In this step-by-step guide we’ll go through how to buy ETFs with Questrade.
In a previous guide, I covered how to sign up to Questrade and how to fund your account. You can also read this review to learn more about Questrade.
Once you’re ready to buy ETFs on Questrade, you’ll need to determine the target allocation for the funds in your planned portfolio and then actually purchase those funds.
Lets get started!
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Step 1: Access the Questrade Trade Hub
You’ll need to start by logging into your Questrade account, and making sure you have funds available to purchase ETFs. If you haven’t already done this, see my previous guide to learn how to fund your Questrade account.
Once logged in, select the Trade button at the top left:
You’ll now be in your main trading hub for Questrade. This is where you can view information for stocks and ETFs, as well as current trade info.
Step 2: Define target allocations for your portfolio
Update (Nov 2020): The ETFs in the Canadian Couch Potato model portfolios have changed since I originally made this post. The following steps are still accurate for buying ETFs on Questrade. If you want to follow the updated CCP model portfolio just replace the ETFs in this guide with the ones you want to purchase.
To build out a Canadian Couch Potato passive index fund, we’ll need to purchase 3 different ETFs with Questrade:
- BMO Aggregate Bond Index ETD (ZAG)
- Vanguard FTSE Canada All Cap Index ETF (VCN)
- iShares Core MSCI All Country World ex Canada Index ETF (XAW)
If you don’t already know what target allocations you are planning for your portfolio, I suggest looking at the Model Portfolios from the Canadian Couch Potato website, and making sure you understand what strategy you want to follow.
For myself, I follow an assertive strategy for my Questrade portfolio, with target allocations of 25% Canadian bonds (ZAG), 25% Canadian stocks (VCN), and 50% US and International stocks (XAW). So with my starting portfolio of $5,200 cash, I’m looking to allocate it in the following way:
- $1,300 ZAG
- $1,300 VCN
- $2,600 XAW
One thing to note, you can’t buy partial shares of ETF funds (unlike TD e-Series index funds where you can buy an exact dollar amount), so you’ll have to buy as close to your target allocation as you can get with buying complete shares.
Step 3: Determine how many ETF shares to buy
We’ll start by purchasing the US and International Index, XAW. Search for XAW.TO in the upper left search bar. These ETFs are on the Toronto Stock Exchange, which is why they end in .TO. It also means that you’ll be buying this asset in Canadian funds.
You can now see the overview for XAW, including the Bid price, the Ask price, and the high and low for the day. In the example below, since I want to buy approximately $2,600 worth, I need to divide that buy the estimated current price to get an idea of how many shares to buy. This would mean roughly 100 shares ($2,600 divided by the Ask). Now select the Buy/Sell button:
This will now bring up the buy menu on the right hand side of the screen, where you can see what people are offering to buy for ($25.80), and what people are offering to sell for ($25.82):
Step 4: Create your ETF buy order
Here is where you have some options. Input the quantity you want to buy that you calculated in the previous step. There are many different order types (the way that you will purchase assets) but the 2 you will most likely be interested in using are Market order and Limit order.
Market order is the simplest of all order types. It allows you to buy or sell securities at the best available price given in the market at the moment your order is sent for execution. You can read more about market orders on the Questrade website. This is the option I used to purchase my ETFs.
The other main option is a Limit order. A limit order allows you to specify the max price you’ll pay when buying funds. You can read more about limit orders on the Questrade website. Limit buys give you more control over the price you will buy at, but if you are looking at making purchases infrequently, then market orders will likely fit your needs.
When using Market order types, you also have to specify the duration. I used Day, as the order will remain active until the end of the current trading day. If the order is not filled by the end of the day, it will be cancelled. You can read about other duration types on the Questrade website.
Now select which account you will be buying in, and select the Buy button:
Step 5: Confirm your ETF purchase
You’ll now get an order confirmation screen, which shows all of the details of your purchase. While buying ETFs avoids the $9.95 Questrade commission fee, there is still a very minor commission fee that you’ll have to pay (a few cents). Remember, there are trade fees when selling ETF funds (which you may have to do when you eventually re-balance your portfolio). You can help offset these by signing up with my referral code (5c7adaa406cd9) to receive $50 in commission credits.
If everything looks good to you, click the Send Order button:
Step 6: Confirm your ETF buy order has been filled
You’ve now sent your trade to be filled! Note that this purchase isn’t instant, it can take a little time for your order to be filled. Once it has you’ll see a little pop-up notification (as per below) that will let you know when the order is filled, and at how much.
Step 7: Repeat for all ETFs in your portfolio
The process will now be exactly the same for the other 2 ETFs that will be in your portfolio. Search them with their stock symbols VCN.TO and ZAG.TO.
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ETF Portfolio now built
You’ve now successfully built a passive index fund portfolio in Questrade by purchasing ETF funds! Congratulations! The next guide will show you how to monitor your target allocations, and rebalance your portfolio using a helpful tool called Passiv.
This post was updated November 2020, the original was posted January 2020.
This is definitely one awesome step-step guide for a newbie like me preparing myself for the 1st time ever.
Looking forward to read more of your detailed articles.
Would be great if you can post some articles on taxation that happens on these ETFs
Let's Talk About Money says
Thanks Nav. Taxation depends on what kind of accounts you are investing in. Are you using a TFSA or RRSP account to invest in the ETF’s?