Congratulations, you are making the right steps already by thinking about pulling the trigger on opening your own self-directed brokerage account. You don’t have to be a professional to use their services and you will outperform your friends who are paying out of control commission fees with a managed portfolio. You have come to the right place if you want to open up a Tax Free Savings Account (TFSA). The beauty of a TFSA is your capital gains and dividend income is tax free.
TFSAs began for Canadians in 2009 with a maximum contribution limit of $5000 for anyone over the age of 18. The government has changed annual contribution limit as follows:
The annual TFSA dollar limit for the years 2009, 2010, 2011 and 2012 was $5,000.
The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
The annual TFSA dollar limit for the year 2015 was $10,000.
The annual TFSA dollar limit for the year 2016 was $5,500.
The annual TFSA dollar limit for the year 2017 is $5,500.
The math becomes pretty simple when you add the dollar contribution limit for every year you are over 18 since inception of the program. You are able to catch up on previous years that still have room in your contribution limit.
Now, what broker will you use? There are quite a few options with pros and cons to all. Many are scored on ease of use, cost structure etc. However, we are in the business of making money and keeping it. Therefore, I have created a table of the cost structure for TFSAs to compare some of the best online brokers that have been trusted in the industry.
ScorChoice has done also their own ranking of all of the Canadian Online Brokers available at the link below.
However, the methodology ScorChoice uses, I am not particularly interested in. With that in mind, they offer the “Create my #1” tool to change my preferences to be 100% interested in cost of the service. With cost of service being the sole criteria, the following results are processed:
Bottom Line: At the end of the day, the broker that fits your needs and style of investing is what you should choose. The winner of my analysis and my personal preferred online brokerage goes to the highly underrated CIBC Investor’s Edge. With ultra low commission fees, abundance of free subscriptions to audited financial data, they are currently a fantastic choice for Canadians looking to start investing in equities inside of their TFSA.
Another fantastic option is Questrade with free ETF purchases and low commission fees. Just beware of inactivity fees and I recommend understanding ECN fees. At the end of the day, choosing a brokerage with no annual fee, you will be light years ahead of your peers who have managed portfolios.