Investing your money can be a confusing process when you’re a beginner. Fortunately, technology has made investing less complicated through websites and apps that invest your money for you without you needing to do hardly any of the work.
This review is all about Wealthsimple, a Canadian robo advisor that claims to make your investing as simple as possible.
We’ll look at everything Wealthsimple can do for you, who it can help the most, what features make it stand out, and whether it’s worth your time and money.
The best part? You get a $50 bonus when you deposit your first $500. With that said, let’s get started. Here’s our full Wealthsimple review.
What is Wealthsimple?
Wealthsimple is a robo advisor that utilizes smart technology to make the process of investing money simple for anyone.
The company is backed by the Power Financial Group, a powerful financial holding company, and has an investment team comprised of some of the world’s largest financial leaders.
You’ll even have a team of financial advisors available to answer your questions if needed, so you don’t always need to rely on a robotic system.
Robo investing has become extremely popular in the last couple of years as technology has found a way to put your money to work for you by balancing your portfolio automatically. They take into account your financial goals to build a portfolio with potential.
Wealthsimple balances your portfolio daily to ensure that it’s diversified to give you the best return on investment. You can even set it to automatically invest the dividends you receive to grow your funds.
You can use the robo-advisor on your web browser or with its mobile app, available for Android and iOS devices.
Who is Wealthsimple Good For?
Whether you’re a beginner who doesn’t know how to invest or an expert who just wants an easier way to make your money grow, you can probably get something out of Wealthsimple.
After you set up your profile – which only takes about 5 minutes or less – you can open an account and begin investing.
Based on your answers to the questions, Wealthsimple can set up a portfolio for you, spreading your money in ETFs (Exchange-Traded Funds) that include different US and foreign stocks, government bonds, and more.
The investment software adheres to the modern theory that investing in a variety of different financial products can greatly minimize your risk, making it a good option for people who are worried about losing the money they invest.
You might also love Wealthsimple above its competitors due to its socially responsible investments (SRI), which you can choose to use when you set up your profile.
This option ensures that your money only goes toward companies that focus their efforts on being socially responsible, whether it’s supporting women’s rights or cleaner air.
How Does Wealthsimple Work?
Wealthsimple prizes its system not so much on being a robotic advisor, but more on its technology that helps create the perfect investing system for its customers.
The company believes that, with as little interference from humans as possible, investing can be more straightforward and successful because it involves less emotion.
The technology involves special algorithms that go by what works in real-life investing. That’s because real financial experts (humans!) design the technology.
Wealthsimple invests in ETFs, which are easy to use and are usually less expensive than mutual funds.
When you sign up, the website will ask you some questions to determine your risk profile. Based on your answers, you’ll get a personalized, recommended portfolio to start with.
You can keep the recommendations and open an account using them, or you’re free to switch them around.
You can deposit funds as often as you’d like and you’re free to tweak your portfolio as you see fit. But, if you’d rather just use the wait-and-see method, you can let Wealthsimple do all the work for you behind the scenes as you keep track of its progress.
Pros and Cons of Wealthsimple
When it comes to investing your money, you definitely need to outweigh the pros and cons of any software. What works for one person may not work for you, and robo advising may just not be your best option. Let’s look at some of the benefits and drawbacks of investing with Wealthsimple.
- Incredible customer service. If there’s one thing Wealthsimple has going for it, it’s the customer service department. The company provides live support for you to get answers to all your pressing questions as soon as possible. So, even if auto-investing makes you nervous, you’ll always have a team of real people to help you out.
- SRI portfolios. Some other similar companies have socially responsible investment options, but Wealthsimple is one of the few. You can choose to create a portfolio with only SRIs, mix-and-match, or have none at all. But, the option is always there at your disposal.
- No minimum account balance. Your account balance can drop down to $0 and you won’t be charged any fees.
- Invest $5,000 for free. Unlike other similar software that charges fees on whatever amount you invest, you can start investing with Wealthsimple for $5,000 and be free of fees. This is an excellent way to try out the system without investing all your savings.
- Auto-deposit. You can set up an auto-deposit on a schedule that works for you so that you’ll never have to remember to deposit money again. This truly makes it an automated investment system.
- Referral system and rewards. You can invite friends and complete other tasks, like downloading the mobile app, to have Wealthsimple manage even more of your money for free. Each friend referral gives you an additional $10,000 managed for free.
- High fees. In comparison to some similar investment options, Wealthsimple does have some high fees for investments below $100,000.
- Lack of extra features to stay on top of finances. Some robo investors have extra financial tools to help customers track finances, plan their financial goals, and learn more about investing. Wealthsimple’s website is very simple, which isn’t necessarily a bad thing for those who want a minimalistic approach to investing. There are some helpful financial articles in the form of a blog. But, those looking for ample financial tools will likely be disappointed.
Beneficial Features of Wealthsimple
Wealthsimple is similar to some other auto-advisors on the market. Betterment and Wealthfront are two competitors with similar features and investment opportunities.
But, Wealthsimple has a few things that make it stand out when compared to others that could make it worth your while to try out.
Automatic Rebalancing and Reinvesting
If you’re going to use an electronic, automated form on investing, you probably want something that’s truly automatic. Wealthsimple caters to the crowd of beginner investors who are likely looking for the simplest way to start investing their money without the guesswork.
Wealthsimple’s automatic portfolio rebalancing is an invaluable tool for the beginner who doesn’t know where to start when it comes to moving money between investments.
Depending on what you need your money for, like retirement or saving up for your first home, the investment technology will continuously rebalance your investments to lower your risk and get you closer to your financial goals.
And then there’s the automatic reinvesting. Your dividends from stocks in your Wealthsimple portfolio are paid out in more stocks.
Wealthsimple automatically reinvests them into other financial products that make sense for you without you telling it where to put them. You won’t get tempted to spend the money that your investments pay.
Instead, it all goes back into your portfolio to continue upping your investment.
Taxes can be tricky when you have investments. If you don’t know much about how it works, know this: you can avoid some taxes by selling your losing investments.
Keeping with the automation trend, Wealthsimple can do this for you to prevent you from losing as much in taxes as you would if you kept losing investments. This is called tax-loss harvesting.
If you have no idea how to minimize taxes on your investments, most experts wouldn’t recommend that you play around with this option yourself.
So, this feature can be another incredibly helpful one for beginning investors. Wealthsimple will automatically sell your losing investments for you to save money on your taxes.
And, it will replace your sold investments with similar ones that are projected to have gains soon.
Hinges on ETF Investments
ETFs, or exchange-traded funds, are quickly becoming one of the hottest financial products to invest in. They’re more affordable than many others and help to spread your money in different assets to minimize your risk.
Wealthsimple invests your cash only in ETFs to keep your risk to a minimum and to make your investing cost more affordable.
Additionally, ETFs are more tax-efficient than other investment products. You get taxed on capital gains of your investments, and the taxes start to accrue as soon as your gains get recognized by the government.
But, ETF gains aren’t recognized until you sell the entire fund, so you’ll only start paying tax on them at that time.
Wealthsimple is one of the few auto-investment programs to offer to pay your fees if you want to transfer your investments from another company.
For example, if you currently use Betterment but want to switch to Wealthsimple, the company will pay any associated fees for Betterment for that transfer.
To take advantage of this offer, you’ll need to transfer at least $5,000 of investment value to Wealthsimple. Once the company approves and completes the transfer, you need to send documentation from your bank that shows the fees you incurred from the transfer.
Then, Wealthsimple pays those fees to the company so you don’t have to.
Transfer fees are usually a percentage of your investment, which could range from 2% to 4% in most cases. For a $5,000 transfer, that could equal a $100 to $200 fee that Wealthsimple takes care of for you.
Convenient Mobile App
A lot of investment companies are creating mobile apps for convenience so that you can check your portfolio and returns wherever you are.
Wealthsimple was one of the first robo investing companies to create a handy app for iOS and Android devices, though, and the app continues to evolve to make investing as simple as possible for anyone.
Through the app, you can add money to your account, check on your investments, monitor the performance of your funds, and even refer others using your personal link to give you more money managed for free.
The app is very secure, even requiring a PIN to move or add money or view your investments and a two-step security system to verify that you’re the one using it.
Referrals and Rewards
If you’re really against paying for the Wealthsimple service when you invest more than $5,000, you’re going to love knowing that the company has a referral system that lets you have more of your money managed for free.
Most other investment companies’ referral programs give you a free month or two off your subscription for each friend you refer. Of course, that means you’ll already need to be paying for a subscription to take advantage of the program.
With Wealthsimple’s referral program, you’ll get more of your money managed for free, so it’s possible that you’ll never have to sign up for a subscription.
Every friend you refer that opens and funds an account will give you an extra $10,000 managed for free for 12 months. You can even quickly share your link on your social media channels via your account dashboard.
And, there are other rewards involved, like an extra $1,000 managed for free when you turn on auto-deposits. Or, get $100 more managed for free for downloading the app. You can even earn an extra $10,000 managed for free when you transfer an account from somewhere else.
How Much Does Wealthsimple Cost?
Like most investing programs, Wealthsimple offers different plans to meet your needs. But, the company keeps it simple with two plans: Wealthsimple Basic and Wealthsimple Black.
Basic is for people who will invest less than $100,000. You’ll get all the basics with this plan, from auto-deposits and auto-rebalancing to tax-loss harvesting and dividend reinvesting.
Wealthsimple managers your first $5,000 for free. So, you’ll have a chance to try the program and see if it’s right for you. This plan won’t cost you anything per month other than the 0.5% fee, which the company calculates daily and applies monthly to your account.
Wealthsimple Black is for investors with more than $100,000 to add to their accounts. This plan gives you everything the Basic plan does, plus a lower fee of 0.4%, a financial planning session, and a Priority Pass membership for you to gain access to VIP airline travel.
What Investing Fees are Involved?
When you have a company like Wealthsimple manage your financial investments, you’ll not only have to pay the company a management fee, but you’ll also pay a fee to the managers of your investment funds.
The fees come with the territory of managed investing, so if you go this route, there isn’t much you can do to avoid them.
Investments below $100,000 will be subject to the 0.5% fee charged by Wealthsimple, whereas accounts with $100,000 or more will have a 0.4% fee. The fees charged by your investment fund managers will vary.
But, Wealthsimple estimates these to be about 0.2% per year. The managers will take the fees directly out of your ETF values.
Is Wealthsimple a Scam or Legit?
Wealthsimple, as with any robo advisor, might not be the perfect option for all investors, especially experienced ones, but it’s certainly a legitimate company.
The program has a lot going for it to make it a truly automatic way to invest money. If you have little to no experience with investing your cash, then this company can be an excellent way to start.
The drawback is that you may not learn much from the process. Wealthsimple doesn’t offer a lot of educational tools to help beginners learn about their investments.
Nor does it spend time walking you through your portfolio and its performance. However, if you have any questions that arise, you can always contact the support team. The live support has some rave reviews across the web.
Overall, this is definitely a legitimate option for people who don’t have the time or desire to learn much about investing. But, they still want a way to invest while minimizing their risks.
How to Sign Up for Wealthsimple
To sign up with Wealthsimple, head to the website. You’ll find several buttons that say, “Start Investing”. You can click on them to sign up. Or, hit the “Sign In” link at the top of the site to create an account.
Once you fill in your basic information, the site will ask you some questions about your finances and your investment goals. They’ll only take a couple of minutes to complete. Then, Wealthsimple will present you with a customized portfolio based on your answers.
Go to your dashboard and click “Open an account” to transfer funds from another account. Or, open up a brand-new investment account.
After you’ve set everything up, be sure to check your email inbox for a welcome email and confirm your email address. Then, you’ll start receiving email notifications with updates about your account and news from Wealthsimple.
If you’re afraid of investing, Wealthsimple can help you get over your fear. It minimizes your risks and takes just about every piece of guesswork out of managing your money for your future.
And, with a helpful support team full of real humans available when you need them, it gives you the best of both worlds.
For more information on investing and helpful products, check out these articles:
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- How To Invest In Real Estate With No Money
- Top 12 Reasons Why You Should Open a Roth IRA
If you’d like to share your experience with Wealthsimple or other similar investment products, please leave us a comment below! Thanks for reading and happy frugaling.