2020 Wealthsimple Trade Review: Start investing for free

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Wealthsimple Trade is a zero-commission, no-minimum brokerage account that lets you build a self-directed portfolio investing in the stock market. This is the perfect low-cost option for young investors or people who don’t have a lot of cash on hand but want to try their hand at managing their own portfolio.

Wealthsimple Trade is a separate app from Wealthsimple. So if you’re already a Wealthsimple customer, you’ll have to download a second app to your mobile advice to start trading. 

What is Wealthsimple Trade?

Wealthsimple Trade is a $0 commission trading platform that lets you buy and sell individual securities on the stock market.

Unlike the Wealthsimple robo-advisor platform, Wealthsimple Trade is a self-directed portfolio. This means no one is managing your portfolio for you. Instead, you are responsible for making your own investment decisions as to what to buy and sell on the stock market.

Now, this is fine if you know what you’re doing. However, if you’re making trade decisions based on stock tips from friends & strangers, or just going on a hunch or a feeling, you’re not investing, you’re gambling. Self-directed brokerage accounts like Wealthsimple Trade are for experienced investors that know how to pick stocks. If you’re new to the stock market, stick to Wealthsimple Invest!

Who is Wealthsimple?

Wealthsimple is a fintech company that helps people start investing in the stock market. Before Wealthsimple Trade was introduced, Wealthsimple was solely a robo-advisor platform.

A robo-advisor is an online investment tool that automatically invests in the stock market for you. You don’t need any investment knowledge, all you need to do is deposit money into your account and Wealthsimple will invest it on your behalf, based on your risk tolerance and financial goals.

Robo-advisors are also the perfect introduction to investing in the stock market. You will learn how the stock market works and get used to seeing your balance fluctuate as market prices change, but since someone else is managing the portfolio, you won’t be able to make reactive or emotional decisions to what’s happening.

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Why would you want a DIY self-directed portfolio?

Because you’re in charge of your investment portfolio when you use a brokerage account like Wealthsimple Trade, you can make any investment decision you want. Your portfolio is completely in your control. Instead of handing the reigns over to a fund manager, you now have the power to pick and choose individual stocks and ETFs.

When you have the freedom to make your own investment decisions, you increase your risk but you also greatly increase your potential return. Wealthsimple’s robo-advising platform appropriately diversifies your investment across a broad collection of stocks. It is expected to deliver a reasonable, consistent return of around 6%.

However, it’s not unusual for a single stock to return 20% or even 50% or more. But you have to own the stock to get that return. Wealthsimple Trade will give you the freedom to buy individual investments and hopefully capture those larger gains.

That’s said, self-directed investing isn’t for everyone. It takes time, practice, skill, and research. Failing to invest in any of those before you invest money in the market is a sure way to lose your cash fast. If you have no desire to monitor stock tickers and put your money on the line, stick to Wealthsimple’s robo-advising platform and skip opening an account with Wealthsimple Trade.

How does Wealthsimple Trade compare to other online brokerages?

Here’s what Wealthsimple Trade has above other brokerages:

  • No commissions
  • No account minimum
  • Unlimited trades

Brokerage accounts at big banks typically charge anywhere from $10 to $30 per trade. More competitive low-cost online brokerage accounts might charge only $5. Being able to trade for $0 used to be totally unheard of!

Likewise, most brokerages require at least $1,000, and often as much as $5,000, to open an account. They also tend to charge fees if you fall below a certain balance. Without these barriers, young traders with very little savings can access the stock market much more easily.

but then how does Wealthsimple Trade make money?

How does a brokerage charging no commissions bring turn a profit? Well, margins are thin! Wealthsimple Trade earns its cash on the 1.5% currency conversion fee when you’re trading CAD for USD stocks. 

Can you trade options on Wealthsimple Trade?

Sadly, no you cannot use Wealthsimple Trade to trade options. As of right now, you can only trade common stocks. Options trading is not available on Wealthsimple Trade. 

This is fine if you’re not an experienced trader and want to stick to buying and selling individual shares of companies in your portfolio. However, 

Downsides to Wealthsimple Trade

Before you make the leap to this new investing platform, there are a few downsides you need to be aware of. Here are some things that might be deal-breakers for you:

Limited Registered Accounts

They just added Tax-Free Savings Accounts (TFSA) and the Registered Retirement Savings Plan (RRSP), but the Registered Education Savings Plans (RESP) is not yet available. It’s likely these accounts are coming in the future. In the meantime, it’s lagging behind larger brokerages that do offer registered accounts.

Not all stocks are available for trading

Additionally, Wealthsimple Trade has some functional limitations. You cannot buy and sell every security. Not every single one is supported by the brokerage underlying Wealthsimple Trade. 

I’m still shocked that I can’t find Disney ($DIS) on the platform, but it’s just one of many familiar companies you will need to go elsewhere to purchase their shares. 

Lacking essential features on other trading platforms

Wealthsimple Trade lacks the functionality and trading tools native to other brokerages. Experienced traders will likely find it severely lacking compared to other discount brokerages like Questrade. 

If you like to use drawing tools on your charts or expect a lot of essential stock statistics available in one place, this platform is going to leave you wanting. The platform errs towards beauty and simplicity, but actively trading stocks is a complex endeavor. Leaving information out just makes it harder to navigate, not easier!

You can read an in-depth comparison here: Wealthsimple Trade vs Questrade

How to get Wealthsimple Trade

Getting started with Wealthsimple trade is ridiculously easy, particularly if you’re already a Wealthsimple customer. Even if you’re not, you only have one extra step: adding an account. Here are the four easy steps to get started with Wealthsimple Trade:

  1. Sign-up for Wealthsimple Trade here
  2. Download the app from the App Store
  3. Fund your account from a linked bank account
  4. Make your first trade!
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About Author

Student debt killer, super saver, and stock market addict. BSc. in Chemistry from the University of Alberta, MBA in Finance from the University of Calgary. CEO x 2 and MOM x 1. Currently residing in Calgary, Alberta, Canada, but hooked on travelling.

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