Wealthsimple Review – Low-Cost Investments
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Fast Facts
Service:
Digital banking and investment options
Account minimum:
$0
Management fees:
0.40% to 0.50%
Plans:
Three tiers based on investment amount
Cash account interest rate:
Upto 4.5%
Building wealth is an important part of saving for retirement and planning your financial goals, but it isn’t always straightforward. For beginners, even basic topics like asset allocation, mutual funds, or exchange-traded funds (ETFs) can be daunting. At the same time, when starting out, you may not have the account balance to feel that working with a financial advisor makes the most sense at this stage.
This is where a platform like Wealthsimple comes in. Wealthsimple combines low-cost investments as well as bank accounts into one straightforward platform. This allows you to streamline your approach to your investment portfolio while reaping the perks of having a savings account at the same institution. Learn more about the pros and cons of one of the best Canadian investment platforms in this review.
In this article
What is Wealthsimple?
Founded in Toronto in 2014, Wealthsimple offers users commission-free investment options and digital banking solutions. Low fees are the name of the game with Wealthsimple, whether it’s management fees of 0.40% to 0.50% or no monthly fees for banking products.
One of the best things about Wealthsimple is that their account minimums are $0. This means it’s easy to start with a self-directed account, no matter how much extra cash you have to invest. Since time is one of the biggest factors in building a nest egg, having access to a brokerage with as few minimums as possible is a great way to get the ball rolling.
Another nice perk of Wealthsimple is that they have a robust mobile app. Compatible with both iOS and Android, this ensures you can check your Wealthsimple account on the go.
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How does Wealthsimple work?
Creating an account for Wealthsimple is super easy. When you click the black “Sign Up” button in the top right of the Wealthsimple homepage, you can download the app via QR code or sign up online. In this example, we’ll be signing up using the Wealthsimple website.
When you create your Wealthsimple account, you’ll first provide an email address and password. This will streamline your login across all Wealthsimple products, making for a simple experience while using the platform.
From there, you’ll select which product you want to start with. Wealthsimple offers the following products:
- Investment products with a managed portfolio leveraging modern portfolio theory
- Trading accounts for you to buy and sell stocks
- Tax accounts for easy-to-file taxes
- Cash accounts, which offer checking and a 4% interest rate
- Cryptocurrency accounts where you can trade cryptocurrencies on your own
Once you’ve created your account, it’s time to finish registration. This will consist of four main steps. First, you’ll add personal details to ensure your identity is properly verified. Then, you’ll choose certain aspects of your portfolio (such as how conservative you want to be as an investor or how you want to handle rebalancing). Then you’ll open your accounts and fund them to grow your money.
How much does Wealthsimple cost?
All brokerages have differing fees and commissions, and the account types offered through Wealthsimple are no different. If you’ve opened an account in the United States or Canada, the general fee you’re charged to use Wealthsimple is 0.50%. This fee includes trading costs, the management of your growth portfolio, and any other financial services you might use with Wealthsimple, such as a financial planning session. If you have more than $100,000 in their brokerage, you’ll only pay a fee of 0.40%.
Wealthsimple features
Wealthsimple Core
Welathsimple Core offers basic functionality to get started building your financial future. All you need to begin using this basic version of Wealthsimple is an investment of $1 to gain access to $50,000 in instant deposits and 3.5% interest on your Cash balance. You’ll also access real, human customer support and Options trading at $2/contract.
Wealthsimple Premium
For investors with $100,000 or more in net deposits, Wealthsimple Premium is a premium offering from Wealthsimple that may be worth considering. Not only does this version of the platform reduce your usage fees to just 0.40%, but it also comes with bonus features such as 4.00% interest on your cash balance, goal setting with an advisor, and options trading at $0.75 a contract.
Customized investing
A Wealthsimple investing account offers you the chance to have a customized investing portfolio designed by experts. This managed portfolio generally has lower fees than most mutual funds, meaning that more of your money is put to work building and achieving your future goals.
Wealthsimple also gives you a fair amount of control over how you invest — so you can really invest your way. From dividend reinvesting to access to fractional shares of higher-priced stocks, this platform is chock-full of tools and products to ensure you put your money to work in a way that works for you. Whether you’re interested in socially responsible investing or opening a halal portfolio utilizing halal investing protocol, you can make the most of your money and ethics by leveraging expert advice.
Wealthsimple trading
When you open a Wealthsimple trade account, you’ll get access to some of the most common investment options. For DIY traders, Wealthsimple can buy and sell thousands of stocks and ETFs without commissions. In addition to these commission-free options, you can buy and sell crypto and fractional shares of larger stocks in addition to options trading.
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Who is Wealthsimple best for?
Entry-level investors
From its excellent educational resources to its low fees and minimums, anyone just starting to invest will find a lot to like with Wealthsimple. They provide a very low barrier to entry, especially when you consider features like competitive interest savings accounts, fractional investing, and the Roundup feature in their savings account when you’ve linked credit and debit accounts. For a multi-faceted option that will grow with you as your wealth grows, it’s hard to go wrong with Wealthsimple.
High net-worth investors
Wealthsimple is great for entry-level investors, and if you can meet their $100,000 minimum for more premium features, the platform only gets better. With lower fees and access to expert advice, the more you can invest in Wealthsimple, the more value you’ll gain. Customers with $500,000 of investments will also qualify for Wealthsimple Generations; you’ll pay even lower fees, gain access to 4.5% interest in your Cash account, and even have the opportunity to invest in private credit.
Who shouldn’t use Wealthsimple?
Consumers carrying high amounts of debt
While it’s important to plan for your future (even while you’re paying down your debts), some of the best features of Wealthsimple come at higher tiers, such as Wealthsimple Premium or Wealthsimple Generations. While Wealthsimple is an affordable option for many, if you have a high amount of debt, it’s important to address that before investing more seriously in your future.
Consumers who are expecting a lot from the platform’s algorithms
The algorithmic future for Wealthsimple could be very exciting. However, at the time of writing, the algorithm just follows a pretty standard buy-and-then-hold strategy. While that’s not a bad strategy, it really doesn’t feel like the sort of algorithmic benefit you’d get during a generative A.I. boom.
Pros and cons
Pros
- Fair and transparent pricing. It’s hard to argue with a platform with a minimum of $0 to open an account and only $1 to start investing. That, combined with lower-than-normal brokerage fees, makes Wealthsimple one of the most cost-effective options on the market. Wealthsimple is also very clear about its pricing so that you won’t face any surprise fees or charges using the platform.
- Great educational resources. In addition to offering a robust investing platform, there are plenty of FAQs and other informational resources to ensure you understand what you’re investing in and why it can benefit your goals.
- Easy to get started. Wealthsimple’s account creation process is quite simple. Whether you do it on the accompanying mobile app or online with your desktop computer, this is one of the more straightforward registration processes for a financial service.
Cons
- Management fee isn’t as competitive as low commissions. While there are cost savings to be had with Wealthsimple, its management fee isn’t as competitive. 0.50% is pretty standard as far as management fees for online brokerages go, so it’s a good thing that you can save money on commissions when using the platform.
- Algorithms aren’t that powerful. As was mentioned earlier, the algorithm Wealthsimple uses isn’t super robust. If you know the simple idea to buy and hold, then the algorithms' strategy isn’t that useful. On the other hand, the algorithm does allow you to automate this philosophy, so if it appeals to you already, this may not be that much of a drawback.
- Limited portfolio options. While you can customize your portfolio in various ways, the options you have to start with are pretty simple. The only options you’ll have when creating a portfolio on Wealthsimple are: Conservative, balanced, growth, socially responsible, Halal.
Wealthsimple vs. competitors
Service | Minimum to Open Account | Fractional Shares? | Fees |
Wealthsimple | $0 | Yes | 0.50% fee + $0 commission trading |
Betterment | $0 | Yes | 0.25% + $0 commission trading |
Vanguard | $0 | Yes | $25 annual fee, $0 commission trading |
Betterment
Betterment compares favorably with Wealthsimple in terms of account minimums and low fees. They also offer fractional shares. Betterment serves U.S. clients, while Wealthsimple started in Canada and has expanded to offering services to U.S. customers. Both are solid options for investors just starting to build their wealth.
Vanguard
Vanguard has a lot of name recognition and is a bit of the “old guard” when it comes to brokerages. Because of that, they were a bit late to the party when it comes to features like $0 commission trading. Even so, now that they are up with the times, they compare pretty favorably with Betterment and Wealthsimple. Their web interface and mobile app certainly aren’t as sleek as Wealthsimple’s, but on a cost basis, they are a strong alternative to consider.
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- Over 100 Stock Picks with 100%+ Returns
- Averaged Stock Pick Return over 593% (vs. 165% for the S&P)
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- 30-Day Membership-Fee-Back Guarantee
- Joy Wallet Reader Deal: The Motley Fool is offering 50% off its top stock-picking service for new members (Limited Time)
FAQs
What exchanges are offered through Wealthsimple?
Investors using Wealthsimple will have access to ETFs and stocks across NYSE, TSX, NASDAQ, NEO, and CSE. Limited securities are also available on the BATS Exchange.
How many stocks are eligible for fractional investing?
Fractional investing is offered on over 1,500 stocks with Wealthsimple. These include familiar (and major) companies such as Amazon (AMZN), Google (GOOGL), Microsoft (MSFT), Netflix (NFLX), and Tesla (TSLA).
How can Wealthsimple offer a $0 commission?
Wealthsimple themselves are quick to point out that offering a $0 commission when other brokerages charge up to $10 is a pretty impressive feat. They explain on their website that due to being designed as a digital-first brokerage, they can offer low-cost fees rather than look to profit off of these transactions the way other brokerages do.
The bottom line
When it comes to personal finance, saving for your future is key. That can be easier said than done if you aren’t well-versed in investment portfolio options. If you’re looking for an easy way to open an investment account, Wealthsimple has a lot to offer. Especially if you want to define your risk tolerance and let a robo-advisor handle your diversified portfolio, emphasizing low fees with Wealthsimple is a major selling point.
If you’re a less experienced investor but want access to a wide range of investment options for your future, exploring stocks, crypto, and more through Wealthsimple is a big plus. You’ll also have access to up-to-date apps that are easy to use and understand and educational resources, so your Wealthsimple account can grow with you over time.
While there are other robo-advisors and online brokerages out there that also include some banking features, Wealthsimple is one of the more robust options currently on the market. Ultimately, it’s hard to go wrong with Wealthsimple if you’re just getting started investing and want access to tools and resources that streamline and simplify how you plan for your future financial goals.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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