When You’re Starting Small, Don’t Get Ripped Off by $10 Investing Fees

Ah yes, investing. *Cue the thunder and lightning*. It might seem a bit daunting to a beginner, but the truth is that it’s a lot less complicated and expensive now than it used to be.

You don’t have to buy a bunch of Peter Lynch books (you know, the ones staring down at you from Indigo’s business section) when TikTok and YouTube offer plenty of how-tos for free. 

And now you can avoid forking over the $10 that most banks and investment handlers charge every time you buy and sell stocks.

For example, National Bank introduced zero-commission trading in August, becoming the first big Canadian broker to do so. And Wealthsimple — the hot investing service most of us millennials adore for its low costs — has offered $0 commission fees for a while.

Why is that such a game changer? Let me break down the math for you.

Hey, full disclosure: The links in this article are sponsored. But we only recommend products and services we trust and that we think you’ll love.

Trading can be commission-free

Say I decide to buy $100 worth of stock and I sell it for $110. That’s a 10% return on the original amount I invested — not bad.

But if there’s a $10 commission fee on trades, I already lost money worth 10% of the value of my investment when I first bought the stock. And when I sell, I’ll fork over another $10. 

I needed to earn a 20% return to just break even, so I’ve actually lost money.

Of course, the more money I put into each trade, the less intimidating those commission fees will seem. When I buy $1,000 worth of stock, that $10 commission only amounts to 1% of my original investment.

But as a young person or beginner in the market, I might not have $1,000 to set aside to invest in one company to begin with. That’s when those commissions start looking scary. 

That’s not to say there aren’t any fees at all for platforms that feature zero-commission trading. For example, I might incur an extra “currency conversion” fee for trading with U.S. stocks (which require American currency), or the bank or brokerage could tack on an annual administration fee. 

But you can sometimes find exclusions. National Bank typically includes a flat $100 annual fee, but this gets waived if you’re 30 years old or younger and you hold assets that amount to at least $20,000 or you make at least five stock, ETF or option trades within a year.

What does Wealthsimple offer?

Hey, before National Bank made it cool, Wealthsimple did it first. 

The online investment platform offers zero-commision trading, and you can even receive a $50 cash bonus by opening a Wealthsimple Trade or Crypto account and depositing and trading at least $150.

Wealthsimple also lets you start buying pieces of shares with as little as $1 using its Fractional Trading service. Instead of throwing hundreds of dollars into a single share in a big company like Apple, you can start small and buy a slice of that share for a more affordable price.

Remember, however, that there’s a 1.5% currency conversion fee to trade American stocks and ETFs. So if you’re thinking of purchasing shares (or fractional shares) in Amazon and Tesla, factor in the added conversion costs.

Sounds complicated? If you’re not comfy with managing your investments in manual mode just yet, feel free to opt for the robo-advisor option instead. 

With Wealthsimple Invest, you can sign up for a customized portfolio based on how much risk you’re comfortable with, and you get automatic deposits and re-balancing. And to sweeten the deal, there’s a $50 cash bonus for when you open and fund your account with at least $500.

Just keep in mind that for a basic package, you’ll pay a 0.5% annual management fee, and there’s an annual management fee of about 0.2% for ETFs.

How to get started (with stonks)

First off, decide which investment platform best suits your needs. Could you get a special discount for being a student? Or pay less fees depending on how much you put in your account or how many trades you make?

For example, with National Bank, I wouldn’t have to pay that $100 yearly fee as a ~Young Investor~ but if I was interested in purchasing fractional shares in big companies like Apple, then Wealthsimple might be the better option. 

Remember, when you’re looking at what other platforms offer, think about whether you’re getting better perks in exchange for any commissions you’re paying.

When you keep fees low, you can get started with smaller amounts of money — and that gives your money a lot more time to grow.