Wealthsimple is a robo-advisor that provides completely hands-off investing in the stock market. All you need to do is open an account, add some funds, and they’ll take care of the rest! In this Wealthsimple review, we’ll go over everything you need to know about this awesome investment tool.
You can get your first $10,000 managed for free by signing up here.
Wealthsimple also offers a commission-free brokerage called Wealthsimple Trade. Wealthsimple Trade is for experienced investors that understand the stock market and want to buy and sell securities themselves. You can read our full Wealthsimple Trade Review here.
However, if you’re looking for the completely hassle-free investing experienced offered by the robo-advisor Wealthsimple Invest, read on!
Table of contents
- A 100% honest Wealthsimple Review
- What is a robo-advisor?
- Wealthsimple fees
- How does Wealthsimple invest my money?
- The Wealthsimple portfolios
- Can you lose money with Wealthsimple?
- Accounts offered by Wealthsimple
- The Wealthsimple investing experience
- The Wealthsimple Smart Savings Account
- Is my money safe with Wealthsimple?
- Is Wealthsimple a good investment?
- Final thoughts on Wealthsimple Invest
A 100% honest Wealthsimple Review
Many people have questions about Wealthsimple because robo-advisors are still fairly new. It’s easy to be wary of investing with a brand you’ve never heard of before, rather than the banks we’re all familiar with. But if you don’t take advantage of the new fintech, you’re missing out on some pretty great tools!
Wealthsimple is a legitimate investment tool and an awesome way to manage your money. They might even be exactly what you’re looking for to build your portfolio. In this Wealthsimple review, I share all the perks and downsides of this online robo-advisor.
What is a robo-advisor?
Don’t let the name fool you! A robo-advisor is not a robot. The term “robo” simply refers to the process of investing in the stock market being automated for you. There is still a real live person (or rather a team of people) behind the scenes investing in the market on your behalf.
Want to learn more? Check out our post on The Best Robo-Advisors in Canada.
On that note, if you ever want to talk to someone about how your money is being invested, you can contact Wealthsimple at any time. They’ll answer your questions about the app, or if you have more in-depth questions about your portfolio, they’ll put you in touch with one of their portfolio managers.
Active vs. passive investing
You’ll hear a lot in the personal finance world about active vs. passive investing. Active investing refers to actively buying and selling individual securities in an effort to time the market. Passive investing takes a less involved approach and seeks to simply replicate the entire market. It’s important to note that the Wealthsimple portfolios are actively managed funds.
This isn’t something you need to worry about because the experience of investing with Wealthsimple will still be passive for you. You don’t need to do anything except fund your account, and they’ll take care of the rest.
Wealthsimple charges 0.40% to 0.50% of your portfolio’s value. You will be charged 0.50% in fees if your assets are below $100,000. This fee drops to 0.40% if you have more than $100,000 invested and qualify for Wealthsimple Black. The fee stays at 0.40% if you have over $500,000 invested and are a member of Wealthsimple Generation.
Wealthsimple counts all your financial assets in their total, including money you have with Wealthsimple Invest, Wealthsimple Trade, and Wealthsimple Cash.
You can get the first $10,000 managed for free for 1 year by signing up here (a $50 value!).
How does Wealthsimple invest my money?
The only thing more honest than this Wealthsimple review is Wealthsimple itself. Wealthsimple is extremely transparent about exactly where every penny you have is going. At any time you can view exactly what stock every cent is invested in, and what proportion of your portfolio that makes up.
For the most part, they’re investing in Exchange Traded Funds (ETFs) from Vanguard and iShares. However, some portfolios consist only of individual stocks, but they’ll tell you exactly what those are. Your money is never hidden from you, and you can always be certain of where each dollar is.
The Wealthsimple portfolios
When you sign up for Wealthsimple, you’ll answer a few questions to determine your risk tolerance and investment goals. Based on your answers, they’ll place you into one of the established portfolios: Conservative, Balanced, or Growth. We won’t be going over these in detail in this Wealthsimple review, but here’s a brief explanation.
As you can probably guess from the names, the Conservative portfolio invests your money with the lowest risk and tends to be fixed-income focused. Growth takes on the greatest risk for the greatest opportunity for returns by investing primarily in equities. And the Balanced portfolio takes on a middle approach, which is a blend of fixed income and equities.
Choose ethical investing
One of the best things you can do for the world and yourself is to choose an ethical investment portfolio. Ethical investing consists of investing your money with companies that have sustainable and socially responsible business practices.
We’re in the midst of a climate crisis, and one of the best things you can do is vote for a better tomorrow with your dollars. By choosing a socially responsible portfolio with Wealthsimple, you’re communicating to corporations that you believe we can have profit and a better planet.
The Wealthsimple Halal portfolio
Wealthsimple also offers a Halal portfolio, which consists of a 100% equity allocation in 50 stocks. This portfolio is optimized not only for performance but to comply with Islamic law. It contains no companies that profit from gambling, arms, or tobacco, and no businesses that derive significant income from interest or loans. All investments are screened by a third-party committee of Shariah scholars. You can learn more about the Halal portfolio here.
I personally invest in the Wealthsimple Halal portfolio because I appreciate the ethical focus of its investments. Its performance has outpaced the rest, too! Guess that 100% equity allocation doesn’t hurt.
Can you lose money with Wealthsimple?
Wealthsimple is merely a tool you use to access the stock market, and investing in the stock market carries some inherent risk. Fluctuations in the value of the entire market and individual securities are normal and should always be expected. However, historically the stock market has outperformed any other investment. While you might see your investment go down some days, months, weeks, or even years, over time it’s more likely than not to go up.
Because Wealthsimple offers diversified portfolios that consist of investing your money in a number of different securities, you have less investment risk than if you were to invest in only one or two individual stocks. Furthermore, it’s professional portfolio managers striving to make money for you, so you can trust their education and experience.
Technically you can lose money with Wealthsimple, but only if the whole stock market crashes, which means you would have lost your money investing elsewhere. Overall Wealthsimple is a less risky investment than managing your portfolio yourself. And this is one of the reasons why they’re so great!
Accounts offered by Wealthsimple
Wealthsimple offers both registered and unregistered accounts. Registered accounts include the Tax-Free Savings Account (TFSA), the Registered Retirement Savings Plan (RRSP), the Registered Education Savings Plan (RESP), Registered Retirement Income Fund (RRIF), and the Locked-In Retirement Account (LIRA). Wealthsimple also offers Joint and Corporate accounts.
Unregistered Accounts and Joint Accounts
Any account that’s not labeled and tracked by the government is an unregistered account. If you open an account that isn’t labelled as a TFSA, RRSP, RESP and so on, it’s an unregistered account. This is more a tax status than anything else and means you’ll have to report your investment income in your unregistered Wealthsimple account when you file your taxes.
Wealthsimple joint accounts are an awesome way to save for the long term with a partner. Since registered accounts like the TFSA or the RRSP can be in one name only, joint accounts a great way for a couple to save and invest together. If you and your partner have already maxed out your individual TFSAs and RRSPs but still want to invest together, a Wealthsimple joint account is a perfect fit!
Registered Accounts: TFSA, RRSP, RESP, RRIF, and LIRA
Registered accounts are the best way to maximize your investment returns because they let you minimize taxes. Wealthsimple offers all kinds of registered accounts, but you’ll be most interested in the Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), and Registered Education Savings Plan (RESP). You can open any and all of these with Wealthsimple.
For the Wealthsimple RESP where you will receive the Canadian Education Savings Grant (CESG) for your contributions, the grant will be automatically deposited into your account. Wealthsimple will then invest it with the rest of your portfolio.
Wealthsimple Corporate Accounts
If you’re a business owner and looking for a place to invest extra cash, Wealthsimple is a great choice. All you need is your business information, including your corporation number, to set up an account. You can then transfer money to your Wealthsimple Corporate Account, and they’ll invest it in the stock market for you.
Corporate investment accounts are a tax shelter, but they’re not tax-free. Your business will have to pay taxes on investment income, and you will have to pay taxes on the income you withdraw from the business that came from its investments. However, controlling your income and sheltering your investments is one of the best perks of having a corporation, and Wealthsimple simplifies this for you!
The Wealthsimple investing experience
Once you sign up for a Wealthsimple account, you’ll want to set up an automatic transfer from your back to Wealthsimple. We suggest opening an account with at least $100. Then set up a weekly or monthly transfer to keep investing for the long term. Once your money is deposited into Wealthsimple, you don’t have to take any action. They invest it for you!
On your Wealthsimple dashboard, you’ll be able to see your portfolio’s performance over time. You can toggle between 3 months, 6 months, the past year, and all time. It will let you know your current portfolio value and your earnings since you started investing.
The Wealthsimple Mobile app
You’ll be able to view your Wealthsimple account on the web, but the best place to get all your info is the mobile app. The dashboard will display the same info about your portfolio performance, but you’ll also be able to easily navigate to articles and FAQ.
One of my favorite things inside the app is the Wealthsimple Money Diaries. These have been one of my favorite financial series of all time. I can’t get enough of peeking into how other people manage their money.
There’s no such thing as fee-free investing, so Wealthsimple’s price tag is very competitive. On a $50,000 portfolio, you’ll only pay $250 in management fees per year. It’s significantly lower than traditional mutual funds, which can charge upwards of 3%. Likewise, even if you opt to manage your own portfolio in a self-directed account, you’ll still pay trading commissions.
For a completely hassle-free investing experience, plus the beautiful user interface Wealthsimple offers, it honestly cannot get any better for the price.
The Wealthsimple Smart Savings Account
In addition to robo-advising investment services, Wealthsimple also offers a high-interest savings account. The Wealthsimple Smart Savings Account boasts a very attractive 2.00% interest rate. It also offers no minimum balance requirement, unlimited transactions, and no fees. You can see how the Smart Savings Account stacks up against other High-Interest Savings Accounts here. (Spoiler: it does pretty well!)
The balance in your Wealthsimple Smart Savings Account does count towards your Wealthsimple Black status. So keeping a few extra dollars here can help bring you nearer to that $100,000 threshold!
Is my money safe with Wealthsimple?
Yes, your money is safe with Wealthsimple! When you invest with Wealthsimple, your assets are actually held by Canadian ShareOwner Investments Inc., Wealthsimple’s custodial broker. ShareOwner is regulated by IIROC and a member of the Canadian Investor Protection Fund (CIPF). Your account is protected up to $1,000,000 if the brokerage were to go insolvent. To learn more, check out the CIPF website.
Your invested assets with Wealthsimple are not CDIC insured because CDIC does not insure brokerages. However, the Wealthsimple Smart Savings Account does qualify and is CDIC insured. CDIC protects up to $100,000 of eligible deposits at member financial institutions, of which Wealthsimple is one.
Is Wealthsimple a good investment?
Wealthsimple is a GREAT investment. In our opinion, everyone should invest their first $10,000 with Wealthsimple. This is the perfect way to get your feet wet investing in the stock market. You’ll watch your balance fluctuate as the market changes, earn dividends, and watch your money grow.
Once you’ve been investing for a while, you might want to try your own hand at the stock market. At this point, you could sign up for Wealthsimple Trade or another discount broker like Questrade. Alternatively, you might find you love the worry-free life of not having to follow the stock market, in which case you never have to change a thing!
Final thoughts on Wealthsimple Invest
I hope you enjoyed this Wealthsimple Review. And I hope you enjoy Wealthsimple as much as I do! I’ve been investing with Wealthsimple for over a year and I love watching my account grow.
Leave a comment below letting me know what you’re investing for. Tell me if there are any other financial reviews you’d like me to do next!