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Wealthsimple Review – Simple Automated Investing

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Wealthsimple Review - Simple Automated Investing

What’s Wealthsimple?

Traditionally, investing required some basic finance skills. Either one had to go through an investment advisor, with fees often being quite prohibitive, or one had to find and choose some funds to pickup in order to have a good overall asset allocation. Furthermore, usually advisors are available only to high net worth individuals. For the average investor, investing in stocks can also be seen complicated and a lot of people lack suck knowledge or just do not want to know more about that.

At the same time, as we live in an environment with an all-time low-interest rate, a lot of people choose to park their money in traditional bank accounts, with really low interests, which is one the best way to lose some money due to inflation!

What could people do regarding this fact?

Wealthsimple is one possible solution to make investing easy and accessible. Now that we live in a world where everything can be done with the swipe of a finger, many companies have seized upon this new era which is the world of Robo-Advisors. Wealthsimple is a robo-investment aimed at Canadians (Updated January 31st, 2017: Wealthsimple is now fully available for Americans also!), that invests your money in low cost index funds.

In a nutshell, Wealthsimple, like many other Robo-Advisors services, allows you to build an efficient and customized portfolio which is comprised of widely diversified, low-fee funds. The “Robo” part is mainly due to the fact that everything gets automated (and not the fact that it’s managed by robots, because we’re not in a sci-fi movie!). It’s really easy to use, even for new investors. If you do not want to manage your own portfolio, Wealthsimple is tough to beat for a very low price particularly for small accounts, and is based on the “Set it and Forget it” principle.

How does Wealthsimple work?

The whole concept of Robo-Advisor and low-fee funds is to mirror the stock market. This is a passive approach to investing. You invest your money in the market as a whole, in a balanced way, for a low cost. You’re not into picking stocks and trying to beat the market.

Investing is all about the *endgame*. When I’m saving, I don’t really care about investment theories; what I care about are the results! I’m investing for a specific purpose, like saving for a home down payment, or for retirement.

All of that is handled for you by computers. Wealthsimple offer free re-balancing, tax optimization as well as a much cheaper MER than the banks (about 0.2%). Who doesn’t enjoy cheaper fees!

Investing is all about the endgame. I don’t really care about investment theory, what I care about are the results!Click To Tweet

There’s no need to research which investments you have to purchase or at what percentage for each. Wealthsimple automatically does this for you. This makes investing really easy for beginners. Wealthsimple’s goal is to maximize returns while also minimizing the risks. By investing in a wide pool of assets, this aims at collectively lowering the risks and yet stabilizing returns over the long term!

With Wealthsimple, you do not own individual stocks; instead, investments are held as ETFs (exchange-traded funds). The ETFs own a portion of the equities market via indexing. The asset allocation between these various ETFs ensures that your account is not weighted too heavily into one specific area, company or sector. While this doesn’t lead to outrageous returns, it has the benefit of preventing to put all your eggs in a single basket.

As of February 2017, I have made 11.8% on the money I have invested in Wealthsimple and paid not more than a couple cents for them to manage it for me.

Wealthsimple

Wealthsimple features

Wealthsimple has really low management fees. They also have the perks of modern technology as this a quite recent company. It makes an attractive means to “set it and forget it” as you are able to set up recurring payments weekly, monthly or annually, as well as one-time contributions. Updated assets & users with January 2017 statistics.

  • No Minimum Deposit
  • Low Management Fees
  • $750M Assets Under Management
  • Founded in 2014
  • 15,000 Users

Setting up an account is also very easy. No more having to sign a lot of paperwork and waiting for it a long time before all is setup properly as everything can be done online. Once opened, just transfer your funds into one of their diversified portfolios and watch your money grow as everything else is taken care of.

Try Wealthsimple!

Opening an account takes less than 10 minutes and everything is automated. First $10,000 managed for FREE.

Open a Wealthsimple account

Wealthsimple isn’t a real “robo-advisor” by definition, because customers still can get financial and investment advice from a real human being. Named the “Wealth Concierge Service“, clients can get advice from a team of professionals to discuss their customized portfolio, including asset allocation, and also answer anything related to investments, goals or finances.

Supported accounts types (Canada):

  • RRSP (Individual and Spousal)
  • TFSA
  • RESP
  • RRIF
  • LIRA
  • Corporate
  • Non-registered accounts (Single and Joint)

Supported accounts types (USA):

  • IRA
  • Roth IRA
  • Individual Investment accounts

Wealthsimple recently did a major overhaul of their website and they made it more visually appealing and investor friendly. Here’s what the user interface looks like now (I personally love it!):

Wealthsimple

As can be seen above, Portfolio total value, Earnings as well as Performance are really easy to find. But equally important is just below, where you can find the Fees (and how much you saved on Fees), how many trades you have made and your reinvested dividends.

Easy sign up process

The ease of signing up through Wealthsimple and their overall website design and app’s experience was what hooked me up in the first place.

Wealthsimple offers a blazing fast on-boarding process, unlike traditional banks, which allows to set up an account in less than 15 minutes from your smart phone or your computer. There’s no endless paperwork to sign. Everything can be done online!

You start by answering a few simple questions to be placed into a risk category from one 1 of 10, 10 being the highest risk focused mainly on equities (as opposed to fixed income). After this step, with an e-signature you get to sign documents electronically, thus eliminating the need to visit a traditional physical location to fill out paperwork. In just a couple minutes, you’re ready to start investing.

“I automated my contributions to my RRSP as if it was a simple monthly bill! Just set it and forget it.”

I was personally placed in Risk Category 8, which is a balanced portfolio of 80% equities and 20% fixed income.

Then, if you want, you can setup a call with their “Wealth Concierge”. This is a real financial advisor who has a quick conversation with you about your goals and validates if your risk category is right for you. Overall, here are the kinds of questions that you might be able to discuss:Wealthsimple Review - Simple Automated Investing

  • What are these accounts for?
  • When do you think you’ll need the money?
  • Do you anticipate taking any of the money out to buy a house, achieve other goals?

In a couple minutes, I was all set up with my Wealthsimple account.

As my employer pension plan is locked, I chose to create a new RRSP account with Wealthsimple to try it first, with a simple recurring $50 (now $100!) contribution per paycheck.

If you do not want to create a new account, you can choose to transfer an existing one from another bank account.

Once all the paperwork was submitted, it was a quick waiting game for Wealthsimple to use the funds to buy into the market. I think it took less than a day for my money to be invested.

How much does Wealthsimple cost?

The main reason why I chose Wealthsimple was because accounts under $5,000 are managed for free (up to $10,000 when you register with my referral code). Because of this I am allowed to grow my portfolio free of any management fee and gain a little investing experience at the same time. As a *young* and new investor this was a key point for me.

You still have to pay the funds MER (Management Expense Ratio) fees that are used depending on the portfolio you chose, which are usually around 0.2%.

Another factor the led me to choose Wealthsimple over their competitors was the fact that Wealthsimple has no hidden fees. They have in their FAQ all the information you will need about their fees, from the percent you are charged for your account.

Wealthsimple

For example, a $10,000 investment costs as little as $25 a year (management fees from Wealthsimple, which gets down to $0 when you use my referral link), plus about $20 as investment fees for the funds (MER). Compared to the industry average (which is around $240 per year), you get to make your choice!

Updated January 10th, 2017:

Wealthsimple just announced (see their blog here) that it simplified and reduced its management fee. Now there are only two different packages:

  • Accounts under $100,000: 0.50% management fee
  • Accounts over $100,000: 0.40% management fee and you also get a Priority Pass (valued at $399) to access 1000+ airline lounges!

End of Update!

As for transfer fees, if you choose to transfer from an existing account and if the transfer is over $5,000 Wealthsimple will reimburse the fee your bank might charge for an account transfer (sometimes this adds up to $100!).

Final thoughts

What started as a way for me to improve and automate my finances ended in a recurring contribution to my Wealthsimple account. So far so good as they say, and I’m still really impressed with their services!

If you are looking to start investing I would highly recommend using Wealthsimple. Its a great way to get exposure to investing and low-cost funds, and with the two years of zero management fees from them on your first $5,000 it’s a great option to get started. Also don’t forget the referral code to gain the additional $5,000 managed for free from Wealthsimple.

  • Low Management Fees. No fees at all if you have less than $10,000 to invest. Wealthsimple will also reimburse transfer fees from your current bank account.
  • Perfect for Young & New Investors. Wealthsimple makes investing accessible for new investors by automating all of the investing process.
  • Great Referral Program. Get an additional $5,000 managed for free when you invite a friend to Wealthsimple (this can be cumulated!).
  • Really Clean Interface. The web interface is really clean with just enough dashboards to get a quick “at a glance” view. You also get to have a nice iOS and Android App.
  • Not the Best for High Net Worth Individuals. For advanced investors, Wealthsimple might not be the perfect fit. If you can roll your own asset allocation and know investment theory, there’s little need to use a service like Wealthsimple.

Click here if you wish to use my referral code. Its a great way to save yourself some money in fees.

I hope you liked this review and that you learned a bit about Wealthsimple and the whole “Robo-Advisor” concept in general!

Let me know if you have any suggestions or ideas, and feel free to share and comment below this post!

– Vincent

What about you? Are you using a Robo-Advisor like Wealthsimple?

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