Opening a self-directed brokerage account is an essential step toward taking control of your finances. This forms an integral component of the Execution phase of the Fee-Only Financial Planning Process. A self-directed brokerage account allows you to buy and sell stocks, ETFs and other securities.
In order to open an account, you will need some information accessible before you begin, as it will be required as part of the process:
- Government-issued Photo ID
- Driver’s License or Passport
- Current account information if you will be transferring funds into your new account
- Account #s for each account (RRSP, TFSA, etc.)
- Institution name and address
The below walkthrough is specifically for our recommended brokerage Questrade, but the steps will be similar for any self-directed brokerage. This process should take you about 30 minutes to complete but can be done in phases.
Note: We only recommend that you open an account if you will be transferring $5,000 or more. When you have $5,000 or more, you will not be charged fees for inactivity in your accounts.
Self-Directed Brokerage Account Opening Steps:
Go to questrade.com
Click on “Open An Account” in the top right portion of the landing page
Select the accounts that you wish to open.
Our recommendation is to open an Individual Margin, RRSP, and TFSA account. These are the 3 basic account types that are appropriate for all Canadians.
Select the Self-Directed account options, not the Questwealth options. Questwealth accounts charge management fees for pre-packaged portfolios. We have covered elsewhere how management fees negatively impact your portfolio
On the right-hand side of the screen, you will have the opportunity to enter an offer code.
If you enter the code “uajekubi” you will receive a $50 trade commission rebate. This is offered as part of the Questrade affiliate program. To understand more, please read our affiliate policy.
Create a user ID and enter your basic personal information
The name that you enter on this screen must match the government issued photo id that you will upload as part of the account opening process.
Build Your Profile
Next, you will expand on the personal information provided in the previous step.
You will have to enter information in 4 different categories:
- Personal Information
- Employment Information
- Financial Information
- Citizenship Information
Account Opening Questions and Documents.
For this next step, you have to complete some paperwork and answer questions for each account that you are opening.
From the account summary screen, click on an account to complete the setup.
There are a separate set of questions for each account, as well as paperwork that must be signed and submitted prior to being able to open your account. It is during this step where you must upload the copy of your photo-id to the website.
Fund your account
Now it’s time to put some of that hard-earned money of yours into your new account.
You have a few options at your disposal.
If you are transferring an RRSP or TFSA to your new accounts, you must use the ‘Transfer account to Questrade’ option. Any other form of funding would result in a contribution to your account, which may put you over your contribution limits for either your RRSP or TFSA.
When transferring accounts, they can only be transferred into the same type of account (i.e. RRSP into an RRSP).
For a limited time, if you are transferring an account of $25,000 or more, you may be eligible to have your transfer fees that are charged by your current institution (the transfer out) covered up to $150 by Questrade.
If you are transferring your account, you will have 3 options available to you.
- Transfer in-kind
- Transfer in cash
Transferring in cash means that your stock/ETF positions will be liquidated by your current institution and converted to cash. This can have some unintended consequences, such as incurring brokerage trade commissions, or tax bills for realized gains (or losses) in your non-registered accounts.
Transferring in-kind means that you are moving your stocks and ETFs over while keeping your adjusted cost base/book values intact for tax purposes. This is the recommended option.
A partial transfer would be for only a portion of your account, as opposed to the full value. A cash transfer is appropriate if you are holding securities, such as mutual funds, which are unable to be held in your brokerage account.
Account transfers can take up to a month or more, depending on the financial institution.
Minimum initial funding in order to buy stocks or ETFs is $1,000 per account.
And that’s it!
Once your accounts are funded, you are now able to trade stocks, ETFs and other securities.
We have prepared a guide on how to execute a stock or ETF trade for your reference.
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