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
