Wealthsimple Trade in-depth review 2021: The pros and cons

Since making its debut in 2014, Canada’s Wealthsimple has helped to demystify investing for hundreds of thousands of regular people who want to grow their money. The company’s success thus far is unquestionable: As of late February 2021, its AUM (assets under management) have been valued at $8.4 billion, and its online investment management tools have won multiple awards. In March 2019, Wealthsimple introduced Wealthsimple Trade, which immediately attracted attention for its ability to allow Canadians to buy and sell individual stocks and ETFs (exchange-traded funds) with zero commission fees. In late January, Wealthsimple Trade was ranked number one in the Canadian Apple App Store, and has remained in the top 10 ever since.

Wondering if Wealthsimple Trade is right for you? Here, we present the pros and cons of Wealthsimple Trade, as well as take a deeper dive into its features and how it works, so you can decide. 

Wealthsimple Trade* pros and cons

The pros

  • Wealthsimple Trade is the only commission-free trading platform in Canada. Most of its competitors charge a minimum of $4.95 and up to $9.99 (or more) per trade
  • You get free access to thousands of stocks and ETFs listed on North America’s largest exchanges, such as the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX), as well as cryptocurrencies, such as bitcoin and ethereum, too.
  • There are options for investing within tax-free savings accounts (TFSAs) and registered retirement savings plans (RRSPs) as well as non-registered accounts.
  • When you sign up, you will receive a bonus of up to $25 when you invest your first $100.
  • The Wealthsimple Trade app is attractive, clean and intuitive; even first-time investors will find it easy to use. The “browse” feature on the app sorts trending stocks by different markets and categories. While the platform doesn’t allow users to automate dividend reinvestments, it’s very easy to do so manually. Dividends are simply added to your cash funds, which you can then use to buy more shares in just a few clicks.
  • Wealthsimple is a trustworthy financial brand. As mentioned above, its assets under management are currently valued at more than $8 billion, and it has an estimated 1.5 million customers. Wealthsimple is also regulated by the IIROC (Investment Industry Regulatory Organization of Canada) and the CIPF (Canadian Investor Protection Fund)—just like the big banks.

The cons

  • Currently, Wealthsimple Trade is exclusively for the trading of stocks, ETFs and select cryptocurrency. Other activities, such as trading mutual funds or purchasing IPOs, are not available.
  • If you are looking into buying U.S. stocks, you won’t be able to avoid foreign exchange fees, since you can’t leverage “Norbert’s gambit” or hold U.S. dollars in your account. 
  • If you prefer working on a laptop or desktop computer over your smartphone for investing, be advised the web-based version is still in beta (testing) stage. The phone app offers the best trading experience for now. And it can be tough to navigate good options for beginner investors, as there is a lack of in-depth investment analytics and educational tools.
  • If you’re in a hurry to access your funds, new deposits may take up to three business days to process, and users can’t automate recurring deposits.
  • Quotes on Wealthsimple Trade have a 15-minute delay, so prices aren’t live up-to-the minute. (Wealthsimple does provide a 5% collateral to protect you against sudden last-minute price changes.)

The bottom line

Whether you’re a first-time investor or a seasoned one—passive or active—Wealthsimple Trade is the simplest, most inexpensive tool available for buying and selling Canadian stocks and ETFs. For those with more heavily diversified investment interests (such as buying U.S. equities) or who need access to trading tools and analytics, Questrade* or another online brokerage may be a better alternative.

Open a Wealthsimple Trade account* >

Wealthsimple Trade* detailed review

Creating a Wealthsimple Trade account

Whether you’re signing up on your phone or computer, it’s very simple and it takes just a few minutes. Enter your email address and a password of your choosing (if you already have a Wealthsimple account, just use your existing login info), then the app/site guides you through the rest. You have the option of creating an unregistered account, a TFSA and/or an RRSP. (Unfortunately, you can’t open RRIF or a LIRA accounts with Wealthsimple Trade.) 

How to add funds

If you’ve ever used PayPal or done an Interac e-Transfer, you’ll find this just as easy. You link your bank account to your Wealthsimple Trade account and input the amount you want to move (up to $50,000 per transfer). As mentioned above in the “cons” section, it can take up to three business days to process your deposit, and there’s no feature to automate your deposits, so you’ll want to manually set calendar reminders/notifications if you want to regularly set up deposits to benefit from dollar-cost averaging. 

In a positive new development: If you want to move money from one Wealthsimple platform to another—say, from Wealthsimple Invest to Wealthsimple Trade—there’s now an automated feature for this. You’ll need to transfer your investment funds in the form of cash, however. 

What can you trade on Wealthsimple Trade?

Wealthsimple Trade currently supports trades within the largest stock exchanges in North America, including the Toronto (TSX) and New York (NYSE) Stock Exchanges, TSX Venture Exchange (TSVX), NASDAQ and NEO. 

Your investments needn’t have a U.S. or Canadian bias, since you’ll have access to index funds and ETFs listed on the above-mentioned exchanges with diversified holdings that track international companies and virtually all sectors. 

If you’re taking a passive, long-term approach to investing, you can access iShares and Vanguard ETFs and build an ideal “couch potato” investment portfolio—all for free. You can buy everything from emerging-market ETFs to cryptocurrency ETFs that track market performance in various sectors.

While Wealthsimple Trade’s stock market scope doesn’t expand internationally—thus ruling out buying individual stocks from the likes of the Bombay and Hong Kong stock exchanges—you can buy index funds that track the performance of international companies from the available exchanges. 

Trading crypto with Wealthsimple Trade

Wealthsimple is known for being a safe and easy way to invest, so this addition to the app is definitely interesting. You can start your account with a minimum of $1 (but that’s not going to buy you much right now). You should know that using this platform doesn’t give you a crypto wallet; instead you’re buying/selling in the digital assets of Wealthsimple. 

When you add the ability to buy/sell crypto on your account, Wealthsimple is great in communicating some of the risks. So really read the disclaimer–don’t just check the box to move on to the next screen like it’s an online cookies agreement. This is where you will learn about how your crypto assets are held (in a pool of Wealthsimple’s digital assets), who shouldn’t invest (those who would need to pull from retirement funds, student loans, mortgage, emergency funds or other critical funds to invest in crypto), as well as risks (short history; volatility; market value dependant on demand; technical and cyber security issues; temporary blockchains (read more on blockchains); and more. You will also do a quick quiz on your crypto knowledge and risk tolerance. 

Your crypto investments are part of a non-registered account on Wealthsimple Trade, so you will have to pay taxes on any gains you make (note there are ways to invest in crypto within a registered account to avoid this—just not through Wealthsimple). The only two types of crypto you have access to are bitcoin and ethereum. You will have access to current prices as well as history charts, too. Again, there are no commission costs and trading can be done whenever you have access to your phone or computer (24/7).

Are there really no commission fees?

Yes, really! It can’t be overstated how key this is to Wealthsimple’s success—it’s the only trading platform in Canada without commissions on trade, whereas many of its competitors charge a flat rate of around $5 to $10 per trade, or a percentage of your trade value. Again, this is a particular boon for passive, long-term investors, who now can build a well-diversified portfolio for absolutely no commissions. 

Open a Wealthsimple Trade account* >

Does Wealthsimple Trade have any hidden fees? 

Hidden, no. As mentioned, there are no commissions for trading, nor are there any recurring “member fees” or withdrawal fees—and that’s the case regardless of your balance. 

But there are moderate potential fees you’ll want to know about. 

When trading U.S. equities listed on the New York Stock Exchange, you’ll have to pay a 1.5% foreign-exchange fee, since the trade is a non-Canadian currency. This isn’t exclusive to Wealthsimple, but whereas some other platforms allow you to hold U.S. dollars and leverage “Norbert’s gambit” (meaning you can strategically and cheaply convert your Canadian dollars to buy U.S. stocks), Wealthsimple doesn’t. An upside, though, is that you can buy ETFs and stocks listed on Canadian exchanges that track the performance of multiple U.S. companies (for example, the Vanguard S&P 500 Index ETF).

There are small fees associated with other transactions—such as $45 for a broker-assisted phone trade, or $20 for a paper account statement—but you’ll rarely, if ever, require these. 

Is there anything you can’t buy on Wealthsimple Trade?

Yes. But if you’re a passive, long-term investor without a lot of experience, you’re probably not going to mind. 

Wealthsimple clients are restricted to trading equities like stocks and ETFs. So, if you want to, for example, buy mutual funds or participate in a company’s IPO, you’ll have to go elsewhere. It’s for this reason that more ambitious or experienced investors may opt for the likes of Qtrade or Questrade*—which, while not as easy to use as Wealthsimple (and with different fees), offer a greater range of options. Wealthsimple is also restricted to stock exchanges within North America, therefore ruling out major international exchanges.

How to use the Wealthsimple Trade interface 

At the time of this article’s publication, Wealthsimple Trade’s desktop version was still in its beta (testing) phase. So you’ll probably want to stick with the smartphone app for now. 

That said, buying stocks and ETFs is as easy as it gets. Simply search stocks by their three- or four-letter ticker abbreviation, then click to buy shares. Done! 

To help guide your choices, you can also access basic statistics about specific equities, such as their P/E (price-to-earnings) ratio, plus snapshots of trending and top stocks across various market segments and categories. Again, these can be found with just a click or two. The overall experience is extremely intuitive, so novice investors are unlikely to feel intimidated.

Is Wealthsimple safe?

Needless to say, if you’re going to be moving your money—no matter how small the amount—through an online platform, you are always concerned with security. Take comfort in knowing Wealthsimple’s products, including Wealthsimple Trade, are widely trusted. And the financial tech company has won multiple awards for its service. Approximately 1.5 million customers have invested their trust in Wealthsimple, which is why the platform currently has more than $8.4 billion in assets. And Wealthsimple’s primary owner, Power Corporation of Canada, is a more than 100-year-old institution with over $450 billion in assets and 30,000 employees.

An additional layer of comfort: Wealthsimple is regulated by the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada—just like all of Canada’s major financial institutions.

Open a Wealthsimple Trade account* >

The final word

The term “game-changer is thrown around far too often, particularly in reference to technological innovations. But Wealthsimple Trade truly has transformed investing for countless Canadians who previously were too intimidated by the process to try their hand. For beginner and passive investors seeking long-term growth with minimal action required on their part, this is a great platform to try—not least because there are no commission fees, and very few fees of any kind. 

While the platform is missing some features that may enhance its appeal to more sophisticated investors (such as analytics tools or the ability to employ Norbert’s gambit), those things may likely come with time. Regardless, this is an online investing tool that lives up to the hype, and is as good a place as any to get started if you’re ready to dip your toe in the waters of the stock market. 

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