Wealthsimple Trade in-depth review 2023
Is it easy to buy and sell stocks and ETFs? Is it safe for Canadian investors? Find out the pros and cons of trading on the Wealthsimple app and website.
Wealthsimple Trade in-depth review 2023
Since making its debut in 2014, Wealthsimple has helped to demystify investing for hundreds of thousands of regular people in Canada who want to grow their money. The company’s success thus far is unquestionable.
As of September 2022, Wealthsimple’s AUM (assets under management) has been valued at $17.5 billion, and its online investment management tools have won multiple awards. In March 2019, Wealthsimple introduced Wealthsimple Trade, a self-directed investment platform. It immediately attracted lots of attention for its ability to allow Canadians to buy and sell individual stocks and ETFs (exchange-traded funds) with zero commission fees. About a year-and-a-half later, Wealthsimple made another splash when it added cryptocurrencies to its Trade offerings. Now in 2023, Trade is no more a separate app, but is part of their one all-inclusive app—called just “Wealthsimple.”
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Wealthsimple Trade pros and cons
- Wealthsimple Trade was one of the first commission-free trading platforms in Canada. Most of its competitors charge a minimum of $4.95 and up to $9.95 (or more) per trade.
- There are no annual account fees or account minimums.
- 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). Plus, it offers dozens of cryptocurrencies, including bitcoin (BTC) and ethereum (ETH)—which could be a con depending on day.
- You can purchase fractional shares in companies, such as Microsoft, Netflix, Tesla, Shopify, Royal Bank of Canada, Toronto Dominion Bank, and the Canadian National Railway Co. With fractional investing, you can own a small piece of these companies even if you don’t have sufficient money to buy one entire share.
- You can open registered accounts such as a tax-free savings accounts (TFSAs) and registered retirement savings plans (RRSPs) as well as non-registered accounts—called a “personal” account on the Wealthsimple app. Cryptocurrencies are held in a separate non-registered “crypto” account because they are not TFSA or RRSP eligible.
- You can deposit your money instantly to begin trading right away. Your instant deposit limit could be between $1,500 and $50,000. It depends on several factors like the amount of money you hold on Wealthsimple and your prior trading activity on Wealthsimple.
- Real-time, on-demand quotes and unlimited price alerts are now free to all Wealthsimple Trade clients.
- 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. There is also an online platform for users who prefer to trade on their laptop or desktop rather than their mobile device.
- Wealthsimple is a trustworthy financial brand. As mentioned above, its AUM was valued at about $15 billion as of 2022, and it has an estimated three 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 investment wings of the big banks.
- Currently, users can trade stocks, ETFs and select cryptocurrencies. Mutual funds and IPOs are not available.
- Want to buy U.S. stocks such as Google (GOOGL), Amazon (AMZN), Tesla (TSLA) and others? Know that you’ll have to pay a currency conversion fee of 1.5% per transaction in the basic no-fee account, since you can’t hold U.S. dollars directly in these accounts. Every purchase and sale of a US stock involves currency conversion. To hold U.S. investments in U.S. currency without paying the currency conversion fee, you’ll need to get a USD account—earlier known as the “Trade Plus plan”—which costs $10 a month.
- There is a lack of in-depth investment analytics. While this decreases clutter and makes it easier for newbie investors to navigate, seasoned investors may want more granular trade data on their screens.
- Be warned if you’re in a hurry to withdraw your funds, because it can take one to two business days to withdraw funds from your trading accounts. For crypto, it’s two to three business days. However, you could get instant withdrawals by linking your debit card to your account. Note that instant debit card withdrawals carry a 2.5% withdrawal fee, there’s a withdrawal limit of $5,000 per transaction, and not all debit cards are currently supported.
- The platform also doesn’t allow users to automate dividend reinvestments. Having said that, it’s easy to do so manually because dividends are simply added to your cash funds. You can simply use these funds to buy more shares, including fractional shares, in just a few clicks.
Is Wealthsimple Trade good?
Whether you’re a first-time investor or a seasoned one—passive or active—Wealthsimple is a simple, inexpensive platform for buying and selling Canadian or U.S. stocks and ETFs. For those who want to invest in other assets (such as mutual funds, bonds, global equities or precious metals), Questrade or another online brokerage may be a better alternative. Same goes for those who need access to detailed trading tools and analytics.
Wealthsimple Trade detailed review
Creating a Wealthsimple Trade account
Whether you’re signing up on your mobile 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 will guide you through the rest. You have the option of opening any combination of a personal (non-registered) account, a TFSA, an RRSP or a crypto account. Unfortunately, you can’t open registered retirement income fund (RRIF) or locked-in retirement account (LIRA) accounts with Wealthsimple Trade.
How to put money in your Wealthsimple Trade account
If you’ve ever used PayPal or made an Interac e-Transfer, you’ll find this just as easy. You have to link your bank account to your Wealthsimple Trade account and input the amount you want to move. For standard deposits, it would take 3 business days to deposit up to $50,000 and 5 business days to deposit amounts greater than $50,000.
If you want to move money from one Type of Wealthsimple account to another—say from your stocks and ETF account to either your managed investing (robo-advisor) account or your crypto account—it’s quick and easy to do this from within the Wealthsimple app.
What can you trade with Wealthsimple Trade?
Wealthsimple currently supports stocks and ETF trades from the largest stock exchanges in North America. That includes the Toronto Stock Exchange (TSX), New York Stock Exchange (NYSE), TSX Venture Exchange (TSVX), NASDAQ, Cboe and Canadian Securities Exchange (CSE). There are also limited securities available on the BATS Exchange.
Your investment portfolio needn’t have a U.S. or Canadian bias. You’ll have access to ETFs listed on the above-mentioned exchanges which invest in various parts of the world, including Asia and Europe. Since most ETFs are broad based and track a particular stock index, you’ll be able to gain investment exposure to global equities in a simple, efficient and cost-effective manner.
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—for an extremely low cost. You’ll just have to pay the management expense ratio (MER) of the ETF(s) you’re invested in. For example, the current MER of the VFV (Vanguard’s S&P 500 Index ETF for Canada) is a mere 0.09%. If you want to take a more active approach to your investments, or if you’re looking to diversify your portfolio, you can buy everything from emerging-market ETFs to cryptocurrency ETFs.
While you can buy ETFs that invest in global stocks, you can’t actually buy individual stocks outside of those available of the major U.S. and Canada exchanges. So, you can’t, for example, buy individual stocks from the likes of the Bombay Stock Exchange (BSE) or the Hong Kong Stock Exchange (HKG). Apart from ETFs that track various other countries or regions, there are hundreds of American depositary receipts (ADRs) of global companies that are traded on U.S. exchanges. And there are non-U.S. companies that inter-list their stocks on U.S. stock exchanges, such as Toyota and AstraZeneca.
How to buy stocks and ETFs on Wealthsimple Trade
Buying stocks and ETFs on Wealthsimple Trade is as easy as it gets. Simply log into your account, search the stock by name or its three- or four-letter ticker symbol and select the security you’d like to buy. Then choose the account in which you want to buy it. That could be a RRSP, TFSA or personal account. Then select your preferred type of buy order, whether it’s market, fractional, limit or stop-limit.
A market order is an immediate buy in which the trade is executed at the best available price on the market at that moment. A fractional order is for fractional shares only and is put through at the end of the day (or next available trading day). And limit and stop-limit orders allow you to set in advance the maximum price you’re willing to pay for the security.
Next enter the number of shares you’d like to buy, click “buy,” review your order and select “place order.” And you’re done!
To help guide your choices, you can also access 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 intuitive, so novice investors are unlikely to feel intimidated.
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). You get access to dozens of cryptocurrencies, along with current prices as well as history charts. Crypto trades and purchases include a price spread (limited to 2% per transaction). But there are no extra fees on top of that. And there are never any fees to deposit or withdraw coins.
You should know that using this platform doesn’t give you your own crypto wallet. Instead, the wallet is managed and controlled by Wealthsimple—as is the case with all centralized crypto exchanges. If you hold crypto elsewhere—say on other exchanges or in your own wallets, you can securely transfer coins to or from your external wallets with just a few taps or clicks.
When you add the ability to buy and 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. You will also read about who shouldn’t invest. For example, those who need to pull from retirement funds, student loans, their mortgage, emergency funds or other sources of money that are critical to their everyday life and well-being. Bottom line? Investing in crypto is risky, and Wealthsimple communicates that to its users.
The app educates users about various crypto investments risks, including its relatively short history, high volatility, demand-dependent value, technical and cyber security threats, and much 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. That means you will have to pay taxes on any gains you make. Note: You can invest in crypto indirectly in your registered accounts like TFSAs and RRSPs by buying ETFs that hold cryptocurrency. But cryptocurrency itself is not an eligible investment for registered accounts.
Watch: Investing in cryptocurrency (and crypto ETFs)
Common questions about Wealthsimple Trade
Are there really no commission fees?
Yes, really! It is a big part of Wealthsimple’s success. Many of its competitors charge a flat rate of around $5 to $10 per trade or a percentage of your trade value. Whether you’re a passive investor or an active trader, your overall return could benefit from not having to pay trading commissions. However, it would be prudent not to over-trade simply because it’s free!
What is Wealthsimple Trade’s cost structure?
If there are no commission fees, how does Wealthsimple Trade cover its costs and earn profit, you might wonder. According to Wealthsimple, its earnings come primarily from a 1.5% currency exchange fee charged on Canadian-to-U.S. dollar conversions (and vice-versa). Since the basic plan doesn’t include U.S. dollar accounts, these conversions are necessary for trading U.S.-listed securities.
As previously mentioned, you can avoid these foreign exchange fees by paying $10 per month for a U.S. dollar account.
When you buy or sell a cryptocurrency, you’ll pay a spread of 1.5% to 2%, which is already included in the price. The spread is called the “operations fee” and it’s the all-in fee they charge for crypto trading instead of a flat fee or commission.
Wealthsimple does charge a relatively small fee for various atypical services. For example, $45 for a broker-assisted phone trade, $20 for a paper account statement, or $30 for an incoming or outgoing wire transfer. However, if you’re considering trading on Wealthsimple, these services are probably not a high priority for you.
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 stocks, ETFs and options. So, if you want to, for example, buy mutual funds or participate in a company’s initial public offering (IPO), you’ll have to go elsewhere. For this reason, some investors may opt for other discount brokerages such as Qtrade or Questrade.
While those platforms are not as easy to use as Wealthsimple (and have different fee structures), they do offer a wider range of securities to trade—including mutual funds. Wealthsimple is also restricted to stock exchanges within North America, therefore ruling out major international exchanges.
Is Wealthsimple Trade safe?
Needless to say, if you plan to move money—no matter how small the amount—through an online platform, you’d be concerned about security. You can take comfort in knowing Wealthsimple’s products and services are widely trusted, and they’ve won multiple awards for its service.
Approximately three million customers have placed their trust in Wealthsimple, and the platform currently has more than $15 billion in assets under management. Also, Wealthsimple’s primary owner, Power Corporation of Canada, is a 100-year-old-plus institution, with over $450 billion in assets and 30,000 employees.
An additional layer of comfort: Wealthsimple is regulated by the Investment Industry Regulatory Organization of Canada—like all of Canada’s major financial institutions. And investors’ assets are insured by the Canadian Investor Protection Fund (CIPF)—as per CIPF rules.
Should you invest with Wealthsimple Trade?
Wealthsimple’s goal was to help Canadians who were intimidated by the seemingly complex world of investing. For new investors seeking long-term growth through stocks and ETFs, Wealthsimple may fit their needs well. A word of caution, though: While no-commission trading can save you money, self-directed investors should consider the risks of frequent trading: which might be more tempting with a platform like Wealthsimple. And research shows that doing so can result in no growth and lost income.