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Canadian Discount Brookers


beerbaron
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I would be happy to hear the board's toughs on their Canadian Discount Brooker's. I'm with Questrade and here are my comments:

 

Pricing

Minimum comission: 5.95$

Maximum comission: 9.95$

Currency Fees: 1.3-2% Depending on amount in account

Options: 9.95$ + 1$ per contract

Annual Fees: None in any types of accounts

 

Availability

Available accounts: RRSP, TFSA, RESP, Margin

Available Markets: USA / Canada

Available instruments: Stocks, Options, Gold, Mutual Funds, Bonds

 

Others

Not possible to get bond quotes online. Need to call trade desk.

Very bad interface, need 4 logins to manage my 3 accounts there

Customer service is acceptable

They have nice promotions when you switch assets or refer someone

Big plus! You can hold USD and CAD in your registered accounts

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We had a thread about this a while back, maybe in the archives/search .

 

Ive personally used RBC Direct and TDWaterhouse for personal accounts

 

TD I believe theyve changed alot since I used them last so I wont comment.

 

RBC, they are fairly competitive in their rates - and for me very easy to transfer funds around.

 

 

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RBC has recently implemented US$ accounts for RRSP and TFSA.  In my experience, it is in these areas where I was getting badly raped by my brokers.  In the past, if I wanted to make a change in my RRSP to sell perhaps $20,000 of KO to buy $20,000 of PG, the broker would charge me US$10 commission to sell KO and US$10 commission to buy PG....but then they would also take the US$20,000 in proceeds from the KO sale and convert it to $CDN and screw me for about a 1% charge, then they'd take that money and convert it back to $US to buy PG and screw me again on the currency conversion for about another 1% charge.  Well, when you add it all up, I'd end up paying ~$400 on currency conversion and ~$20 for stock commissions!  That whole process amounts to being seriously bent over  :'( :'( :'( by the banks!

 

All of this to say that the availability of $US registered accounts can be a big plus for Canadian investors.  Be very careful about understanding the hidden costs (or less well publicized costs) rather than just focusing on the headline costs of $X per trade.  If you are not a day trader, then the commission costs for stock trading amount to bugger-all anyway (like who really cares whether it costs $5, $8 or $10 for an equity order if you are only making 20-30 trades per year?).  Those banks can be sneaky in how they empty your pockets.

 

At this point I am a relatively happy RBC client.  The commissions are $10 if you hit a modest assets threshold.  They have $US registered accounts.  If you hit a more significant assets threshold, you qualify for "Royal Circle" benefits which reduce costs even more.  So, overall, they're pretty good on the cost side.  Unfortunately, their website is about the same as it was in 1996  ??? ???, and their trading platform does not give you Level II quotes which is seriously sucky....

 

SJ

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RBC has recently implemented US$ accounts for RRSP and TFSA.  In my experience, it is in these areas where I was getting badly raped by my brokers.  In the past, if I wanted to make a change in my RRSP to sell perhaps $20,000 of KO to buy $20,000 of PG, the broker would charge me US$10 commission to sell KO and US$10 commission to buy PG....but then they would also take the US$20,000 in proceeds from the KO sale and convert it to $CDN and screw me for about a 1% charge,

I think its closer to 1.5% each time.

I dont let them convert for me anymore but inside the RRSP account its hard to get around.

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... At this point I am a relatively happy RBC client ...

 

 

Is anyone else having trouble avoiding excessive foreign with-holding taxes on U.S. dividends, in non-registered accounts?  The usual 15% is fine (since you get credit for foreign taxes with-held), but I have some Nokia ADR in a non-registered account, and RBC tells me that it is Nokia (Finland) that is with-holding the 28% tax on dividends.  I think it's just that RBC's back-end brokers that handle the ADR don't knowing what papers need signing in order to reduce the 28% to 15%.  (15% is what the Canadian-Finland tax treaties have agreed should be with-held.)  Any other Canadian holders of NOK, or similar situations (probably Swiss stocks would be the same)?

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RBC has recently implemented US$ accounts for RRSP and TFSA.  In my experience, it is in these areas where I was getting badly raped by my brokers.  In the past, if I wanted to make a change in my RRSP to sell perhaps $20,000 of KO to buy $20,000 of PG, the broker would charge me US$10 commission to sell KO and US$10 commission to buy PG....but then they would also take the US$20,000 in proceeds from the KO sale and convert it to $CDN and screw me for about a 1% charge,

I think its closer to 1.5% each time.

I dont let them convert for me anymore but inside the RRSP account its hard to get around.

 

Yeah, it might be 1.5% each time.  It's been a long time since I have allowed them to convert anything on my behalf.  For the RRSP, in the past I used a variety of elaborate in-kind exchanges between my RRSP and my after-tax accounts in $US in $CDN to avoid currency exchange.  These types of swaps are not permitted for TFSA, so I was quite happy when the dual-currency support was introduced!

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... At this point I am a relatively happy RBC client ...

 

 

Is anyone else having trouble avoiding excessive foreign with-holding taxes on U.S. dividends, in non-registered accounts?  The usual 15% is fine (since you get credit for foreign taxes with-held), but I have some Nokia ADR in a non-registered account, and RBC tells me that it is Nokia (Finland) that is with-holding the 28% tax on dividends.  I think it's just that RBC's back-end brokers that handle the ADR don't knowing what papers need signing in order to reduce the 28% to 15%.  (15% is what the Canadian-Finland tax treaties have agreed should be with-held.)  Any other Canadian holders of NOK, or similar situations (probably Swiss stocks would be the same)?

 

roundball, I believe the 28% is correct.  It is a function of investing through the US ADR.

 

I think it works like this. 

$1.00 dividend

-0.15  (15% Finland tax withholding)

-----------------------------------

$0.85 = Dividend paid to US ADR

-0.13  (15% of $0.85) US Tax withholding.

------------------------------------------

$0.72 = dividend payable to Canadian Shareholders of US ADR.

 

 

I think you can avoid this double withholding tax if you bought the NOK stock directly on the Helsinki exchange. Then you would pay only the 15% tax to Finland.

 

Cheers!

 

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roundball, not sure about the non rrsp, the only one I have is nestle and it draws the 20%plus tax and so did Sanofi when i had it, but in the rsp have found that the British PLC companies don't incur the withholding tax  i.e. Glaxo, Unilever Plc (UL). Unilever Dutch (UN) draws tax though. In the rsp Ingersoll Rand gets taxed unlike other us dividends, due to foreign registration i think. The only suggestion is if you have a choice, like shell oil or unilever, buy the plc.

 

 

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Yeah, it might be 1.5% each time.  It's been a long time since I have allowed them to convert anything on my behalf.  For the RRSP, in the past I used a variety of elaborate in-kind exchanges between my RRSP and my after-tax accounts in $US in $CDN to avoid currency exchange.  These types of swaps are not permitted for TFSA, so I was quite happy when the dual-currency support was introduced!

 

SJ, would you care to help me understand how you avoid their 1.5% spread?

 

BeerBaron

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Yeah, it might be 1.5% each time.  It's been a long time since I have allowed them to convert anything on my behalf.  For the RRSP, in the past I used a variety of elaborate in-kind exchanges between my RRSP and my after-tax accounts in $US in $CDN to avoid currency exchange.  These types of swaps are not permitted for TFSA, so I was quite happy when the dual-currency support was introduced!

 

SJ, would you care to help me understand how you avoid their 1.5% spread?

 

BeerBaron

 

It's no longer a relevant strategy for RBC because they now have $US RRSP accounts, but it was relevant in the past (and maybe it's still relevant for other brokers). 

 

Suppose I had US$20k of JNJ in my RRSP and I suddenly decided that I hated the company and want to sell.  As discussed above, if I just filled out a sell order, they'd hit me for a commission of US$10 and then currency exchange of ~1.5% or about $300, implying a total transaction cost of ~$310 on a $20k trade. Instead, I could look in my taxable accounts for cash or securities that I could use to execute a swap for the JNJ in my RRSP.  The easiest would be if I had ~CDN$21k in my CDN$ cash account, in which case I could simply swap the CDN$21k out of my CDN cash account and into the RRSP, and then shift the JNJ out of the RRSP into my US$ cash account.  At that point, I could simply sell the JNJ for US dollars which I would hold in my $US cash account.  The cost of this shenanigan used to be $35 for the swap, plus $10 for the sell order, or about $45 total.  That's a hell of a lot better than ~$310.  I also used to swap securities other than cash (eg: swap some KO shares in my taxable account for JNJ in my RRSP), but you need to remain cognizant of potential capital gains that you are triggering by "disposing" of the shares from your cash account.

 

At times I would end up moving 200 shares of XYZ from my $CDN account, along with 300 shares of ABC and 500 shares of CDF from my $US account plus some cash in exchange for a couple different US securities in my RRSP.  It was a PITA, but it resulted in significant cost savings.

 

To make matters more interesting, if you attain a certain assets threshold (ie Royal Circle), RBC gives you 3 or 4 free swaps per year, which further reduces your costs of this type of strategy (ie, it becomes $10 instead of $45, which is waaaaay better than $310!)

 

SJ

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