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Wealthsimple is an online investment company that was first established in 2014. Its founder Micheal Katchen created Wealthsimple with the idea of making investing accessible to people no matter their age or net worth. As it turns out, despite being only 6 years old, it has flourished and is now considered as one of the world’s leading robo-advisors. Whether you are young, new to investing, or simply looking for a hands-free investment, Wealthsimple may be the platform for you. 

What Is Wealthsimple’s Investing Approach?

Wealthsimple believes in passive investing, which is an investing approach that believes in growing wealth over time. This approach comes from a theory that was developed after Nobel Prize winner Harry Markowitz. Markowitz had won in the 1950s for proving long-term strategies were the best way to grow wealth. This idea of long-term growth picked up and soon developed the Modern Portfolio theory, which Wealthsimple now uses. The Modern Portfolio Theory is a passive investing approach that has proven to be the most reliable way to invest and grow your money. 

Wealthsimple embraces this theory by curating portfolios that use low-cost ETFs that aren’t dependent on each other. By diversifying your investment portfolio, Wealthsimple minimizes the volatility and risk of individual stocks and is thus able to optimize your investment returns over time. 

How Do You Invest With WealthSimple? 

To invest with Wealthsimple, you’ll have to create an account with them by filling out an online application, which consists of 5 main parts. 

  1. Sign up – To create an account you must first create a username and password.
  2. Personal details – After creating your username, you’ll have to provide some personal details including your name, date of birth, and SIN.
  3. Customize your Portfolio – In order to create an investment portfolio that matches your risk tolerance and financial goals, you’ll have to answer some questions regarding that. 
  4. Agreement – Once you’ve entered your details you’ll have to e-sign an Investment Management Agreement to complete the application. 
  5. Funds – Lastly, you’ll need to connect your bank account to Wealthsimple so that you can add funds to your account and start investing. 

Depending on your risk tolerance, you may have to have a short conversation with one of Wealthsimple’s portfolio managers to discuss your investment experience and goals. This is called a “suitability call”, and it is used to ensure your investment needs are being met. If all is well, it should take no more than 5 business days to get your account up and running. 

How Does Wealthsimple Work? 

With your account up and running, you’ll be given a portfolio that is tailored to your goals and tolerance for risk. That means you’ll have an investment portfolio that reflects any one of the following investment styles.

  • Conservative –  Best for individuals who want stability and low risk. The conservative portfolio usually yields a modest return and is best for long term goals. 
  • Balanced – Best for individuals who want low to medium risk. The balanced portfolio is great for people who want to test the waters and see what kind of returns they may yield from some added risks.
  • Growth – Best for individuals who are comfortable with medium to high risk. While the Growth portfolio experiences the most fluctuations, it is also the type of portfolio most likely to earn a higher return.

While the risk level and potential returns differ, the investing approach used is the same. All portfolios are diversified in a way that will maximize returns and reduce risk according to your tolerance. Your portfolio will continue to be managed by Wealthsimple’s algorithm to ensure your investments are performing well by rebalancing your investments as the value of your assets change and by reinvesting any dividend earned to minimize risk and maximize profits.

How Much Does It Cost To Invest With Wealthsimple?

Wealthsimple has a 3 tier cost system. The more you invest the more you’ll be charged. Along with the fees, there’s also a 0.1% to 0.2% fee built into the ETFs your money is invested in. Compared to traditional investment advisors who typically charge between 1% to 3%, these fees are quite inexpensive and also come with additional features like tax and money-saving tools.

FeesBasic: 0.5% on investments under 100k Black: 0.4% on investments over 100kGeneration: 0.4% on investments over 500k
MER0.1% to 0.2% 
SRIs0.25% to 0.4%

How Much Can I Customize My Investment Portfolios?

Wealthsimple tailors your portfolio according to your tolerance for risk and investment goals. While you cannot choose the exact ETFs you want to invest in or the amount, Wealthsimple does have plenty of investment portfolio options that can cater to your desired risk level and goals. Your account is also equipped with optimization features like automatic rebalancing, tax-efficient funds, and tax-loss harvesting. Moreover, you have the option of investing in ETFs that are considered socially responsible. You’ll also get a report that includes information regarding your net worth, your financials, your cash-flow and a projection of how you can reach your goals.

Perks Of Using Wealthsimple

Low minimum investment amount. One of the biggest barriers to investing is the amount required to be able to invest. While other investment firms require at least a few thousand dollars, Wealthsimple has a minimum of $1, which is in-line with their goal of making investing accessible to all Canadians. 

Socially- responsible ETfs. If you’d like to invest in a way that helps promote socially responsible companies, Wealthsimple has two ETFs: WSRI and WSRD, which exclude the US and global companies involved in weaponry, tobacco, fossil fuels, excessive carbon emitters, and other non socially responsible companies. 

Halal investing. For those who wish to invest in a way that is in line with Islamic values, Wealthsimple has Halal investment options. 

Portfolio review. Ensure your investments are optimized by having an expert review your portfolio for free. They will determine if your investments are diversified in a way that matches your risk tolerance and goals. 

Save Money. Wealthsimple also offers a “Roundup” feature that allows you to invest your spare change. Every transaction you make on your debit or credit card will be rounded up to the nearest dollar. That rounded amount will be used to invest and help you reach your financial goals faster.  

Commission-free stock trades. If you’re interested in trading, you can use Wealthsimple’s Trade app to buy and sell thousands of stocks commission-free. 

Customer service. Though much of Wealthsimple is automated, they understand the need for human support. If you ever have any questions or concerns regarding your investments, you’ll be able to access a real financial expert. 

Who Is Wealthsimple Best Suited For?

Wealthsimple is geared toward Canadians who are young and inexperienced in the investing world. It is particularly popular with millennials who are not just new to investing but also don’t have a huge amount of capital to invest. Wealthsimple is a perfect platform for such individuals as it allows them to grow their wealth without having to worry about actively managing it. 

Overview Of Wealthsimple

BasicBlackGeneration
Fees0.5% per year0.4% per year0.4% per year
Minimum investmentUnder $100,000$100,000 – $500,000$500,000 and up
Reinvests dividendsYesYesYes
Automatic rebalancingYesYesYes
Financial adviceYesYesYes
Automatic depositsYesYesYes
Portfolio reviewYesYesYes
Tax-loss harvesting NoYesYes
Tax-efficient funds NoYesYes
Comprehensive financial planningNoNoYes

Should You Use Wealthsimple Or Work With A Human Advisor 

Though robo-advising platforms are quickly gaining popularity, it doesn’t mean they work for everybody. In general, Wealthsimple’s online investment platform is tailored to beginners looking to invest, but depending on your needs and investment goals, it may work for you. 

You Should Choose Wealthsimple If: 

  • You prefer to have your investments on autopilot. Rather than actively managing your investments, robo-advisors will do all the work for you. 
  • You don’t qualify for a traditional advisor. Many traditional advisors will have a minimum balance requirement you must meet before they’d consider working with you. With Wealthsimple, you can invest no matter how much money you have. 
  • You are risk-averse. Wealthsimple uses a passive investing approach that is built on lowering risk by reducing volatility through diversification.  
  • You are a beginner. Wealthsimple is a great investment tool for young and inexperienced Canadians looking to invest. With Wealthsimple’s algorithm making all your investment decisions, you don’t have to worry about any miscalculations or choosing the wrong stock to invest in.  

You Should Choose A Human Advisor If: 

  • You need human contact. If you are uncomfortable with managing your investments online only and value advice from an investment expert, a traditional or financial advisor could be a better choice for you. 
  • You want to actively manage your investments. If you are more experienced and value the ability to choose where your money goes, then a traditional advisor will be more suited to your needs, as robo-advisors are fully automated and you can’t choose how much of your money goes into each ETF. 
  • Complicated needs – If you have a large sum of money and different sorts of assets you’re looking to invest, the expertise of an advisor will allow you to discuss strategies you can use to grow your wealth. 
  • You want higher returns –  If you’re an experienced investor who wants to use riskier strategies to earn a higher return, a financial advisor is likely the best option for you.

Bottom Line 

Investing is important when it comes to building your wealth and reaching your financial goals. Most Canadians invest in order to save money for a house, retirement, higher education, or any other financial goal that is hard to meet through mere savings. While high-interest savings accounts are an option and can help you save money, it usually doesn’t provide a high enough return. Investing can seem daunting when you’re inexperienced, Wealthsimple makes things simple by automating the entire process. With minimal effort, you too can invest your money and grow your wealth faster than any high-interest savings account. 

Priyanka Correia, BComm avatar on Loans Canada
Priyanka Correia, BComm

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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