What is Wealthsimple?
Wealthsimple is a Robo-advisor, which means that your money is invested using software that uses algorithms to do the job of a portfolio advisor or a wealth manager.
Robo-advisors usually asks you a couple of questions when opening an account to find out more about your goals and determine your risk tolerance – Using that information they then create a customized portfolio that is more likely to suit your needs. For example, if you are in your 20s and you want to invest your money for a long-term goal such as retirement, they will most likely offer you their riskier growth portfolio which is composed mostly of equity stocks rather than government bonds and tends to perform well over-time.
As a result, they charge a lower fee than what most portfolio managers & wealth managers would charge.
How much does Wealthsimple cost?
As of today, Wealthsimple charges a 0.5% fee for the first $99,999.99 that you invest with them, and a 0.4% fee once your balance reaches $100,000. Please note that on top of those fees, you will also have to pay management fees for your ETFs which is usually around 0.2% bringing the total to about ~0.7% annually.
What kind of portfolio can I get from Wealthsimple?
WealthSimple offers three types of portfolios conservative, balanced, and growth. The conservative portfolio is for you if you’re looking to invest for a short-term goal or if you have very low-risk tolerance, these kinds of portfolios are composed mostly of government bonds and have a little percentage of equity in them. The balanced portfolio is for you if you want to be careful with your capital but are okay with taking a little risk. The growth portfolio, as we mentioned earlier, is for you if you’re looking to invest your money for the long-term (10+ yrs) and are willing to bear the short-time market dips.
What are the pros & cons of using such a service?
Some of the pros that Wealthsimple offers are portfolio rebalancing & automatic dividend re-investing. Meaning that as soon as you receive any dividends from your stocks – they will automatically re-invest that money, which will make you more money in the long run, which, in my opinion, is a huge plus. They also keep an eye on your portfolio and will rebalance it to suit your needs.
Some of the other pros that Wealthsimple offers are:
- Access to expert financial advice whenever you need it.
- Recurring auto deposits, which can be extremely helpful and will make sure you stick to investing.
- A wide variety of accounts such as (TFSAs, RRSPs, RRIFs, RESP, LIRA…).
- Customizable portfolios that are in line with your customs & values. Wealthsimple offers halal portfolios which are suitable for people who are Muslims and socially responsible portfolios for those of you who want to support our planet.
Although Wealthsimple is a great investing tool for beginners, It can be very easy for those of you who already have some experience investing, as you can easily replicate the same portfolio that Wealthsimple offers. As a result, you will save yourself the 0.5% fee that Wealthsimple charges every year.
How is the sign-up process like?
Signing-up with Wealthsimple is very easy and will take you less than 10 minutes, to be all set, just make sure to have your social insurance number handy.
After signing up, you’ll have the choice to open either a registered account or a non-registered (personal) account.
What type of account should I open?
If you are new to investing and this is your first time opening an account – I’d suggest you open a Tax free savings accounts (TFSA) if you don’t have one already. TFSA’s allow your money to grow tax-free, meaning that if you invest $1000 today and your money grows to $2000 in the future you won’t have to pay any taxes on your gains. These types of accounts are regulated by the Canadian Revenue Agency. Therefore you can only contribute a maximum amount each year. To view your contribution room, you can either log-in to your CRA’s account or learn more about your TFSA’s limits.
What if I already have an account?
If you already have an account with another bank, you can still transfer your account to Wealthsimple. They will refund all transfer fees if your account is worth at least $5000.
How do I fund my account?
After the creation or transfer of your account, you can now fund your account directly from your checking account via Electronic Funds Transfer. These transfers take typically between 1 to 2 business days to complete. You can also set up pre-authorized auto deposits that occur according to your preferred frequency.
After your money transfer is completed, Wealthsimple will automatically invest your funds within 2 business days.
To sum up this review, I must say that Wealthsimple is a great investing tool for beginners.
If you are new to investing – I would highly suggest that you open an account with Wealthsimple. They are pretty much very open, and they are adaptable to most financial situations. Your investments are also under the protection of CIPF. To learn more about CIPF, click here.
For those of you who already have some decent experience investing – I would still suggest that you open up an account with Wealthsimple if you are forgetful and tend to not stick to investing consistently. But, if you are consistent and know what you are doing, then please go ahead and do it yourself and save yourself from the 0.05% fee that Wealthsimple charges.
If you have any questions about this review, please let me know in the comments below.