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Best Robo-Advisor Apps in Canada 2020

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Best Robo-Advisor Apps in Canada 2020

Written by Priyanka

Best Robo-Advisor Apps in Canada 2020

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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

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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.

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  

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WealthBar

WealthBar’s premise is based on providing regular individuals with “millionaire style” investment opportunities. They offer brand name funds that offer great value and are less likely to be volatile. 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. WealthBar also has a feature called “cleantech” which lets you create a portfolio that is socially conscious.

Who is WealthBar for? 

WealthBar 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.

Pricing

WealthBar’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%

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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.

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. 

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. 

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

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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. 

Pricing
  • All accounts cost $4.99/month.

Robo-Advisor Summary

FeesMER fees Minimum Amount Dividend Reinvestment
Wealthsimple0.4% – 0.5% per year0.2% $0.00 Yes
WealthBar 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

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
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.

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.

Portfolio rebalancing

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

Stocks

When you buy a stock, you are buying a share of a company. 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.


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