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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.
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.
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.
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.
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.
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.
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.
Fees | Basic: 0.5% on investments under 100k Black: 0.4% on investments over 100kGeneration: 0.4% on investments over 500k |
MER | 0.1% to 0.2% |
SRIs | 0.25% to 0.4% |
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.
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.
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.
Basic | Black | Generation | |
Fees | 0.5% per year | 0.4% per year | 0.4% per year |
Minimum investment | Under $100,000 | $100,000 – $500,000 | $500,000 and up |
Reinvests dividends | Yes | Yes | Yes |
Automatic rebalancing | Yes | Yes | Yes |
Financial advice | Yes | Yes | Yes |
Automatic deposits | Yes | Yes | Yes |
Portfolio review | Yes | Yes | Yes |
Tax-loss harvesting | No | Yes | Yes |
Tax-efficient funds | No | Yes | Yes |
Comprehensive financial planning | No | No | Yes |
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.
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.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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