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A reader wants to know the most user-friendly online brokerage for buying exchange-traded funds on a monthly basis. I wonder if she’d be better off with some alternatives like robo-advisers or index funds.

Two brokers offer unrestricted no-cost ETF purchases – Questrade and Virtual Brokers (they charge usual commissions to sell). However, this reader tried VB and found it more tailored to buying stocks. Questrade ranked highly in my latest ranking of online brokers and is definitely worth a look if you want to buy ETFs, but it also tilts more to savvy investors.

National Bank Direct Brokerage offers no-cost buying and selling of ETFs, but you need to trade at least 100 shares. Qtrade Investor and Scotia iTrade have no-cost trading for a limited menu of ETFs, and both placed highly in my ranking and are quite user-friendly. However, you need to confine your investing to their list of funds available for no-cost trading.

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Here’s the kicker on why I think this reader would be better off with an alternative like a robo-adviser. She wants to be able to have money transferred regularly from her bank account into her investment account and have it invested in a pre-selected mix of ETFs. Online brokers generally cater more to people who place their own orders for the fund they want to buy.

Robo-advisers charge fees of roughly 0.5 per cent in addition to the costs investors pay to own ETFs, and the fee typically includes trading commissions. This reader could avoid the 0.5 per cent fee by using an online broker, but she’d lose the benefit of having those regular contributions to her account invested in a pre-selected mix of ETFs. All she has to do is set up a pre-authorized contribution plan. The robo-adviser takes care of the rest, including rebalancing the portfolio periodically to get back to the original target mix of stocks and bonds.

One more thought for this reader is the TD e-series of index mutual funds, which are nearly as cheap as ETFs and can be bought and sold at no cost through the online brokerage TD Direct Investing. ETFs can certainly work for this person, but it’s worth exploring the alternatives to find the most comfortable fit.

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