If you want your money to grow, you have to invest. Your savings account that pays 1% interest won’t cut it. But without any investment experience, how do you get started?
Many of us fear investing and worry that we’ll “do it wrong” and lose our hard-earned money. Enter Wealthsimple. This is a company that can help you create a balanced, well-diversified portfolio to begin building wealth.
Robo advisor platforms like Wealthsimple make it easy to follow a passive investing strategy by taking the work out. But if you thought that was all Wealthsimple was good for, you’d be mistaken. In this Wealthsimple review, I’ll cover their flagship platform, Wealthsimple Invest, as well as some lesser-known products you may not be aware of.
What Is Wealthsimple?
Wealthsimple is a robo-advisor that helps you create a long-term investing portfolio. Like many robo-advisors, Wealthsimple uses the idea of asset allocation based on your risk profile to put together a portfolio.
To get started, you are asked questions about when you plan to retire and your ability to handle risk. Using this information, Wealthsimple can put together a portfolio for you, based on different asset classes. As with most robo-advisors, Wealthsimple works best when you plan for the long term, with a goal like retirement. Use dollar-cost averaging to add a set amount of money each month, and Wealthsimple will automatically invest it on your behalf.
The idea is to use low-cost ETFs to limit your fees. This means that more of your money is building your long-term wealth rather than going toward fees. Wealthsimple uses the management of asset-based (a diversified mix of stocks and bonds) to handle your portfolio passively. With the help of an algorithm, it adjusts as needed as you approach retirement.
Wealthsimple has a board of directors and investment team of long-time Silicon Valley folks and well-known and successful investment professionals. One of the investment team members is Eric Kirzner, the designer of the first ETF in North America and a Professor of Finance at the Rotman School of Management.
It’s a simple strategy, but it’s one that’s been shown to work well for most people over time. It’s boring, but you’re more likely to see good long-term results when using a company like Wealthsimple.
Get Started
Wealthsimple Invest
The Wealthsimple brand is comprised of three main elements. The first is Managed Investing, considered by many to be Canada’s top robo-advisor service. The second is Stocks & ETFs, a no-commission fee discount brokerage where you can buy and sell thousands of ETFs, mutual funds, and individual stocks right from your mobile device. And the third is Wealthsimple Crypto
Wealthsimple’s Managed Investing portfolios are built around the concept that the best way to invest is through low-cost, passive investments that track the market. By automating your contributions, the idea is that you’ll come out ahead in the long term.
As Wealthsimple puts it, it’s investing on auto-pilot. This is where the term robo-advisor comes in. Unlike the experience you get from meeting face to face with an investment advisor, you can open a Wealthsimple account, choose an investment profile, and purchase your investments from the comfort of your living room, using their website and mobile app.
Don’t be fooled by the term robo-advisor. With Wealthsimple you still have the opportunity to talk to a real, live human.
Managed Investing
Wealthsimple’s Managed Investing is at the core of its business. They blend robo-advisor technology to help you select a portfolio of exchange-traded funds (ETFs) with low management fees. The experience can be fully digital, but you can access real-live, human advisors when required. Your investment contributions are automated, so you can put your investments on auto-pilot. When opening a Managed Investing account, you’ll notice that there are three different packages (and price points).
Wealthsimple Basic $0-100K
If your Wealthsimple Invest account balance falls between $0 and $100,000, you’ll pay a 0.50% yearly management fee. This gets you a personalized portfolio, access to expert financial advice, automatic rebalancing, automated deposits, and dividend reinvesting. Investing is that easy, and affordable.
Wealthsimple Black $100K+
Once your account balance reaches $100,000, you qualify for extra perks with Wealthsimple Black. Your management fee drops to 0.40% and includes tax-loss harvesting, which can help you make the most of your tax situation during tax time. On top of that, you get a full financial planning session regularly to ensure that you are on the right track. You also qualify for a 15% discount when you purchase an online will from Wilfull. Not too shabby.
Wealthsimple Generation $500K+
When you or your household exceed $500,000 on deposit across all Wealthsimple accounts, you qualify for Wealthsimple Generation. For the same small management fee of .40%, Generation adds several additional services to the Wealthsimple Black level.
You’ll receive more in-depth financial planning, tailor-made portfolios, a dedicated advisor team, a higher level of service, and 50% off a comprehensive health plan from Medcan. You even get an enhanced level of reporting at the Generation level, including income and retirement planning.
Socially Responsible Investing
If you’re interested in socially responsible investing (SRI), Wealthsimple has options. More people want to put their money into funds that reflect their values. Wealthsimple can help you do that with its Socially Responsible Investing ETFs. These ETFs include low carbon, cleantech, affordable housing bonds, etc. The idea is to invest in companies that promote your social values. You can feel better about how you make money with the help of SRI through Wealthsimple.
Wealthsimple Halal Investing
Wealthsimple has created an investment portfolio that includes only investments that align with Islamic investing principles. That means any company making a profit from products such as alcohol, tobacco, gambling, pork, or weapons, is excluded from the Wealthsimple Halal portfolio.
Halal investing excludes income products, such as bonds and GICs, as they are considered debt instruments. The fees on a Halal portfolio are the same as with any Wealthsimple portfolio: 0.5% up to $100,000, 0.4% over $100,000, and $10,000 managed free for anyone you refer to Wealthsimple.
I should note that the Halal portfolio does not invest in ETFs; rather, it holds a portfolio of 50 carefully selected individual stocks.
Wealthsimple for Advisors
One of the challenges of running your own financial planning or investment advisory firm is having a platform capable of onboarding clients, opening and managing accounts, and looking after regulatory compliance. Small investment firms simply don’t have the resources to develop their own proprietary software.
Thankfully, Wealthsimple for Advisors can help by delivering low-cost investment planning products and services to advisors, enabling them to focus on their clients’ matters. Through Wealthsimple, advisors can access ETFs, mutual funds, and individual stock portfolios.
Wealthsimple for Work
This Wealthsimple review wouldn’t be complete without mentioning the cool benefits of Wealthsimple for Work. You can get help managing your Group RRSP if you own a business. That’s great because it takes some hassle and difficulty off your plate. If you want to offer a benefit to your employees, this can be a good way to do it.
If you sign up for Wealthsimple for Work, you don’t have to worry about administration fees. You just pay your matching contribution, which goes right to your employees.
Stocks & ETFs (Wealthsimple Trade)
Stocks & ETFs is a self-directed mobile trading app that lets you buy and sell thousands of stocks, ETFs, and mutual funds at no cost via the Wealthsimple Trade app. Unlike most Canadian discount brokers, Stocks & ETFs is commission-free.
How do they do it? Wealthsimple’s low-cost model of using technology, combined with a small, dedicated team, makes no-fee trading a reality. You can open a trading account within minutes using the same login you would for any other Wealthsimple account.
Stocks & ETFs Service Plans
Basic Plan: There are no trading fees for clients using the Basic plan to purchase Canadian stocks or ETFs. You will be subject to a 1.5% currency conversion fee when converting CAD to USD and vice versa.
Plus Plan: For $10/month, clients can buy, sell, and hold stocks and ETFs in USD without paying the 1.5% conversion fee on each trade. They will only incur fees when they fund their accounts and convert currency between CAD and USD.
Wealthsimple Crypto
Wealthsimple Crypto lets Canadians invest in more than 20 crypto coins including Bitcoin, Ethereum, Litecoin and Dogecoin. The platform is included as a separate section on the Wealthsimple Trade mobile stock trading app, which is available for download on both iOS and Android devices.
While there are no commission fees to buy or sell Crypto, Wealthsimple will make money on the spread between the market price and the transaction price. This is similar to how banks make money on foreign exchange transactions. Crypto is available as a non-registered account only. If you’re unfamiliar with the crypto world, here’s an article on how to buy and sell Bitcoin and other cryptocurrencies.
Types of Wealthsimple Accounts
What types of Wealthsimple accounts are offered? The most common account is the RRSP. Many Canadians like to use this account to save for retirement. However, you can also use Wealthsimple for other accounts, including:
- Tax-Free Savings Accounts (TFSA)
- Registered Retirement Savings Plan (RRSP)
- Spousal RRSP
- Registered Retirement Income Fund (RRIF)
- Registered Education Savings Plan (RESP)
- Locked-In Retirement Account (LIRA)
It’s also possible to open joint accounts. You can even open a corporate account and take advantage of lower corporate income tax rates. If you transfer an account from another broker, Wealthsimple will pay the transfer fees.
Wealthsimple Invest Management Fees
As I mentioned earlier, Wealthsimple Invest management fees range between 0.40% and 0.50%, depending on your portfolio size. As a MapleMoney reader, you get free management on your first $10,000 when you sign up through our exclusive link.
Wealthsimple Returns
Wealthsimple is built on the ideas of Modern Portfolio Theory, the Nobel-prize winning theory that holds that your asset allocation matters more than the individual stocks you hold. The rise of indexing and ETFs in the last few decades have only made it easier to apply principles of asset allocation and Modern Portfolio Theory to the portfolios of ordinary investors.
Over time, your returns will compound to grow into a nest egg that can help contribute to a comfortable retirement. It’s worth noting that studies indicate that indexing outperforms stock-picking over time. Additionally, many passively managed index funds outperform managed funds over the long haul.
Wealthsimple performance has been in line with market performance, as the company uses a diversified mix of ETFs to help ensure that you have a degree of protection and risk appropriate for your age and your goals. No, you won’t see anything sexy with Wealthsimple. But you are more likely to see solid returns over time and build wealth.
Other Products from Wealthsimple
While Wealthsimple is best known for investments, they have several other unique products that can help you save money, manage your spending, and file your income taxes. Here are some of the other accounts you can open with Wealthsimple.
Wealthsimple Spend
Wealthsimple Spend is a spending account that rewards you with stock or crypto. All you need to do is spend with your Wealthsimple card, and you’ll earn 1% towards stock, crypto, or cash. There is no minimum balance requirement, no fees, and no foreign exchange fees.
Your Wealthsimple Card can be used wherever Visa is accepted, but it’s not a credit card, so your credit score won’t be impacted. Your deposits are protected for up to $100,000 through the Canada Deposit Insurance Corporation (CDIC), the same protection that is offered to customers of Canada’s chartered banks.
Wealthsimple continues to add new features to Spend: the ability to pay bills, direct deposit, and send and receive funds via e-Transfer is coming soon. Wealthsimple is not a bank, but Spend is the closest thing they have to a bank account.
Wealthsimple Cash
Wealthsimple Cash is a mobile app that lets you send and receive money with friends you are connected to. There are no fees, and no security questions required – simply download the app, create your unique handle, and prepare to send funds.
Wealthsimple Roundup
When you enable the Roundup feature on your Wealthsimple App, anytime you use your debit card, your purchase is rounded up to the nearest dollar, and the spare change is transferred to a Wealthsimple Invest account. Over time, what starts as spare change can add up, especially when you’re earning interest on your savings.
Wealthsimple Overflow
Wealthsimple Overflow works just like it sounds. You determine the balance you want to maintain in your account every month, and Wealthsimple will automatically transfer any overflow too, you guessed it, Wealthsimple Invest. Before doing so, they will send you a reminder in case you want to adjust the amount you keep in your account.
Wealthsimple Tax
Wealthsimple acquired the highly popular SimpleTax in 2019, and rebranded the online tax software, Wealthsimple Tax. Like other popular programs, such as Intuit’s TurboTax and Ufile, Wealthsimple Tax is NETFILE approved and is designed to handle most Canadians’ income tax situations.
What sets it apart from many other programs is that it’s 100% free to use. And Wealthsimple Tax’s user interface is so easy to use, that most returns can be completed on one webpage.
In other words, Wealthsimple Tax has similar functionality to the best-paid tax software programs for free, in a way that’s very easy to understand.
Is Wealthsimple Safe?
You may be wondering if Wealthsimple is safe to use. After all, though it is very popular, it hasn’t been around nearly as long as traditional Canadian financial institutions and investment companies.
The good news is that Wealthsimple is considered one of the best financial services websites in the world. The company won the Webby for the best financial services website. Additionally, it is the largest robo-advisor in Canada and has the highest count of assets under management ($8.4 billion), evidence of a large client base.
Wealthsimple is a big deal in Canada, and it is also beginning to make waves in the United States. It’s no surprise that Wealthsimple is one of the top 100 global fintech companies.
Wealthsimple has a custodial broker, ShareOwner. This company is regulated closely by the IIROC. Plus, it’s also insured by the Canadian Investor Protection Fund. Your account is insured for up to $1 million against insolvency or bankruptcy. If things do go badly.
Final Thoughts on Wealthsimple Invest
In the case of Wealthsimple Invest, what began as one of the world’s best robo-advisors has evolved into much more. At the heart of their product lineup remains Managed Investing, their low-cost, passively managed robo-advisor platform, which offers three tiers of service: Basic, Black, and Generation. Invest also includes Wealthsimple Crypto, and the free, mobile trading app, Stocks & ETFs.
Not to be outdone is Wealthsimple Spend, a no-fee online account that rewards you with 1% on all spending with your Wealthsimple card. Your earnings can be used towards, stock, crypto, and cash. And don’t forget to take advantage od Wealthsimple Cash, a mobile app that makes it sending and receiving money between friends a breeze. Of course, there is also Wealthsimple Tax, an easier way to file your income taxes online.
Overall, Wealthsimple is a great option for anyone wanting to get started with long-term investing. If you aren’t interested in stock picking but know that investing needs to be part of your plan, opening a Wealthsimple Invest account may be the way to go. With its adherence to time-tested principles, and your ability to use dollar-cost averaging to your advantage, it makes sense to consider Wealthsimple for building wealth long-term.
