Sunday, February 23

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 new investors or people who don’t have a lot of cash on hand, but what 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. However, your existing bank account will already be linked to your Wealthsimple account so you’ll be able to fund your new Wealthsimple Trade profile and get started right away.

If you haven’t heard of Wealthsimple before, read on! You’re going to love them.

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.

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I’m a die-hard self-directed investor, but even I believe everyone should invest at least part of their wealth with a robo-advisor. This is a way to further diversify your portfolio, by keeping some of it out of your hands! 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.

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.

Why would you want a self-directed portfolio like Wealthsimple Trade?

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?

Wealthsimple Trade offers unlimited trades, no commissions, and there is no minimum requirement to open an account. This makes Wealthsimple an attractive option compared to competitors. 

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. Furthermore, most brokerages require at least $1,000, and often as much as $5,000, to open an account and get started investing. Wealthsimple Trade reducing both these financial barriers makes the stock market more accessible to everyone.

But there are downsides to Wealthsimple Trade

Before you make the leap to Wealthsimple Trade, there are a few downsides you need to be aware of. The first major bummer of this platform is that not all registered accounts are available.

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 leaves Wealthsimple Trade behind larger brokerages that do offer registered accounts.

Additionally, Wealthsimple Trade has some functional limitations. You cannot buy and sell every security, as not every single one is supported by the brokerage underlying Wealthsimple Trade. You may find yourself unable to find familiar names. Likewise, 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. 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 Wealthsimple Trade from the App Store
  3. Fund your account from a linked bank account
  4. Make your first trade!

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I just downloaded Wealthsimple Trade, and have been waiting for the markets to open today to get started! I promise a full in-depth review once I have a chance to test it out — but don’t wait for me! There’s nothing holding you back from getting started yourself.

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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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