★ Rockstar Review: Wealthsimple (Online Investing)

Posted June 13, 2017 6:00 am by with 4 comments

Review of: Wealthsimple

Reviewed by:
Rating:
5
On June 13, 2017
Last modified:June 13, 2017

Summary:

Wealthsimple is an online investing service that uses smart technology to build a portfolio of low-fee index funds designed to help you meet your financial goals.

This is part of our Rockstar Reviews series.
Be sure to check out all previous products we’ve reviewed!


rockstar rating 4 and a half stars
Who it’s for: Anyone who prefers the idea of using a robo-advisor (with low fees) instead of fully managing their own investments. And as their website says, Wealthsimple is for “everybody, regardless of age or net worth.”

Ease of use: Wealthsimple has one of the cleanest dashboards of any financial services product I’ve seen. It only takes a few minutes to set up your account, and you can set up/change your automated depositing plans anytime.

What we like about it: Aside from the low fees, I like that you get a clear picture of how your portfolio is performing. The dashboard shows the total balance of all your investments, how much you’ve earned since you started investing with Wealthsimple and what your return is (as a percentage). You also get to see the exact amount you’re paying in fees, which many other index/mutual fund statements won’t show you (or hide it deep in their paperwork). Oh, and this has nothing to do with investing, but their blog content is amazing! We’ve featured Wealthsimple’s content on this site multiple times which is rare for a company blog.

What we don’t like about it: If you’re transferring cash from a regular checking or savings account, your first deposit will happen quickly! It’s great! However, if you’re transferring money in from an existing investment fund, it can take 6-8 weeks to be transferred out and moved over (and may require you to check-in with both Wealthsimple and your bank, like I had to – but more on that later).

Where to find them:

Wealthsimple.com | Cost: .04%-.05% management fees

(Rockstar Finance readers receive a special $50 bonus when they open and fund a new Wealthsimple account)

[This week, Cait Flanders is sharing her experience investing with Wealthsimple! She’s only been using the service since February 2017 but has a lot to say!]

Wealthsimple is the Largest Online Investing Service in Canada – Now Also Serving the United States!

I’ll be the first to admit that I’m not very good at multi-tasking – and that includes working on multiple financial goals at the same time. From 2011-2013, I was focused on paying off nearly $30,000 of consumer debt. After that, I started saving more and eventually built up a $10,000 emergency fund.

In all that time, I was always putting aside some money for retirement, but I didn’t know much about investing beyond the fact that I should try to pay the lowest MER (management expense ratio, or just management fees) possible, so I could keep more of my money. While building up my first $50,000, I was using index funds that only charged 1.07%; this felt good – it was good. But from reading all the incredible investing blogs out there, I still knew I could do better.

Last year, I realized I had reached most of my short-term financial goals, and wanted to start funneling as much money into my retirement accounts as possible. I started looking at the various robo-advisors available in Canada, knowing their fees were lower than any financial institution could offer, and kept coming back to one: Wealthsimple.

What is Wealthsimple?

Wealthsimple is an online investing service (more commonly referred to as a robo-advisor) that uses smart technology to build you a portfolio of low-fee index funds designed to help you meet your financial goals. In layman’s terms that means their investment team works behind the scenes to create portfolios you don’t have to pay a ton of money to invest in! And you can do everything required on your end from a computer or smartphone.

As stated on their website, their mission is to help everyone achieve their goals by making investing: simple, affordable, accessible and personalized – and that’s exactly what they do. With a passive investing approach, the idea is simple: find the right portfolio for you, set up automatic depositing and put your (low-fee) investments on autopilot. Then sit back and watch your money work for you.

Like many of the online investing services out there, Wealthsimple’s strategy is to diversify your investments. They don’t believe in trying to pick winning stocks, and they don’t like the idea of putting all your eggs in one basket. Instead, they track the stock market as a whole and purchase broad based exchange traded funds (ETFs). This method minimizes losses and maximizes returns (a win-win for you!).

Right now, more than 30,000 clients trust $1 billion with Wealthsimple companies – and I am one of them. They first launched in Canada, but as of January 31, 2017, Wealthsimple is also open for business in the United States!

How to Sign-up for a Wealthsimple Account

Nearly two years ago, I sat down with CEO Michael Katchen and walked through the process of opening up an account with Wealthsimple. I’ll be honest with you (and I was honest with him then): it was a little clunky. Imagine my happy surprise, then, when I decided to finally open an account in November 2016 and found the entire process had been redesigned and streamlined. From start to finish, I was done in under 15 minutes.

Now that Wealthsimple is available in both Canada and the US, you’ll start by choosing which country you live in. Next, you’ll take a risk survey, where they’ll ask questions about your investing experience, your financial goals, how much you want to invest, etc. All of this information helps them figure out which of their portfolios would be best for your needs.

As an example, I entered my age, an initial investment of $50,000 and said I wanted to invest $750/month until I was 55, and this is the portfolio they suggested I start with:

Rockstar Review: Wealthsimple (Online Investing)

Rockstar Review: Wealthsimple (Online Investing)

If you’re happy with the level of risk in the portfolio they suggest (in this case: an 80/20 equity/fixed split in their Growth portfolio), you’ll go on to fill out some standard information (legal name, address, etc.), verify your bank account and then you’re good to go!

How to Start Investing with Wealthsimple

Once your account is set up, you can do two things:

  1. transfer cash from a checking or savings account (either a one-time deposit or set up automated depositing), or
  2. transfer money from an existing investment fund.

Rockstar Review: Wealthsimple (Online Investing)

If you decide to transfer cash directly from a bank account, you will find the process easy-breezy. Seriously, just click on the Funding tab, pick the Wealthsimple account you want to deposit money into (you can have many), which bank account the money will be coming from, how much and how often (just once, weekly, bi-weekly or monthly).

Right now, my account is set to deposit $100/week into my tax-free savings account. Based on the current balance, it shows you what my contributions could build up to become if I didn’t invest another dime ($39K) and what I could potentially have if I maintained my automated depositing plan until age 65 ($465K).

*Note: To come up with these numbers, they assume a return of 5.1-5.45% on stocks (equity) and 0.74-1.05% on bonds (fixed income) after 0.5% fees. The impact of taxes is not included, and actual returns may differ.

If you decide to transfer the money from an existing investment fund, click on Transfer an existing account at the top and follow those steps. Here is where I will say that while everything else about using Wealthsimple is easy-breezy, transferring money out of one fund and into another is not. Or rather, it’s easy – but it takes time.

I was told it could take 6-8 weeks to transfer money out of my two old investment funds and into my two new Wealthsimple portfolios. When it hit the 8-week mark, I was told by a Wealthsimple advisor that I should call my bank to make sure they know it’s ok to “release my funds”. When I called my bank, they said they hadn’t even received the forms from Wealthsimple. It turns out, Wealthsimple forgot to send them. (Yikes!) I called back, expressed some frustration, and my money was magically taken out of my old funds and deposited into my Wealthsimple portfolios a week later.

All-in-all, I’ve had such a great experience using Wealthsimple SINCE my money has been transferred over. However, waiting for 9 weeks was pretty frustrating. My advice to anyone thinking of transferring money out of an existing fund would simply be this: stay on top of it. Call Wealthsimple and make sure they’ve sent the paperwork to your bank, then call your bank a few days later to make sure they’ve received it. Take the lead and make sure things are moving along. It’s your money, after all!

How Much Does It Cost to Invest with Wealthsimple?

Ahhh, the most important question, when it comes to investing: how much is it going to cost? One of the things I love most about Wealthsimple is that there is no guessing game about this. There are just two options, depending on how much money is in your portfolio. If you have less than $100K, you’ll get the Wealthsimple Basic package with its 0.5% fee. And if you have more than $100K, you’ll be serviced under Wealthsimple Black with its 0.4% fee (plus a few other bonuses listed below, also including tax-loss harvesting).

Wealthsimple also has a $0 account minimum, you get the first $5,000 managed free (in both countries) and they don’t charge you any trading, account transferring or rebalancing fees.

Rockstar Review: Wealthsimple (Online Investing)

Compared to the funds I used to invest in, what I appreciate most about Wealthsimple’s model isn’t just the lower fees – it’s the fact that they are totally transparent about how much you pay each month. When you look at your account activity or at your monthly performance report, you can see the exact dollar amounts you’ve been paying. Even though someone is managing the portfolio behind the scenes for you, having this kind of information and clarity can help you feel so much more in control of your finances – and your future.

Other Features of Wealthsimple

When you login to Wealthsimple, the dashboard gives you an excellent overview of your investments. On top of showing you the total balance of your portfolio, it also shows you how much you’ve earned since you started investing with Wealthsimple and the rate of return (as a percentage). In my case, I have two different portfolios (tax-free savings and retirement savings), which is why you can see the two different shades of blue in the projection below*.

*Screenshot taken on May 16, 2017.

If you sign-up and start investing with Wealthsimple, they offer a number of other features you should know about:

  • Socially Responsible Investing – If you care about the impact your investments make on the world, you can invest in the socially responsible version of any of their portfolios (for a modestly higher fee).
  • Automatic Rebalancing – So your portfolio is precisely diversified every day.
  • Dividend Reinvesting – When your funds pay dividends, they automatically reinvest the money for you.
  • Monthly Performance Reports – See a breakdown of the balances, deposits and fees paid for each portfolio, as well as a detailed list of all the holdings within each portfolio.
  • Expert Advice – The Wealthsimple team can answer any questions regarding accounts, and help you plan for important financial milestones.
  • Insured – Up to $1 million of your money is insured with CIPF in Canada, and up to $500,000 is protected via the SIPC in the United States (and includes $250,000 of cash).
  • Secure – Your money is protected by bank-level security (128-bit SSL certificate), so your information is encrypted and kept safe.

In Summary

Wealthsimple is an online investing service that uses smart technology to build a portfolio of low-fee index funds designed to help you meet your financial goals. If you’re thinking about investing with a robo-advisor, you should look at what their fees are and what they invest in.

Personally, for where I’m at in my financial life (including the fact that I’m in Canada), I’ve found Wealthsimple to be the best option for me. And if you need an extra vote of confidence, our Prime Minister thinks Wealthsimple is turning heads all over the world!

Check them out at Wealthsimple.com

(Rockstar Finance readers receive a special $50 bonus when they open and fund a new Wealthsimple account)

*****

About the author: Cait Flanders is a former binge consumer turned mindful consumer of everything. Through personal stories, she writes about what happens when money, minimalism and mindfulness cross paths, on her blog CaitFlanders.com. She’s also the Managing Editor here at Rockstar Finance, and helps curate all the amazing content you read every day!

All Rockstar Reviews include affiliate links to the companies being featured. Thank you to all those who support our site by going through them when you find them helpful!

 

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4 responses to ★ Rockstar Review: Wealthsimple (Online Investing)

  1. Jim Broome June 13th, 2017 at 11:26 am

    Superb review!

    Reply

  2. Jerry June 14th, 2017 at 1:13 pm

    Is the bonus automatically applied? I just signed up for a Roth

    Reply

    • J. Money June 15th, 2017 at 5:57 pm

      Shot our contact over there a note, and here’s what he said:

      “We’re setting up a system to automatically apply bonuses, but it’s still 1-2 months out. The bonuses will be applied about a week after the first funds hit their account.”

      Reply

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