who do their investing primarily on their computer as opposed to an app on their phone or tablet. A few online brokers offer some degree of no-cost ETF investing and they can work just as well as GoalAssist and Wealthsimple Trade.

There are three tiers of online brokers offering some degree of free ETF trading, the first occupied by National Bank Direct Brokerage. NBDB lets you buy or sell ETFs for free as long as your order is for 100 or more shares.

The next tier features Qtrade Investor and Scotia iTrade, both of which offer a limited selection of ETFs that can be traded at no cost. The third tier is Questrade and Virtual Brokers, which charge nothing to buy ETFs and a standard commission to sell.

Among brokers, Questrade and VB seem the best option for buy and hold investors who plan to make frequent ETF purchases. For people who want to invest on the fly and never worry about costs, GoalAssist and Wealthsimple Trade look just fine for ETF investing.

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