ETF Index Investing Course
8. Do You Need a Lot of Money to Invest?
(before beginning ETF investing)
A big "thank you" goes to Tom for mentioning some of the fine print with Questrade to those Canadians with smaller accounts (i.e. Under $5,000).
After receiving this information, I contacted Questrade to see if there are any other rules/fees that we should know about if we hold smaller accounts. Here are all the details:
1. To start, if your account is $5,000 or above then you don't get charged any inactivity fees, no matter what type of trades you do (ex. ETFs or stock purchases), and no matter how often you buy ETFs.
2. As of June 14 2016 (the date when I contacted Questrade about this), if your account is under $5,000 and you only did non-commissionable trades (i.e. Buying ETFs is considered "non-commissionable" since Questrade is letting you buy them for free), then they will charge you a quarterly fee of $24.95.
So the bottom line is that to not get charged this inactivity fee ever, then just make sure that your account is over $5,000. If you do any commissionable trades such as buying an individual stock where they charge you a trading commission (usually around $10) then you no longer get charged this fee even if your account is under $5,000.
In summary, you only need $1,000 to open an account, but if you're only going to buy ETFs, then you need to have a balance of $5,000 or more to not get charged that quarterly fee by them.
Also, it's not like you have to invest that entire $5,000 all at once. If you're just getting started, you could have a portion of that sitting in your Questrade account as cash. This way you can do a few small trades to get your feet wet and get comfortable with the whole process.
For your reference, here is a snippet of exactly what Questrade told me (I just copied and pasted from the chat window):
Questrade: "You will not be charged any inactivity fee if you maintain a balance of $5K , there is no monthly fee there is a quarterly fee of $24.95 anytime your balance falls below $5k or if you do not place a commissionable trade."
Kornel: Oh ok. So even if let's say you put in 5k, then the market drops to $4,999, then at that point you would be charged the $24.95 in that quarter if that initial 5k invested was all ETFs (i.e. non comissionable trade).
Questrade: That is correct.
I hope that helps clear things up for everyone. If you have any questions then just let me know 🙂