Hereafter, all money is in Canadian Dollars. My relative in Canada buys and holds for the long run. She plans to invest around $2000 of only ETFs monthly.
Market timing is hard; so she refuses it.

For North American ETFs and stocks, HSBC InvestDirect charges $6.88 (if Premier), $8.88 (Advanced), or $9.88 (Standard customer) for each trade, independent of the quantity.
To minimise transaction fees, should she increase the intervals of investing, ie invest every 2 months or 3 months, instead of monthly?

If so, how should she decide the optimal interval? Is it every 1.5 or 2 or 3 months?

Footnote: To wit, she wishes to follow the investment strategy of Dollar Cost Averaging or Value Averaging (but she hasn't determined which yet).

  • Please specify whether the wage payments are weekly/biweekly/monthly.
    – base64
    Jun 2, 2015 at 18:15
  • @base64: Monthly, but she has a pile of cash now that she wants to invest.
    – user10763
    Jun 2, 2015 at 19:28
  • With that much money, can't she find a no-cost option? US Vanguard for example I'm fairly sure doesn't charge anything for investing in Vanguard's ETFs.
    – Joe
    Jun 2, 2015 at 21:57
  • Hmm, This reddit thread suggests there are limited options (but extant) for trading free in Canada. Maybe one of our Canadian posters knows more.
    – Joe
    Jun 2, 2015 at 22:01
  • 2
    One advantage old-style mutual funds have over etf's is that you often have the option of opening an account with them directly and buying/selling arbitrary amounts without transaction fees.
    – keshlam
    Jun 3, 2015 at 5:01

3 Answers 3


I personally invest in 4 different ETFs. I have $1000 to invest every month. To save on transaction costs, I invest that sum in only one ETF each month, the one that is most underweight at the time.

For example, I invest in XIC (30%), VTI (30%), VEA (30%), and VWO (10%). One month, I'll buy XIC, next month VTA, next month, VEA, then XIC again. Eventually I'll buy VWO when it's $1000 underweight. If one ETF tanks, I may buy it twice in a row to reach my target allocation, or if it shoots up, I may skip buying it for a while. My actual asset allocation never ends up looking exactly like the target, but it trends towards it. And I only pay one commission a month.

If this is in a tax-sheltered account (main TFSA or RRSP), another option is to invest in no-load index mutual funds that match the ETFs each month (assuming there's no commission to buy them). Once they reach a certain amount, sell and buy the equivalent ETFs. This is not a good approach in a non-registered account because you will have to pay tax on any capital gains when selling the mutual funds.


By not timing the market and being a passive investor, the best time to invest is the moment you have extra money (usually when wages are received). The market trends up.

$10 fee on $2000 represents 0.5% transaction cost, which is borderline prohibitive.

I would suggest running simulations, but I suspect that 1 month is the best because average historical monthly total return is more than 0.5%.


Note, the main trade off here is the costs of holding cash rather than being invested for a few months vs trading costs from trading every month. Let's start by understanding investing every month vs every three months. First compare holding cash for two months (at ~0% for most Canadians right now) and then investing on the third month vs being invested in a single stock etf (~5% annually?). At those rates she is forgoing equity returns of around

  • first month $2000 * (5%) * (2/12) = ~$16 (2 months forgone)
  • second month $2000 * (5%) * (1/12) = ~$8 (1 month forgone)
  • third month forgoing nothing as you invest the money at this time.

These costs and the $10 for one big trade give total costs of $16+$8+$10=$34 dollars.

If you were to trade every month instead there would be no cost for not being invested and the trading costs over three months would just be 3*$10=$30. So in this case it would be better to trade monthly instead of every three months.

However, I'm guessing you don't trade all $2000 into a single etf. The more etfs you trade the more trading more infrequently would be an advantage. You can redo the above calculations spliting the amount across more etfs and including the added trading costs to get a feel for what is best. You can also rotate as @Jason suggests but that can leave you unbalanced temporarily if not done carefully.

A second option would be to find a discount broker that allows you to trade the etfs you are interested in for free. This is not always possible but often will be for those investing in index funds. For instance I trade every month and have no brokerage costs.

Dollar cost averaging and value averaging are for people investing a single large amount instead of regular monthly amounts. Unless the initial amount is much much larger than the monthly amounts this is probably not worth considering.

Edit: Hopefully the above edits will clarify that I was comparing the costs (including the forgone returns) of trading every 3 months vs trading every month.

  • Thanks. 1\. Would you please clarify half of that ~$8 for not investing the second lot for one month for a total quarterly costs (including the $10 for one trade every three months) of around $34 dollars. ? What second lot do you mean?
    – user10763
    Jun 2, 2015 at 19:38
  • 2\. You also wrote there would be no costs for not being invested, but does this contradict your first para, where you showed the loss of $-16 from being UNinvested?
    – user10763
    Jun 2, 2015 at 19:40
  • Would you please respond in your answer, which is easier to read than comments?
    – user10763
    Jun 2, 2015 at 19:40

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