Mailbag: Registered vs Non-Registered and Getting Started With Questrade

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As always, these are actual emails sent from real readers whose names have been altered for privacy’s sake.

Hi Kyle,

I’m having a very Young & Thrifty pre-work afternoon. I just read your post about how to rebalance your portfolio the easy way which was helpful. I don’t totally get the math (also math challenged – heyooo!) but I’m sure I’ll get there.

I haven’t started a real account with Questrade (as the funds I had are now going elsewhere), but my friend and I are doing one of their trials. We got together yesterday and bought some ETFs just to practice. The truth is, I find the Questrade page super overwhelming. I don’t even know what I’m looking at half the time. I’ve watched a tutorial or two, but I haven’t found one that breaks down what each page is showing you. Perhaps one just gets used to it?

I also don’t get the different type of accounts they have eg. what a margin account is. And you mentioned you had a registered account with them and then a non-registered something else in one of your articles. What is the perk of having a non-registered account? I also feel I need to spend more time reading about the different ETFs and what they actually are. Do you use Morningstar for this type of learning? I could ask a million questions, I’m sorry. I really appreciate your sharing! One day, I want to be able to look at a Google finance or Morningstar page and understand everything I am looking at. At this point, it’s just a number jumble!

Making your first transaction can seem a bit weird at first. Here is a great video that another Canadian blogger put together that guides you through the process step-by-step:

Let me know if you have any questions after that. The only math you have to do is figuring out how many shares you want your investment to be. Basically, if you want to invest $500 in a TSX60 index such as XIU, you’d look up the price of a single unit of the ETF (at the time of writing it is currently $22.28) and then divide $500 by the price you’ve researched. In my hypothetical example I can purchase 22 units (don’t worry about partial shares for now) of the XIU ETF. Questrade will confirm with you the final numbers before anything is finalized.

Your question on accounts is a great one. Basically, if you want to keep life super simple for yourself right now I would apply to Questrade to open two accounts: an RRSP account and a TFSA account. Both of these accounts will allow you to transfer funds from your bank’s chequing account and then use that money to build an investing portfolio (most Canadians aren’t aware of the fact that investing in a tax-free savings account doesn’t mean your money is in a literal high-interest savings account, it can be invested in almost anything you want it to be). Before choosing to put your money in either a TFSA or an RRSP, check out the article we wrote explaining why one might be better for you than the other. (Although, to be honest, when you’re just starting out I wouldn’t let worrying about which one is better stop you from starting your investing journey – avoid paralysis by analysis!)

Both TFSA and RRSP accounts are referred to as “registered” accounts. Essentially this means that investment gains within the account are tax sheltered (the government won’t be taking taxes on them each year, so that allows them to compound faster). Non-registered accounts on the other hand are simply just accounts that you are investing money within. They have no special tax considerations. They are most often used by fairly well-to-do investors or investors that have some experience (I personally don’t have one just to give you some context). Margin accounts are like non-registered accounts but with one unique feature – you can borrow money from the broker (Questrade) in order to invest even more money than you have within the account (this is commonly known as leveraging). Obviously borrowing money to invest is somewhat more risky than simply investing what you have. I’m not saying to never use leverage, but since you’re just starting and want to keep things simple I wouldn’t worry about a margin account for now.

By all means, read about ETFs until your heart is content. Honestly, there is no source better than the other. If you follow the Google link to the company that has created the ETF, you can usually get all of the relevant details. For example, if you click here it brings you the Blackrock page (the company that produces the XIU ETF) and it tells you every detail about the ETF including which companies are included within it, and how big a percentage they are of the entire fund. You’ll see a lot of banks and energy companies listed which makes sense when you think about Canada’s economy. Truthfully there really isn’t a lot to know about simple ETFs that track indexes. They don’t make decisions to actively buy or sell anything. They will go up and down along with the market average.

Don’t worry by being intimidated at first. The good news is that you’re already ahead of the vast majority of Canadians!


Kyle is a high school humanities teacher by day, and freelance personal finance author by night. He has been published in academic journals, and has also co-authored the book "More Money for Beer and Textbooks". In his free time Kyle likes to limp up and down a basketball court and pretend to be a tough guy in a boxing ring.

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