Investing is a great way to save for the future. Either for retirement or a big purchase, investing can give some returns instead of holding cash which yields little to zero returns.
Wealthsimple was founded on 2014 with the aim of making investing easier. Wealthsimple Invest is introduced initially. On 2019, Wealthsimple Trade was launched and some other Wealthsimple products are also launched afterwards.
In summary, Wealthsimple Trade gives you the choice of what specific stocks or ETFs to own, and you can withdraw or change stocks anytime. On the other hand, Wealthsimple Invest gives you a customized portfolio based on a survey you filled on how much risk you are willing to take.
Wealthsimple Invest will automatically invest your money on a diversified asset classes based on your risk tolerance and investing goals. Wealthsimple Trade has to be managed manually and you can choose what specific stocks and ETFs to invest in, and you can sell stocks or ETFs anytime you choose to.
| Wealthsimple Trade | Wealthsimple Invest |
| Buy or sell individual stocks anytime | Deposits will automatically be invested to diversified stocks and bonds. |
| $0 fees when for every buy/sell of Canadian stocks | Fees applies on a per year basis (0.50% per year) |
| 1.5% exchange rate fee for every buy/sell US stocks | Withdraw anytime |
| Withdraw anytime | Close an account anytime |
| Close an account anytime | No minimum to start investing |
| No minimum to start trading | Managed for you by Wealthsimple for 0.50% fee per year |
| Manually managed |
Wealthsimple Fees
| Wealthsimple Trade | |
| Stock/ETF Trades (Buy or Sell) in CAD | Free (no limit) |
| Stock/ETF Trades (Buy or Sell) in USD | 1.50% per buy or sell |
| Deposits | Free (no limit) |
| Withdrawals | Free (no limit) |
| Monthly Fees | Free (no limit) |
| Wealthsimple Invest | |
| Management Fee (below $100,000) | 0.50% per year |
| Management Fee (above $100,000) | 0.40% per year |
| Deposits | Free (no limit) |
| Withdrawals | Free (no limit) |
| Monthly Fees | Free (no limit) |
| Wealthsimple Crypto | |
| Bitcoin trades | 1.5% plus spread |
| Ethereum trades | 1.5% plus spread |
| Deposits | Free (no limit) |
| Withdrawals | Free (no limit) |
| Monthly Fees | Free (no limit) |
Wealthsimple charges $0 fees for deposits, withdrawals, and no monthly fees. Wealthsimple Trade charges 1.5% fee for every buy or sell trades in US stocks or ETFs, while trades in CAD stocks or ETFs are free. Wealthsimple Invest charges a management fee of 0.5% per year for investments less than $100,000.
In contrast, big banks charges $9.95 flat fee for US and CAD trades. For this reason, most people choose to use Wealthsimple Trade for Canadian stocks and ETFs since there is no fee. Also, smaller US stock purchase may be cheaper.
For example, buying a $200 stock will have a fee of $3 (1.5%) instead of $9.95 on the big banks. Larger US stock trade of $5,000 will result to a $75 fee (1.5%). Wealthsimple Trade is more expensive for larger US stock trades.
ETFs charge additional fee which typically ranges from 0.05% to 0.80% per year. Common ETFs like S&P 500 ETFs charges the lowest ETF fees at around 0.10% while uncommon ETFs charges higher fees of around 0.80%. ETF fees are collected by the fund that offered the ETF, and is automatically reduced on the price of an ETF.
Investment Options on Wealthsimple Trade vs Wealthsimple Invest
Wealthsimple Trade
On Wealthsimle Trade, people can invest on individual stocks and ETFs in US and Canada. At this time, they do not offer mutual funds and bonds on the platform. These stocks and ETFs can be bought or sold when the market is open (Monday to Friday (9:30am to 4:00pm ET)
Stocks are ownership of a company. For example, Tesla has around 960 million stocks out there. It means that ownership to Tesla is divided to 960 million parts. Elon Musk owns more than 220 million of Tesla stock as of March 2021, that makes him 20% owner of the company.
The most common function of an ETF is for diversification of stocks or other assets. For example, there are ETFs that tracks the return of the S&P 500, an index that includes 500 biggest stocks in America. Owning an S&P 500 ETF is an option instead of buying 500 stocks one by one.
Wealthsimple Invest
Investments on Wealthsimple Invest accounts are a combination of government and corporate bonds, gold, emerging markets, foreign stocks, global stocks, US stocks, and Canadian stocks.
Wealthsimple Invest will automatically invest your money to these assets when funds are deposited. The allocation on how much investment for each class will be based on the survey they ask you to fill out when opening an account.
For instance, a low risk portfolio will put more allocation into bonds and less into stocks, whereas riskier portfolio will put more funds into stocks than bonds.
Based on Wealthsimple Invest website, here are the allocation for each asset depending on how much risk a person is willing to take.
Asset allocation for each Risk Level
| Assets | Conservative | Balance | Growth |
| Gov’t bonds | 39.8% | 25.8% | 12.5% |
| Corporate bonds | 27.5% | 11.3% | 0.0% |
| Gold | 2.7% | 2.9% | 2.5% |
| Emerging Markets | 8.6% | 15.0% | 15.9% |
| Foreign Stocks | 6.4% | 13.3% | 21.3% |
| Global Stocks | 8.6% | 10.0% | 10.6% |
| US stocks | 4.3% | 15.0% | 26.6% |
| Canadian stocks | 2.1% | 6.7% | 10.6% |
When actually investing, Wealthsimple Invest will recommend something in between of Balanced and Conservative portfolio, or something between Balanced and Growth portfolio.
Government and Corporate Bonds
Government and Corporate bonds are debts that government and corporations issued, in exchange for fixed interest payments, known as yield. Government bonds is thought of as the least riskiest since they can just print money if they cannot afford debt payment when maturity comes.
You may notice that the low risk portfolio has a combined 67.3% on government and corporate bonds while growth portfolio has only 12.5% in bonds. Bonds is thought of as less riskier asset than stocks by a lot of people.
Global, Foreign, US and Canadian Stocks
Stocks are ownership to companies. US and Canadian stocks are ownership to companies that are based on US and Canada. An example of US stocks are Apple, Google, and Microsoft stock.
Global and Foreign stocks are mix of different stocks around the world. This may included stocks in UK, France, Germany, etc.
Emerging Markets
An emerging market is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or were in the past. (Source)
Emerging markets are mostly Asian, Eastern European, and some South American countries. Wealthsimple do not specify whether stocks or ETFs on these emerging markets.
Disadvantage of Wealthsimple Invest
Rates on bonds today are at historic low, close to 0% on short term bonds in US. The federal reserve have cut rates to near zero in response to covid, and rates was cut to 1% on 2000 and 2008 financial crash.
Here is a full list of US government yields per maturity lenngths. As of June 13, 2021, 12 month rates are at 0.04%, 5 year at 0.75%, and 10 year rates at 1.46%. On the other hand, inflation are estimated by the Federal Reserve to be 2% per year.
These rates are interest payment per year.
Inflation is an increase on prices. An inflation rate of 2% means a $100 worth of goods will be $102 after a year on average. Assuming an income from bonds of 1%, this is a loss of 1% on purchasing power.
Also, there is currently a lot of talk about the possibility of higher inflation. If inflation became higher than expected, this will result to higher prices. For the most part, bonds are hurt the most in an inflationary environment since most rates are fixed.
For example, a 1% bond while inflation hits 5% will result to a 4% loss in purchasing power since the same goods are 5% more expensive but money only gained 1% interest.
Because of this, a low risk portfolio with around 60% in bonds does not take into account the inflation risk. Bonds may lose value in a high inflation environment.
Taxes on Wealthsimple Invest and Trade
Taxes will depend on the type of account the stocks are inside of. Both Wealthsimple Trade and Invest offers TFSA, RRSP, and Personal accounts. Here is a link to the article I made for full comparison on TFSA, RRSP, and Personal accounts.
Investments inside a TFSA account with either Wealthsimple Trade and Invest accounts are tax free, but deposits are limited up to a certain amount. Otherwise, CRA will charge a 1% a month penalty for amounts above the contribution limit.
Personal accounts is a regular taxable account.
Wealthsimple Invest and Trade Withdrawals
People can withdraw money anytime from Wealthsimple Invest or Trade accounts to a bank account. Withdrawals from Invest or Trade accounts usually take 2-5 business days to complete and appear on a bank account.
Before withdrawing money from a Wealthsimple Trade account, a stock or ETF has to be sold first, and it takes 2 business days* for the cash to be available for withdrawal after the day it is sold. In total, withdrawing stocks or ETFs from Wealthsimple Trade takes 4-7 business days.
*Stock trades takes 2 business days to settle on US and CAD markets. The actual stocks are transferred from an investment dealer to other investment dealer after 2 business days.
Is Wealthsimple good for beginners?
Wealthsimple is good for beginners since there is no minimum amount to get started while other platforms may require an initial deposit of $1,000 or more. Also, Wealthsimple platform is designed for beginners and easier to navigate while other platforms may be overwhelming.
Wealthsimple is a good platform to start with and diversifying with other platforms after a year of experience may be an option.
How can I start investing with little money in Canada?
To invest with little money, a person can start with a popular stock that a person has some knowledge about like a stock on a company where a person likes to use its products or services. Also, one can start with an S&P 500 ETF to diversify among 500 stocks.
Most beginners lose money on the first time investing. Starting with with little money may be best to limit losses and gain experience at the same time.
Is Wealthsimple like Robinhood?
Wealthsimple and Robinhood are have similar user interface since they are designed for beginners. Wealthsimple Trade only offers stocks and ETFs and charges 1.5% fee for US stocks and ETF, while Robinhood offers stocks, ETFs, and cryptocurrencies for free. Wealthsimple also offers robo-advisor to autatically invest money.
Wealthsimple trade or invest?
Wealthsimple Trade is best for people that wanted to self managed their investments and choose what specific stocks and ETFs to invest in. Wealthsimple Invest is best for people that wanted for money to be automatically invested in a diversified stocks and bond, based on your investment goals and risk tolerance.