Best Robo-Advisor Apps in Canada 2021

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Best Robo-Advisor Apps in Canada 2021

Written by Priyanka Correia
Fact-checked by Caitlin Wood

Best Robo-Advisor Apps in Canada 2021

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Investing Robo-advisor

What Is a Robo-Advisor?

With technology growing in ever more clever ways, it’s no wonder people are trusting robo-advisors with their investment goals. Robo-advisors are low-cost financial investment platforms that invest and manage money for you. They are equipped with a complex mathematical algorithm that looks at the information you provide to create a diverse investment portfolio that optimizes your goals. If you are a beginner investor but are interested in investing your money; robo-advisors are a great option. 

How Do Robo-Advisors Work? 

Robo-advisors use your account information to understand your risk tolerance, income, and investment goals. With that information, robo-advisors will put your information into their algorithm and create an investment portfolio that matches your needs. Asset allocation is an investment strategy that robo-advisors will use to diversify your money across the stock market using exchange-traded funds, or ETFs. Meaning, robo-advisor will not put your investments into volatile assets if you are a risk-averse person.

Robo-Advisors vs. Financial Advisors

Both robo-advisors and financial advisors have their benefits and drawbacks. Depending on what you’re looking for either one may work for you. 

Choose a Robo-Advisor if: 

  • You’re looking to invest a small amount of money, robo-advisors allow you to own a fraction of the ETF share rather than buying the whole share 
  • You don’t want to pay high fees 
  • You want your investments on autopilot
  • You don’t mind slow returns
  • You want personal advice. Some robo-advisor apps give you access to financial planners if you have any questions or concerns 

Choose a Human Advisor if:

  • You’re looking to invest a large amount of money 
  • Don’t trust online investments
  • Have no problem paying more for value
  • You’re interested in using risk strategies to get higher returns
  • If you want to personally manage your investments

Financial advice and life lessons to learn from successful billionaires, check this out.

Robo-Advisor Summary

FeesMER feesMinimum Amount Dividend Reinvestment
Wealthsimple0.4% – 0.5% per year0.2% $0.00 Yes
CI Direct Investing 0.6% – 0.35% per yearETF: 0.26% – 0.32%
Private: 0.83% – 1.22%
$1000Yes
Nest Wealth$20 – $80/month$0.00Yes
QuestWealth0.25%0.11% – 0.23%$1,000Yes
Justwealth4.99$/month$5,000Yes

Top 5 Best Robo-Advisor Apps

It can be hard to navigate your way through the plethora of robo-advisors available in Canada. To help you come to a decision, below is a brief introduction of some of the best robo-advisor apps you should check out.

Wealthsimple

Wealthsimple is a Canadian online investment app that allows the general public the ability to invest without the work and effort of managing it. Wealthsimple creates a diverse portfolio of investments by investing your money across the global stock market using ETFs. They customize your portfolio based on your risk tolerance and financial goals. It also gives socially conscious people the choice of investing in socially responsible and halal investments. Lastly, Wealthsimple also offers high-interest saving products and features like tax-loss harvesting and finance. 

Who is Wealthsimple for?

With no minimum investment required, Wealthsimple works great for beginners. If you want to learn how robo-advisors work, Wealthsimple is a great place to see how your money will be invested.

Wealthsimple Pricing

Wealthsimple offers three simple, as their name suggests, pricing plans that you can opt for.

  • Basic – offers a 0.05% fee for accounts under $100,000.
  • Black – offers a 0.04% fee for accounts between $100,000 to $500,000.
  • Generation – offers a 0.04% fee for accounts over $500,000  

Learn More

CI

CI Direct Investing

CI Direct Investing’s premise is based on providing regular individuals with “millionaire style” investment opportunities. They offer their clients the ability to invest in brand name funds that offer great value and are less likely to be volatile. Currently, they offer two types of portfolios: 

  • a low-cost ETF portfolio 
  • a private investment portfolio

Their approach to investing is based on a long-term vision. They shoot for low-risk investments that will provide their clients with portfolios that generate cash-flow in the long-run despite market dips. CI Direct Investing also has a feature called “cleantech” which lets you create a portfolio that is socially conscious.

Who is CI Direct Investing for? 

CI Direct Investing is great for people who know a little bit more about the stock market and are looking to invest in assets that are more premium.

CI Direct Investing Pricing

CI Direct Investing’s pricing depends on how much you invest. Wealth bar has structured their pricing per year as follows: 

  • First $150,000 – 0.6%
  • Next $350,000 – 0.4%
  • Above $500,000 – 0.35%

Learn More

Nest Wealth

Nest Wealth

Nest Wealth is one of Canada’s leading robo-advisors that first came out in 2014. Nest Wealth uses smart technology to create personalized investment solutions that will help bring you closer to your financial goals. They believe that money should be invested in multiple asset classes and across different industries in order to reap the best and safest benefits. In fact, all investments are equipped with Nest Wealth’s automatic balancing feature which allows the app to diversify your portfolio so you can get better returns at a lower risk. 

Who is Nest Wealth for? 

Nest Wealth is great for people who are older. Why? Well, Nest Wealth offers its members a low-risk investment using passive investment strategies. Rather than trying to beat the market, they create low-risk portfolios to reach your goals.

Nest Wealth Pricing

Nest Wealth charges a fee of $20 – $80 dollars a month depending on how much you invest. As such, it’s not great for small investors who may find their returns aren’t big enough to support a $20 charge a month. However, a fixed cost for big investors is much more cost-effective than rates that go by percentage. 

Quest Wealth

QuestWealth

QuestWealth is offered by Questrade, an online brokerage that first established itself in 1999. It provides individuals with the ability to grow their wealth and take control of their financial future. It gives users five options to choose from when signing up for QuestWealth Portfolios. These options range in risk from aggressive to conservative and everything in between. So whether you’re risk-averse or not, there’s a portfolio that will match your needs. They also offer socially responsible investing options to the socially conscious. Furthermore, if you like to do things yourself,  QuestWealth also allows you to take the reins and invest your money according to your own strategy. 

Who is QuestWealth for? 

QuestWealth is best suited to individuals who prefer to have a hand in their investment choices. 

QuestWealth Pricing 

  • 0.25% for accounts with $1,000 – $99,999
  • 0.20% for accounts with $100,000+

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Justwealth

Justwealth

Justwealth aims to provide its members with affordable yet customizable investments, which are hard to come by using traditional methods. They currently work with 7 different ETF providers who give them access to 29 different ETFs allowing them the ability to create over 60 different portfolios. So, no matter your investment goals there’s a portfolio that will match your needs and risk tolerance. Once your portfolio is set up, a registered portfolio manager will be assigned to take care of your account, giving you individual attention and care. Moreover, when you invest with Justwealth, your assets (up to $1,000,000) are protected by the Canadian Investor Protection Fund.

Who is Justwealth for?

Justwealth is best suited for people looking for variety in portfolios and appreciate a more professional hand managing their investments. 

Justwealth Pricing

  • All accounts cost $4.99/month.

Learn More

Frequently Asked Questions

What kind of accounts can I invest in with a robo-advisor?

Depending on the robo-advisor you choose you’ll have the choice to invest in various accounts. For example, some robo-advisors allow you to invest in RRSPs, TFSAs, RESP, RRIF, LIRA, non-registered accounts, joint accounts and business accounts. 

Should I invest using a robo-advisor or a financial advisor?

A financial advisor is a better choice if you have a large amount of money to invest or if you want to actively manage your investments. Robo-advisors are great for beginners looking to passively grow their income over a long period of time. They’re also very affordable and require as little as $1,000 to begin investing.

What is an ETF?

An ETF (exchange-traded funds) is a portfolio that consists of multiple securities like stocks and bonds. This makes ETFs less risky and affordable as you are able to buy and sell shares without having to buy the entire stock individually.

Bottom line

If you’re new to investing, robo-advisors are safe and easy to use. They will create and manage your money based on your risk tolerance and investment goals. However, if you’re looking to customize your investments or prefer to have greater control over them, a human advisor is suggested. Regardless, if you choose a human advisor or a robo-advisor, investing your money is important to building a more stable financial future. Just like an investment portfolio, diversifying your money and assets will help build your financial worth and strengthen your financial health.

Investing Glossary

Terms
Annual Report

A yearly report provided by a company to its shareholders that discusses the business activities and finances from the past year.

Annuity

An annuity is a financial product that pays out a guaranteed income. It is used mainly by those who are putting a retirement plan together. When an investment is made in an annuity, it then makes regular payments at a date or dates in the future to create an income stream for retirement.

Asset Allocation

A type of investment strategy that aims to balance risk and rewards by adjusting the portion of money invested in different types of assets in an investment portfolio. The specific investment strategy depends on the risk tolerance, time frame and goals of the investor.

Bond Fund

A mutual fund that invests in bonds or similar debt securities, also known as a debt fund. 

Bond Maturity

The term to describe time passing throughout a bond’s term. At the bond’s maturity date, the end of a bond’s term, the principal and interest will become due to the investor. 

Bonds

A type of debt security or financial instrument that represents a loan made between an investor and a borrower. The borrower is often a corporate or government body. Bonds are lower risk and yield less return than other types of investments. 

Common Stock

A type of equity ownership in a corporation. Holders of common stock vote on corporate policies and elect the board of directors.

Diversification

Investors are typically encouraged to diversify their loan portfolios in order to hedge against risk and garner the highest returns since different assets react differently to the same economic events. Diversification refers to a portfolio that consists of various assets that are not correlated with one another.

Dividend

An amount of money that is paid on a regular basis by a company to their shareholders. The amount paid comes out of the company’s profits.

Dividend Yield

The ratio of a company’s dividend per share to the price per share. The dividend yield communicates how much dividend income you received in relation to the price of the stock. The ratio is most commonly expressed as a percentage.

Enterprise Value

A measure of a company’s total value typically used as an alternative to equity market capitalization. The calculation considers market capitalization, short term debt, long term debt, and cash on hand.

Equity Fund

A mutual fund that invests primarily in stocks, also known as a stock fund.

ETF

ETF stands for exchange-traded funds. To put it simply, an ETF is like a mutual fund where it is comprised of securities like stocks and bonds and, like stocks, can be traded on the stock exchange. You are able to buy and sell shares of the ETF, like a stock, without having to buy each bond, stock and other securities separately. You own a part by buying the ETF which is comprised of these securities.

Guaranteed Investment Certificate (GIC)

A GIC is considered a low-risk investment vehicle because it is guaranteed. It works similar to a savings account because the money deposited in it earns interest.

Index Funds

A type of mutual fund that is built to match or track a financial market index, such as S&P 500. Index funds are low risk which makes them safe investments, but there is little opportunity for big earnings.

Investment

When an individual or entity contributes money towards something with the intention of turning a profit or gaining a material outcome, it is considered an investment. All of the money invested would be considered an individual or entity’s investments.

Investment Advisor

An individual or group that manages money or makes financial suggestions on behalf of another individual or group in exchange for a fee. 

Market Cap

The market value of a public company’s outstanding shares. The market cap is calculated by multiplying the share price by the outstanding number of shares.

MER

MER stands for the management expense ratio. The management expense ratio includes management fees, operating expenses, and taxes associated with a fund.

Mutual Funds

A mutual fund is a portfolio of different securities (stocks, bonds, short-term debts) that many people can invest in. Rather than diversifying your investments by buying different securities yourself, you can invest in a mutual fund. Depending on how much you invest, you will own a share of the mutual fund. This allows investors to have their hands in different stocks with one transaction.

Number of Holdings

The sum of all holdings types in a fund, investment or portfolio. For example, if you have a portfolio with common stock, bonds and preferred shares, the number of holdings would be three.

Par Value

Par Value – Par value refers to the value of a stock as stated on the stock certificate or the corporation’s articles of incorporation. The par value per share is typically of very little or no value.

Portfolio Management

The professional science and art of executing investment decisions and performing investment activities on behalf of an individual or institution.

Portfolio Rebalancing

Portfolio rebalancing is the act of consistently balancing your investments according to your needs by buying and selling assets.

Preferred Stock

A type of equity ownership in a corporation. Holders of preferred stock have a higher priority when it comes to dividends or asset distribution when compared to common stockholders.

Premium Bond

A premium bond is one that costs more than its face value. Bonds may trade at higher values as a result of a higher interest rate compared to current market rates.

Price to Earnings Ratio

The ratio of a company’s share price to earnings per share. This ratio is used to determine if a business is overvalued or undervalued.

Price-to-Book (P/B) Ratio

The P/B ratio refers to a company’s stock price divided by its book value per share (total assets less liabilities). Low P/B ratios may be a sign of an undervalued stock.

Reinvest Dividends

The process of investing dividend cash payments into the company or fund that provided that dividend.

Risk Tolerance

Risk levels vary with different investments. While some investments come with low risks, others are riskier in nature. Risk tolerance refers to the amount of risk that an investor is willing or able to undergo when investing in a particular investment vehicle.

Share Price

The price of a sole share in a company. A share price is not fixed and fluctuates depending on market conditions.

Shareholder Value

The value brought to equity owners of a corporation as a result of management’s actions to increase sales, free up cash flow, boost earnings, pay out dividends, and earn capital gains for shareholders.

Stockbroker

A professional who purchases and sells securities on a stock exchange for their clients.

Stocks

A type of debt security or financial instrument that represents ownership share in a company. Issuing stock is a way for companies to raise money and investors to turn a profit. Stocks carry more risk, but have the possibility for greater returns. Once you own a share of the company you can gain money through dividends paid out by the company or by selling the stock for a higher price than when purchased.

Tax-loss Harvesting

The practice of selling an asset or security that has incurred a loss with the intention of offsetting taxes on capital gains and income. Using the proceeds of the asset or security sale, a similar asset or security is purchased to maintain optimal returns and investments.

Volatility

The statistical level of variation of a trading price over time. Often, volatility is measured using the standard deviation of logarithmic returns. When volatility is high, the risk of investment is also high.

Yield to Maturity (YTM)

Yield to maturity refers to the total anticipated return on a bond if it is retained until maturity. If an investor holds onto a bond until it matures, the YTM is the rate of return of an investment if all scheduled payments are made and reinvested at the same rate.


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