Friday, April 17, 2009

Questrade Mutual Funds - Earn Like a Broker

If you're a Canadian with mutual fund holdings, you might want to consider moving them to Questrade. Why? Trailer fees. Trailer fees are the commission that is paid to your broker for selling the mutual fund to you. This is why most brokers will not charge you for trading mutual funds - they're getting money from the management company. A bit like commission except they are usually an ongoing payment as long as you keep your money there. Obviously, if you are paying to trade mutual funds, and they're pocketing these trailer fees, you're getting ripped off by your broker.

Questrade has a different strategy. They offer a program where they'll deposit the trailer fees into your account, and charge you $9.95 for trades, instead. The headlines number is thet you'll get 1% of your holding's value, but it does vary by fund, as there are different fees and different structures. Since most people own mutual funds as a "fire and forget" type of investment, and probably only review their position annually, if that, paying for trades instead of simply owning them seems like it would be a great deal. Also, until April 30, Questrade is running a promotion where they'll pick up the transfer fees for bringing you funds in from another broker. There's also the potential to win $1000, but since I never win anything, I wouldn't consider that to be a reason to move.

If you're considering the move, you can contact me for a referral, and then you'll get $50 in free trades when you sign up.