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What is Wealthsimple: A Complete Guide!

Launched in September 2014, Toronto-based Wealthsimple offers automated investment and savings programs to Canadian customers. New customers can add money to existing accounts or transfer assets between taxable and retirement accounts. With a $0 account requirement, new investors can get started with ease.

A small selection of inexpensive ETFs is used to build relatively generic portfolios, which are then further tailored based on the data you enter into the app. Although we have made an effort to include pertinent data from the U.K. as well as Canadian platforms as well, this review was mainly written from the viewpoint of an investor located in the United States.

Let’s understand the topic“What is Wealthsimple?” in more detail…………………………….

1. What is Wealthsimple?

A computer-driven algorithm is used by Wealthsimple Invest, a robo-advisor as well as an automated investing tool, to make trading choices on behalf of its clients. It is generally regarded as one of Canada’s top robo-advisors.

Wealthsimple creates an Exchange Traded Funds (ETF) portfolio on behalf of new investors after asking a series of broad inquiries about their financial goals for the future when they join up.

These ETFs typically include US, Canadian, foreign, as well as international securities, as well as bonds issued by governments, gold, and other stocks.

This implies that novice investors are not needed to select their own investments.

2. How do I Contribute Money?

This will be just as simple if you’ve ever used PayPal or an Interac e-Transfer. You enter the amount you wish to send (up to $50,000 per transfer) after linking your financial institution’s account to you’re Wealthsimple Trade account.

Processing large deposits can take a maximum of three business days, and processing monies that were already auto-deposited can take three to five business days.

There is now an automated tool for moving money between Wealthsimple platforms, like from Wealthsimple Buy to Wealthsimple Trade. Your investment money will need to be transferred in cash, though.

3. Pros and Drawbacks of Wealthsimple Trade

3.1 The Advantages

  • One of the initial commission-free trading sites in Canada was Wealthsimple Trade. The majority of its rivals charge between $4.95 and $9.95 (or more) per transaction.
  • There are no minimum balance requirements or yearly account fees.
  • The biggest exchanges in North America, including the New York Stock Exchange (NYSE) as well as the Toronto Stock Exchange, provide free availability of thousands of stocks and ETFs. (TSX). Additionally, it provides a large selection of altcoins, including Bitcoin and Ethereum.
  • In businesses like Microsoft, Netflix, Tesla, Shopify, the Royal Bank of Canada, Toronto Dominion Bank, as well as the Canadian National Railway Company, partial shares are available for purchase. Even if you don’t have an abundance of money to spend, fractional shares allow you to own a portion of these businesses.
  • Along with non-registered accounts, you can establish tax-free savings accounts (TFSAs) as well as registered retirement savings plans (RRSPs). (Cryptocurrencies must be held in a non-registered account as they are not TFSA or RRSP eligible)
  • You can immediately contribute up to $1,500 to start trading right away.
  • All Wealthsimple Trade customers now have access to limitless price alerts, real-time quotes, and on-demand quotes.
  • Even novice investors will find the Wealthsimple Trade program to be user-friendly due to its aesthetics, simplicity, and intuitiveness. The app’s “browse” function groups trending stocks into various markets and classifications. For users who would rather exchange on their desktop or laptop than a mobile device, there is now an online platform available.
  • Wealthsimple is a reliable name in finance. Its assets under control are presently assessed at $15 billion, as was already mentioned, and it serves roughly 2 million clients. Like the major institutions, Wealthsimple is subject to regulation from the IIROC (Investment Industry Regulatory Organization of Canada) and the CIPF.

3.2 The Drawbacks

  • At the moment, Wealthsimple Trade only allows for the selling of certain cryptocurrencies, ETFs, and stocks. There are no other options accessible, such as buying initial public offerings or trading mutual funds.
  • Considering purchasing American stocks? Since you cannot use “Norbert’s gambit” or keep U.S. dollars in a fundamental no-fee account, be aware that you will not be allowed to circumvent foreign exchange fees. You must enroll in the $10/month Trade Plus plan if you want to retain American investments in American money without being concerned about foreign exchange fees.
  • A dearth of comprehensive investment analytics as well as educational resources can be challenging for some novice investors.
  • If you’re anxious to get entry to your money, be cautious. The processing time for brand-new payments over $1,500 (or over $5,000 if you choose the Trade Plus plan) could be a maximum of three days for business.
  • Additionally, users cannot automate dividend reinvestments on the site. Having said that, doing it mechanically is simple. This is so because profits are merely added to your cash balance, which you can use to quickly purchase additional shares, including fractional shares.

4. Account Configuration

On the first page of the account’s setup procedure, Wealthsimple gets personal. The questionnaire and portfolio allocations cannot be viewed prior to providing your date of birth, residence, and tax ID number. A series of standard questions about your financial objectives, time horizon, tolerance for risk, prior investing experience, and degree of investment knowledge is then asked of you in the questionnaire.

Your input is used to create an ETF portfolio that is specifically tailored to your finished profile. Changes to suggested allocations are allowed, but the system itself may request justification if they conflict with previous responses. One-time or recurring payments can be used to fund accounts through bank account links.

Along with access to a regular investments program, Wealthsimple provides a Smart Savings account that, by utilizing low-risk ETFs, gives interest rates that are higher than those of conventional savings accounts. The account is subject to taxation and charges a 0.25% fee rather than a 0.50% fee, which reduces net income. Instead of being covered by the FDIC, the Smart Savings account is covered by the Securities Investor Protection Corporation, also known as SIPC, for protection. In addition, Wealthsimple will cover transfer fees for new accounts that are financed in at least $5,000.

People from the United States who peruse disclosure statements before opening an account will be let down. The Wealthsimple U.S. website disobeys an SEC requirement that advisors “require to provide to clients as well as potential customers a booklet disclosing information about your firm” by offering no ADV-2A investment advisory brochure. This is a significant omission because the ADV-2A is meant to be a customer protection document and business disclosures found in those brochures are crucial to building confidence between advisor and client.

5. Consumer Assistance

As previously mentioned, clients have the option to talk with an accountant upon request, though contact information can be challenging to locate. Although Wealthsimple offers phone and email support, there is no online chat option for potential or existing customers. On some websites’ footers and in the help center, you can find Wealthsimple’s phone number. Outside of a FAQ, there isn’t a specific “contact us” website. For the United States, phone hours are stated as being from 9:00 a.m. to 8:00 p.m. Eastern time, Monday through Thursday, and from 9:00 a.m. to 5:30 p.m. Eastern time, Friday. The call center opens one hour early in Canada. No hours are provided by the UK contact center.

During work hours, multiple calls to the U.S. telephone number resulted in a conversation with a customer service agent within one minute. The original recording provided different hours of contact than those listed in the FAQ, extending coverage to 8:00 a.m. on Monday through Thursday. On the “Who We Are” page, Wealthsimple’s office locations are provided without contact information.

6. What can You Trade on Wealthsimple Trade?

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At the moment, Wealthsimple Trade allows transactions on the biggest exchanges of stocks in North America. This comprises the TSX Venture Exchange (TSVX), NASDAQ, NEO Exchange, as well as Canadian Securities Exchange in addition to the Toronto Stock Exchange (TSX), New York Stock Exchange (NYSE), and TSX. (CSE). Limited assets are also offered on the BATS Exchange.

But a U.S. or Canadian bias does not have to exist in your financial portfolio. That’s because you’ll be privy to index funds as well as ETFs with diverse portfolios that follow practically all sectors and foreign companies listed on the aforementioned exchanges.

You can create a perfect “couch potato” investment portfolio using iShares and Vanguard ETFs for free if you’re taking an apathetic, long-term approach to investing. Everything from cryptocurrency ETFs that monitor market performance in different sectors to emerging-market ETFs is available for purchase.

The stock market coverage of Wealthsimple Trade does not extend globally, making it impossible to purchase individual stocks from stock exchanges like Bombay and Hong Kong. However, you can purchase index funds from the accessible exchanges that follow the success of global businesses. Additionally, there are countless American depositary receipts (ADRs) issued by non-American corporations like Alibaba, Toyota, as well as AstraZeneca that inter-list their stocks on American stock markets.

 7. How to Purchase Equities and ETFs on Wealthsimple Trade?

On Wealthsimple Trade, purchasing stocks and ETFs is as simple as it gets. Log into your account, look up stocks using their names or three- or four-letter ticker symbols, then choose the asset you want to purchase.

then decide which account you want to withdraw money from. That could be a personal account, RRSP, or TFSA. Then decide whether you want a market, fractional, limit, or stop-limit purchase order.

An immediate purchase is a market order. A fractional transaction is processed at the close of the business day and is only for fractional shares. (or the next available trading day). Furthermore, limit along with stop-limit orders let you predetermine the highest price you’re prepared to spend for the security.

After that, input the number of shares you wish to purchase, click “buy,” check your order, and then choose “place order.” You’re done now!

You can also get access to fundamental data about particular stocks to aid in making decisions. Consider snapshots of trending and top stocks across different market segments and categories, or the P/E (price-to-earnings) ratio (a valuation measure for stocks). Once more, you only need one or two clicks to find these. New investors won’t likely feel intimidated because the entire experience is very intuitive.

8. Trading Cryptocurrencies Using Wealthsimple Trade

Wealthsimple is renowned for being a secure and user-friendly method of investing, so this update to the program is unquestionably intriguing. You can open an account with as little as $1 (though that won’t get you very far). You should be aware that using this site does not grant you access to a cryptocurrency wallet; rather, you are trading in Wealthsimple’s digital assets. If you already have cryptocurrency stored somewhere else, you can quickly and safely transfer funds to and from your external wallets.

Wealthsimple does a fantastic job of outlining some of the dangers as you add the option to buy or sell cryptocurrency to your account. Therefore, take the time to carefully study the disclaimer before clicking the next screen’s checkbox to continue.

Here, you will discover how Wealthsimple’s digital assets are used to hold your crypto assets. The topic of who shouldn’t engage will also be covered. For instance, those who would have to engage in cryptocurrency using their emergency savings, retirement funds, loans for education, mortgages, or other essential funds.

Additionally, this is where you can discover the dangers. This includes a brief history, volatility, market value that is based on demand, technical as well as cyber security problems, temporary blockchains (read more about blockchains), and many other factors. You will also take a brief test on your understanding of cryptocurrency and risk fortitude.

Your cryptocurrency holdings are part of a Wealthsimple Trade non-registered account. You must therefore pay tax on any profits you earn. Note: By purchasing ETFs or mutual funds that hold cryptocurrency, you can tangentially invest in cryptocurrency in your established accounts like TFSAs as well as RRSPs. However, cryptocurrencies themselves are not allowed as investments in listed accounts.

You have access to hundreds of cryptocurrencies, their present prices, and historical price charts. Price spreads on cryptocurrency sales and trades are present (2% maximum per transaction). However, there aren’t any additional charges. Additionally, neither depositing nor withdrawing coins carries any costs.

9. What is the Pricing Structure of Wealthsimple Trade?

You might be wondering how Wealthsimple Trade makes money if there aren’t any commission fees to pay operating expenses. The business is upfront and honest about this. In the words of Wealthsimple, its revenue is mainly derived from a 1.5% foreign exchange fee applied to conversions between Canadian and US dollars. (and vice-versa). In order to trade U.S.-listed securities under the basic plan, it considers these to be essential.

As stated previously, if you upgrade to the Trade Plus plan, which allows you to keep US dollars in your account, you can prevent these foreign exchange fees. However, you’ll have to pay $10 a month for that, which is another method Wealthsimple Trade generates revenue.

A simple margin (of up to 2%) is paid when buying or selling a coin and is already factored into the price. The spread pays the fees incurred by the liquidity providers, operational expenses, and Wealthsimple’s custodian, Gemini Inc.

Other purchases are subject to small fees. That could be the $20 for a paper account statement or the $45 for a broker-assisted phone transaction, but you’ll rarely, if ever, need these.

10. Is it Secure?

It goes without saying that you are constantly worried about security if you are going to move your money—regardless of how little the quantity is—through an online platform. You can feel secure knowing that Wealthsimple’s goods, such as Wealthsimple Trade, are well-regarded. The financial technology firm has also received numerous accolades for its work.

Wealthsimple has gained the confidence of about two million customers, and as a result, the platform presently manages over fifteen billion dollars in assets. And Power Corporation of Canada, Wealthsimple’s main shareholder, is a more than 100-year-old organization with more than $450 billion in assets as well as 30,000 workers.

A further measure of assurance is provided by the fact that Wealthsimple, like all of Canada’s main financial institutions, is subject to regulation by the Canadian Investor Protection Fund as well as the Investment Industry Regulatory Organization of Canada.

11. Should you Invest with Wealthsimple?

Image by Dmitriy from Pixabay

Too often, especially in relation to technical advancements, the phrase “game-changer” is used. But for numerous Canadians who earlier shied away from investing due to fear of failure, Wealthsimple Trade has had a genuinely transformative impact. This is a fantastic platform to try for novice and passive investors looking for long-term growth with little effort needed on their part—not least because there aren’t any commission fees and minimal fees of any kind. The hazards of frequent trading, which may be more alluring with a tool like Wealthsimple, should be taken into account by self-directed investors, however.

Even though the platform lacks some features that might be more appealing to knowledgeable investors (such as analytical tools or a broader selection of investing options), those features might eventually be added. It doesn’t matter; this internet investing tool stands up to the initial hype. And if you’re prepared to dip your toes into the stock market, it’s as good a location as any to start.

The Takeaway!

This was all about the topic “What is Wealthsimple?”. Every information has been mentioned above that you need to know about wealth simple trade will eventually help you to invest your money in a good place. Moreover, investing is a task that should be done thinking twice before doing it and that’s why is really important to know all the information about it.

Check this out Why should one invest in Bitcoin with proper knowledge? if you want to know why one should be in Bitcoin and that too investing with the proper knowledge which is really really important.

Queries and Answers

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Some of the most asked questions regarding the topic “What is Wealthsimple?” are listed below:

1. What is Wealthsimple’s purpose?

Toronto-based Founded in September 2014, Wealthsimple offers automated savings and investment plans to Canadian customers. New customers can add money to existing accounts or transfer assets between taxable and retirement accounts. With a $0 account requirement, new investors can get started with ease.

2. Is Wealthsimple secure for my money?

Wealthsimple does not give out your money for mortgages because we are not a bank. Although Wealthsimple is not a bank, we are subject to regulation by a number of watchdogs, including the Investment Industry Regulatory Organization of Canada (IIROC), and we have strict risk management procedures in place to protect the money of our customers.

3. Will $100 work in Wealthsimple?

You shouldn’t have any trouble at all investing your full $100 into a tax-advantaged account if you don’t need the money right away. Before investing in non-tax-advantaged accounts, establish an RRSP and/or a TFSA, both of which provide tax advantages that you should take advantage of.

4. Is Wealthsimple only intended for novices?

For traders or investors looking for cheap fees, a wide variety of investment choices, and a straightforward user interface, Wealthsimple is a competitive option. The platform also gives a library on everything related to personal finance and a tax calculator to make filing taxes easier.



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