Self-Directed Investing

Self-directed investing means you open a brokerage account and make your own decisions about what to buy, sell, and hold. There’s no advisor picking investments on your behalf. You choose the securities, place the trades, and manage your portfolio over time. In Canada, every major bank offers a self-directed platform, and independent brokerages like Wealthsimple and Questrade have made it more accessible than ever.

How it works

You open a self-directed account at a brokerage, which can hold registered accounts like a TFSA, RRSP, or FHSA, as well as a non-registered account. From there, you research and purchase your own investments. Most self-directed investors in Canada buy ETFs because they offer broad diversification at low cost.

A popular approach is buying a single all-in-one ETF that handles asset allocation and rebalancing automatically. This makes self-directed investing surprisingly straightforward for people who want simplicity.

Self-directed vs. robo-advisors

With a robo-advisor, you deposit money and the platform builds and manages a portfolio for you, typically charging around 0.4% to 0.5% annually on top of the fund fees. Self-directed investing cuts out that layer. You save on the management fee, but you’re responsible for placing trades, rebalancing, and staying the course during downturns.

Why it matters

The biggest advantage of self-directed investing is cost. By buying low-fee ETFs yourself, you avoid the advisory fees that come with managed accounts and the high MERs common in mutual funds. Over a 30-year investing horizon, even small fee differences can cost tens of thousands of dollars.

The tradeoff is that you need to be comfortable making your own decisions and resisting the urge to tinker during volatile markets. For a step-by-step walkthrough, see our self-directed investing guide, and check out our brokerage comparison to find the right platform.

A concrete example

Say you invest $500 per month into an all-in-one ETF through a self-directed account. With a robo-advisor charging 0.5% on top of fund fees, you’d pay roughly $300 per year in management fees once your portfolio reaches $60,000. In a self-directed account buying the same type of ETF, that $300 stays invested. Over 25 years, that fee savings alone could be worth $15,000 or more in additional growth.