Wealthsimple Trade in-depth review 2022: The pros and cons

As of spring 2022, the AUM (assets under management) have been valued at $15 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.

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. Read on for how it works and the cost structure, so you can decide for yourself. 

• The pros and cons at a glance
• In-depth review: How to set up an account, start investing and more
• Common questions about Wealthsimple Trade

Wealthsimple Trade pros and cons

The pros

• 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 also offers dozens of cryptocurrencies, including bitcoin and ethereum, too.
• 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 shares, you can own a piece of these companies even if you don’t have a lot of money to invest.
• You can open  tax free savings accounts (TFSAs) and registered retirement savings plans (RRSPs) as well as non-registered accounts. (Cryptocurrencies must be held in a non-registered account as they are not TFSA or RRSP eligible) 
• You can deposit up to $1,500 instantly to begin trading right away.
• 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 now an online platform for users who prefer to trade on their laptop or desktop rather than a mobile device.
• Wealthsimple is a trustworthy financial brand. As mentioned above, its assets under management are currently valued at $15 billion, and it has an estimated 2 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 cryptocurrencies. Other activities, such as trading mutual funds or purchasing IPOs, are not available.
• Looking into buying U.S. stocks? Know that you won’t be able to avoid foreign exchange fees in the basic no-fee account, since you can’t leverage “Norbert’s gambit” or hold U.S. dollars. To hold U.S. investments in U.S. currency without the worry of foreign exchange fees, you’ll need to subscribe to the Trade Plus plan, which costs $10 a month. 

• There is a lack of in-depth investment analytics and educational tools, which can make things harder on some newbie investors.
• Be warned if you’re in a hurry to access your funds. New deposits in excess of $1,500 (or over $5,000, if you subscribe to the Trade Plus plan) may take up to three business days to process.
• The platform also doesn’t allow users to automate dividend reinvestments. Having said that, it’s easy to do so manually. That’s because dividends are simply added to your cash funds, which you can then use 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 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 bonds, international equities or precious metals), Questrade or another online brokerage may be a better alternative. Same goes for those who need access to trading tools and analytics

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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 will guide you through the rest. You have the option of creating an unregistered account, a TFSA and/or an RRSP. Unfortunately, you can’t open registered retirement income fund (RRIF) or locked-in retirement account (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). 

It can take up to three business days to process large deposits and three-to-five business days to process funds that have been auto-deposited.

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. That includes the Toronto Stock Exchange (TSX), New York Stock Exchange (NYSE), TSX Venture Exchange (TSVX), NASDAQ, NEO Exchange, and Canadian Securities Exchange (CSE). There are also limited securities available on the BATS Exchange. 

But your investment portfolio needn’t have a U.S. or Canadian bias. That’s because 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.

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. But you can buy index funds that track the performance of international companies from the available exchanges. Also, there are hundreds of American depositary receipts (ADRs) that are non-U.S. companies that inter-list their stocks on U.S. stock exchanges—companies like Alibaba, 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 stocks by name or three- or four-letter ticker symbol and select the security you’d like to buy.

Then choose the account from which you want to draw funds. 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. 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 basic statistics about specific equities. Consider the P/E (price-to-earnings) ratio (a valuation metric for stocks), or 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.

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 should know that using this platform doesn’t give you a crypto wallet; instead you’re buying/selling in the digital assets of Wealthsimple. If you hold crypto elsewhere, 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/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 would need to pull from retirement funds, student loans, mortgage, emergency funds or other critical funds to invest in crypto. 

This is also where you can learn about the risks. That includes short history, volatility, market value dependent on demand, technical and cyber security issues, as well as temporary blockchains (read more on blockchains) 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 Trade. 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 or mutual funds that own cryptocurrency. But cryptocurrency itself is not an eligible investment for registered accounts.  

You get access to dozens of cryptocurrencies, along with current prices as well as history charts, too. 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.

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Watch: Investing in cryptocurrency (and crypto ETFs)

Are there really no commission fees?

Yes, really! It can’t be overstated how key this is to 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. Again, this is a particular boon for passive, long-term investors, especially those who invest small amounts regularly, who now can build a well-diversified portfolio for absolutely no commissions. 

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. The company is very straightforward about this. 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). It deems these as necessary for trading U.S.-listed securities in the basic plan. 

As previously mentioned, you can avoid these foreign exchange fees by upgrading to the Trade Plus plan, which allows you to hold U.S. currency in your account. But that’ll cost you $10 per month, which is another way Wealthsimple Trade makes money.

When you buy or sell a cryptocurrency, you’ll pay a simple spread (of up to 2%) that’s already included in the price. The spread covers the cost to Wealthsimple’s custodian (Gemini Inc.), the liquidity providers, and operational overhead.

There are small fees associated with other transactions. That could be the $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 some investors may opt for the likes of Qtrade or Questrade. 

While those platforms are not as easy to use as Wealthsimple (and with different fee structures), they do offer a greater range of options. 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’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 two-million customers have invested their trust in Wealthsimple, which is why the platform currently has more than $15 billion in assets under management. 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.

Should you invest with Wealthsimple Trade?

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. That said, self-directed investors should consider the risks of frequent trading that might be more tempting with a platform like Wealthsimple.

While the platform is missing some features that may appeal more to sophisticated investors (such as analytics tools or a wider slate of investment options), those things may come with time. Regardless, this is an online investing tool that lives up to the hype. And it 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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This article was originally published on March 5, 2021. It was updated on July 21, 2022.

Read more on investing:

• The best robo-advisors in Canada
• The best ETFs in Canada
• Wealthsimple and its suite of products review
• Wealthsimple Tax review