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I have read the discount brokerage comparisons, but am still not really clear which is the best for me. I just graduated from school and would like to start saving a little bit of money in an index fund (about $100 per paycheck).

I can afford to put up to $1000 down to open the account and I was going to open a Questrade account, but $9.95 per trade seems a little steep. That's a 10% fee per payment. Is there a better option for me where I won't have to pay such high fees?
 

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I was in the same position about a year-and-a-half ago. I decided to start out by buying small lots of TD's e-series mutual funds. The minimum purchase size is $100 ($25 for pre-authorized purchase plans), which is convenient compared to many other funds requiring larger lump sum purchases. Also, the MERs are relatively low and the funds are no-load (with a small early redemption charge for a short period).
 

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TD e-series index funds or Claymore ETFs which now also offer a periodic purchase plan but there is still the initial trading cost. You don't need a brokerage account to trade index funds just visit your bank or its website.
 

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You math is wrong. $9.95 of $1000 is 1% not 10%.

Questrade is the best brokerage for your profile. Other broker are charging $20 and the big banks are charging $30 per transactions.

I have read the discount brokerage comparisons, but am still not really clear which is the best for me. I just graduated from school and would like to start saving a little bit of money in an index fund (about $100 per paycheck).

I can afford to put up to $1000 down to open the account and I was going to open a Questrade account, but $9.95 per trade seems a little steep. That's a 10% fee per payment. Is there a better option for me where I won't have to pay such high fees?
 

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You math is wrong. $9.95 of $1000 is 1% not 10%.

Questrade is the best brokerage for your profile. Other broker are charging $20 and the big banks are charging $30 per transactions.
$9.95 of $100/paycheque is 10% though...i think that's what he was referring to
 

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The minimum commission at Questrade is $4.95 for stock trades, plus a few pennies in exchange fee if you use market orders.

Beats paying fat mutual fund fees at TDW. Also remember that many mutual funds have minimum holding periods.

Good Luck and have fun.
 

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Janbjarne, the trading fees on regular $100 contributions would suck away a heck of a lot more than the low fee e-series index funds... other funds would be a different story. Also, the ECN fees can easily be as high or higher than the $4.95 trading fee with Questrade so in reality it's more like $10 per trade. However with a $100 trade you wouldn't be dealing with many shares so that would be a moot point.
 

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first, numero uno, to congratulate you on good common sense. Market prices are still low and the day will undoubtedly come, while you're still a young man, when you'll be patting yourself on the back for your smart move in 2009.

next, why would anyone pay a fee to purchase a fund. Most discount brokers have big inventories of no-load no-fee-to-buy funds, including index funds, and the modest holding period seems irrelevant here since you say you wish to be a regular buyer for the long term.

it's possible that an extremely small starter account may impose fees for regular fund purchases at pre-arrangeed intervals. To avoid this, I liked the suggestion from one party here that you could set up your initial fund account at your bank, and you wouldn't need a brokerage account until the savings had multiplied.

lastly, although i'm reluctant to knock any small online brokerage house, the fact is that we've just survived the tsunami of financial meltdowns and it may not be over yet.

witness: the FDIC (US equivalent of our CDIC) recently had to raise its assessment of member banks because so many US regional banks had failed that it didn't have funds to reimburse all depositors.

witness: the toronto HQs of the big 5 canadian banks were overrun last october and november with panic-stricken Americans who had driven up to open accounts (perfectly legal.) As Bear, Lehman, Merrill and Wamu failed, as Citi, RBS and BAC teetered, they were desperate to get their life savings over the border and into a canadian bank which they believed to be safer than anything in the good ole US of A.

there is supposed to be $1 million coverage for every client of a member brokerage house under the Canadian Investor Protection Fund, which is operated by the brokerage industry. That fund, however, was created in order to bail out an isolated financial house here or there that got itself into trouble. The fund is not sufficient to insure all investor claimants following a global financial collapse.

we know either very little or nothing about the capitalization of the smaller, privately owned online brokerages. Therefore, in today's circumstances, my choice would be to stick with the online brokerage subsidiaries of the big name canadian banks. It wouldn't matter to me whether XYZ Trade charges 4.99 while the major onliners are charging 9.99 or even 29.99. I'd aim for the best-capitalized and highest-quality discounter and i'd gladly pay their price. Incidentally, a higher number of complaints about order execution and account administration tends to cluster around the smaller online brokerages. The complaint-per-customer ratio is lower at the big bank online houses so that's another reason to stick with them even though their fees may be a few dollars higher.

the very best luck to you. Please don't forget to come back in 15 years and let us know how well you've done :)
 
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