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Wealthsimple Inc was founded in 2014 by Michael Katchen, is based in Toronto, Canada, and was the first brokerage firm in Canada to offer commission-free exchange-traded funds and stocks
They provide various products, namely Wealthsimple Invest, Wealthsimple Cash, Wealthsimple Trade, and Wealthsimple Tax. They currently have $15 billion worth of assets under management.
In this Wealthsimple Invest vs. Trade review, we take a deep dive into the nuances of individual products. Finding out what they are, how they work, how much they cost, and whom they are suited for.
Equity investments are subject to market risks and may not be suitable for all investors. If you have any doubts as to the merits of an investment, you should seek advice from an independent financial advisor. So please invest at your own risk.
Wealthsimple invest was launched in 2014 and was Wealthsimple Inc’s flagship product.
Wealthsimple invest is a passive automated investing service also known as a Robo-advisor.
Wealthsimple invest analyses your investment goals and risk tolerance to give you an investment plan that best suits you. Active management of your portfolio is then taken over by professional portfolio managers and their algorithms at wealthsimple.
The Wealthsimple invest investment portfolio tends to comprise low management fee ETFs and is divided into three main categories Conservative(low risk), Balanced(medium risk), or Growth(high risk).
This service is well suited to individuals who want to get into investing but do not have the relevant experience and know-how and would prefer to delegate management.
- Lowest and most transparent commissions
- Large number of tradable security types
- Robust suite of research tools
- Low margin rates, from 0.75% to 1.59%
- Access to 40,000+ funds worldwide & 7,700+ funds with no transaction fees
Interactive Brokers is a great choice for investors who are looking for a reliable, low-cost online brokerage firm with advanced trading technology, global market access, and a wide range of financial products. They provide a powerful trading platform, which gives you the flexibility and control you need to make informed decisions and execute trades efficiently. Additionally, the firm offers a variety of research and educational resources to help improve your trading skills and knowledge.
Wealthsimple Trade is the opposite of wealthsimple invest in that it’s more suited to active investors who want to manage their own portfolios.
Wealthsimple Trade is a self-directed investment platform that allows you to manage your investment portfolio actively. You choose what to buy and sell. You rebalance your portfolio yourself, and you conduct market research yourself.
Wealthsimple comes in two main tiers. Wealthsimple Trade basic and Wealthsimple Trade plus.
A key feature of wealthsimple is that no account minimums are required to open an account with them.
Wealthsimple Invest Account
The process of signing up for wealthsimple invest is generally straightforward.
Go to the Wealthsimple website.
Click on Get started
Fill in a form with your basic information.
Fill in the questionnaire (This is used to gauge your income, investment goals, and risk tolerance).
E-sign some investment management agreements,
Upload a bank statement(screenshots or void cheque) to verify your bank details.
It usually takes about five business days to create your wealth invest account and less than 10 minutes for the entire sign-up process.
Wealthsimple Trade Account
The process of signing up for Wealthsimple Trade is even simple. If you already have a Wealthsimple account, you can simply download the Wealthsimple Trade app. Connect your bank account to your Wealthsimple Trade account, and you are ready to trade.
A Wealthsimple investment account offers a list of accounts to its investors. They include personal accounts, RRSPs, tax-free savings accounts, RESPs, RRIFs, LIRA, and corporate accounts(joint and business investment accounts)
The Canadian investor protection fund protects all these accounts.
A Wealthsimple trade account offers far fewer account types to its investors. They only offer TFSAs, RRSPs, and personal investment accounts.
All these accounts are protected by the Canadian investor protection fund and are regulated by the IIROC (Investment Industry Regulatory Organization of Canada).
Products and Tools
Wealthsimple Invest primarily focuses on low-cost ETFs, which tend to be more attractive investments than mutual funds due to their lower fees. These ETFs are usually 8 – 10 belonging to a set of unique asset classes, e.g., Canadian stocks, Emerging market stocks, foreign stocks, and US stocks.
Wealthsimple Invest also offers several useful tools, such as:
Round-Up: This rounds up your purchases to the nearest dollar, investing the difference directly into your investment account.
Overflow: which automatically invests extra cash from your bank account.
Wealthsimple investment account fees depend on the value of the deposit. They are divided into three separate fee structures. They are:
Wealthsimple Basic: $0 – $100k range whose management fee is 0.5% of the account value.
This includes the fees for setting up the portfolio, portfolio rebalancing, automatic dividend reinvestment, and unlimited customer service.
Wealthsimple Black: $100k plus range whose management fee is 0.4% of the account value. This comes with a financial planning session and a tax loss harvesting assistance bonus.
Wealthsimple Generation: $500k plus range whose management fee is 0.4% of the account value. This tier comes with a personalized custom financial report, tax loss harvesting assistance, 50% off on a Medcan health plan, and tax savings optimization.
wealthsimple trade is a commission-free broker and the first in Canada. This means that investors can buy and sell stocks and ETFs for virtually free on their platform
Despite that, there are fees that wealthsimple trade does charge. They include:
1.5% currency conversion fee.
$20 paper account statement fee
$45 broker-assisted phone trade fee
$75 special request and investigation fee.
Wealthsimple invest grew in popularity due to its ease of use and accessibility. Clear, intuitive, interactive, and easy to navigate, Wealthsimple’s website has won Best financial services and banking website (webby) two years in a row.
The wealthsimple trade platform offers basic and research trading tools and comes in a web-based version and the wealthsimple trade app. The wealthsimple trade app is intuitive and easy to use, making it great for beginners and where you can conveniently trade stocks and ETFs.
Wealthsimple invest lends itself to passive investing and is suited to investors who would prefer not to navigate the stock market on their own or experienced investors who wish to delegate some of their work as a passive income.
Wealthsimple trade, on the other hand, lends itself to actively investing and investors who want to manage their own investment portfolio. They are familiar with the stock market and enjoy low-fee investing.