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Wealthsimple Review 2019: automated investment platform

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There are many new Robo Advisers out there. Wealthsimple is a Canadian company that was founded in 2014. It has become the largest robbery advisor in Canada and has expanded to US markets. UU. And United Kingdom.

Wealthsimple has a good selection of investment ideas and offers its clients immediate access to real human investment managers. He is also registered in the United States and the United Kingdom, and is a member of the SIPC in the United States. At the time of writing this article, Wealthsimple has more than $ 1 billion under management.

One of the biggest benefits of the “robotic revolution” is that young people now have the ability to count on the help of financial planners and professional portfolio managers. Wealthsimple is a perfect example of a robbery advisor that offers a multi-level rate structure that offers value to each customer level.

Visit Wealthsimple

Wealthsimple has something for everyone

At its most basic level, Wealthsimple offers young people a great way to start saving for their future. There is literally no minimum account size. If you only have $ 1 to save this week, Wealthsimple will be happy to work with you. This is a great tool for younger people or anyone who needs to start saving immediately.

Like many robotic advisors, Wealthsimple relies heavily on ETFs to function. The company uses the “Theory of the modern portfolio” to invest in a variety of asset classes, according to the tolerances and risk objectives of the client.

Wealthsimple also offers some more exotic investment options, such as Halal-compliant portfolios and Socially Responsible Investment (SRI) products. The company offers its established investors some pretty sweet advantages and uses a proven methodology to invest its clients’ funds.

Unfortunately, not all of the features that Wealthsimple offers its Canadian clients are available to investors in the United Kingdom and the United States. Wealthsimple is a new company and, over time, they can expand the services they offer.

Simple wealth projection

Get to know the modern portfolio theory

Modern portfolio theory (MPT) is no longer that “modern.” In any case, it is a good investment methodology that is widely used. Harry Markowitz first proposed MPT in 1952, and has become a basic investment philosophy in the last 60 years.

Basically, MPT proposes the idea that a diversified investment approach in a wide range of assets will produce better results than buying some shares and expecting the best. Later, at the end of the 20th century, another economist showed that this investment philosophy is basically true.

In 1973, Burton Malkiel, a professor of economics at Princeton, published “A Random Walk Down Wall St.”, which shows that an investor who buys a large index of shares (such as the S&P 500) will outperform the vast majority of fund managers. .

MPT has been a great help to many investors, but it is not universally valid.

In 1969, the forerunner of the Quantum Fund was founded by George Soros. His assistant Jim Rogers joined him in 1973 when he expanded his reach and officially became the Quantum Fund. Some consider it the first modern hedge fund, although similar forms of fund management date back to 1949.

Between 1969 and 1974, what is known as the Quantum Fund generated yields of more than 300%, while the S&P 500 fell by more than 3%. Both George Soros and Jim Rogers are billionaires.

Despite the occasional anomaly, the popularity of MPT has only grown over time.

MPT led to the creation of mutual funds and publicly traded funds (ETF). Now robo advisors are based on the success of these financial innovations and offer almost anyone a first-class investment management at super low rates.

It is important to keep in mind that a generation ago ETFs were just beginning, and anyone who wanted to use MPT would have to buy mutual funds. Robo advisors offer much more value than a mutual fund for investment strategies based on MPT, since most of them have rates that are well below 1% of assets per year.

Portfolio example

Easy wallet options in Wealthsimple

Wealthsimple has been able to build a customer base and expand its assets under management to $ 1 billion by offering direct prices on solid investment products. The company uses low-cost ETFs to build client portfolios.

The basic portfolios offered by Wealthsimple are balanced, conservative and growing.

The growth portfolio has an 80/20 share / bond division. The balance uses a 50/50 division, and the conservative portfolio has a 65/35 division that favors stocks over bonds. From a risk perspective, the “balanced” portfolio would appear to be the most risk-reluctant, given the uniform weighting of debt and capital.

There are other portfolio options for Muslim investors, and Canadians can negotiate shares for free with Wealthsimple. Best of all, Wealthsimple allows its clients to connect with human investment managers if they wish.

For established investors with more money invested, Wealthsimple includes the services of a wealth manager as part of its fee structure!

How to: Start with Wealthsimple

It is very easy to open an account with Wealthsimple. You must have a bank account in the United States, but other than that, almost anyone can start saving with Wealthsimple.

To open an account you must:

  1. Complete Wealthsimple’s online applications and answer some questions about your investment history.
  2. Sign some investment management agreements electronically (depending on your country).
  3. Verify your bank account.

Opening an investment account with Wealthsimple is that easy. The company has many different types of accounts to choose from, depending on your needs. In general, it takes them five business days to open your account once the forms are completed, and then you can start saving for your future!

Types of simple wealth account

Wealthsimple has numerous accounts that are made for a variety of investment purposes. In addition to a standard taxable brokerage account, it also offers different types of deferred tax accounts for long-term retirement savings.

If you want to open more than one type of account in Wealthsimple, it shouldn’t be a problem. For example, if you have maximized the amount that you can contribute to your IRA, you can open a taxed brokerage account for any additional money you wish to save for the future.

Account Types

Standard / brokerage account

If you just start investing or want to make sure you always have access to your money, a standard account is probably the right option. You can start with just $ 1, and if you need to withdraw your funds, you can do so at any time.

The standard Wealthsimple account will be subject to the normal capital gains tax, but the company offers a “tax loss collection” function to help minimize your annual capital gains taxes.

In the USA In the US, stock market investors can sell losing positions against their winning positions and pay less taxes. Finding out what to sell can be difficult, so it is good that Wealthsimple has incorporated this into all its taxable accounts as a standard feature.

Joint account

If you want to open an account with another person, such as your spouse, the Wealthsimple joint account is a good option. There is no fundamental difference between the standard brokerage account and the joint account, it only allows you to have more than one person as the owner of the portfolio.

A good reason to have a joint account is in case of unforeseen circumstances. If you are saving for your future home with your partner, a joint account ensures that you will have immediate access to the funds if something happens to you. It’s not nice to think about that, but bad things happen.

Having a joint investment account ensures that your spouse or partner will not have to deal with a lot of paperwork at a time when they are already under a tremendous amount of emotional stress.

Deferred tax accounts (IRA accounts)

The United States government allows people to save a portion of their annual income without paying taxes on money immediately. Or, in the case of a Roth IRA account, invest with money that was taxed and then withdraw it tax free.

Wealthsimple allows US citizens to open all major types of deferred tax accounts, and that’s great news!

Standard IRA

Most people have heard about IRA accounts, but there are a few different options to choose from depending on your market vision and how you are employed. The first individual retirement account (IRA) to be presented to taxpayers in the US UU. It allows you to save around $ 5000 USD (more if you have more than 50) and deduct it from your taxable income.

For example, if you are 42 years old and earn $ 60,000 a year, you could deduct $ 5,000 from that $ 60,000, if you can prove that you were invested in an IRA. You will have to pay taxes later when you withdraw it after reaching retirement age.

The advantage for you is that the money you deposit will be a pre-tax income and can grow for the rest of your life. Most people pay a double-digit percentage of their income in taxes, so a traditional IRA makes saving for the future much more efficient.

There is a fine print when it comes to deducting the full $ 5,000 from your annual taxes. If your employer offers you a 401 (k) plan, you probably cannot deduct the total amount. Talk to a registered accountant if you have more questions about this aspect of IRA financing.

Roth IRA

A Roth IRA is basically the same as a traditional IRA, but it is financed with taxable income. The idea is that taxes in the future could be much higher than they are today. Senator Roth introduced the idea of ​​an IRA that is financed with income taxed in 1997, and has become very popular.

When you contribute to a Roth IRA, the money you invest will never be taxed. Unless you decide to withdraw it before your 59th birthday, all that money in your Roth IRA can grow and not pay taxes again.

The disadvantage of the Roth IRA is that there are different restrictions on who would qualify to use one. Again, this is a matter for a tax professional who knows your economic and legal matters. On the positive side, most people who have an employer-sponsored 401 (k) plan can have a Roth IRA, which is pretty good.

SEP IRA

With the boom in the concert economy and other small businesses, the need for new retirement savings structures has increased. The Individual Retirement Account (IRA) for Simplified Employee Pension (SEP) is aimed at small business owners who do not have many employees.

A SEP IRA has a much higher contribution limit than other IRAs.

Depending on the details of your business, you can contribute more than $ 50,000 of income before taxes per year in a SEP IRA. There are more regulations on what you have to contribute to the SEP IRA of your employees, and if you plan to use this structure, talk to your accountant.

Fortunately, Wealthsimple offers all the main types of IRA accounts for its clients in the United States!

Smart savings

Interest rates have been painfully low for almost a decade. Wealthsimple has created the Smart Savings account for its customers to offer some cash return. The Smart Savings account is designed for fixed income investors and invests exclusively in debt.

Unlike most bank accounts that offer few benefits, the Smart Savings account will pay something annually. It also offers unlimited free transfers, which helps keep costs down.

Interest rates may increase in the next decade. For now, this type of account is a good compromise between the security of fixed income investments and the need to generate a certain amount of return on your savings.

Keeping accounts

Escrow Account

A trust account is a good way to save for the future of your children or ensure that your money is a legal distance from you. The trust law is nuanced and will vary from state to state. Wealthsimple allows you to set up an investment account for a trust, which is a pretty nice feature.

Halal account

Muslim investors must comply with the religious laws that govern what they can invest. Wealthsimple offers a diverse amount of investments that comply with Halal standards that require Muslim investors to avoid supporting any business that deals with gambling, alcohol or pork products, among others. stuff.

Wealthsimple gives great advantages to established investors

Wealthsimple does more than reduce its rates for investors who choose to invest more than $ 100,000 with them. The company has two premium services, the Black Program, which starts with an investment of $ 100,000, and Wealthsimple Generation, for accounts of $ 500,000 and more.

Premium programs

The Wealthsimple Black Program reduces the administration fee from 0.5% of assets under management to 0.4%, but offers much more.

Anyone who qualifies for the Black Program will receive:

  • A completely free consultation with a simple Wealths advice, to talk about investment objectives and portfolio options.
  • Free access to more than 1,000 VIP lounges at the airport, as well as a companion pass for someone with whom they travel.
  • Additional tax planning functions that are very useful for US and Canadian investors.

Wealthsimple Generation offers all those good things, in addition to:

  • Full-time access to a human financial planning team included with the 0.4% administrative fee.
  • A detailed long-term investment strategy.
  • Custom financial reports.
  • Tailored briefcase.
  • 50% discount on Medcan health plans.

Wealthsimple takes the attraction of high-equity investors seriously and includes a lot for 0.4% of the assets invested per year. It is not as cheap as some other robbery consultants at the top end of the investment range, but it offers richer investors access to a lot of human talent at low rates.

Financial advisors

Big data delivery

The Wealthsimple user interface is well designed and offers customers a clear view of what is happening with their investments.

The interface shows all the portfolios that a Wealthsimple has in an easy-to-understand linear graph. Break down all component portfolios (brokerage / IRA, etc.) separately and also show how your investments have worked over time.

In addition to providing a total perspective of the portfolio, the web interface describes how each portfolio is weighted. Fund holdings are given as a list, with the total percentage given for each fund. Overall, Wealthsimple simplifies tracking your investments and seeing where you are putting your money.

Special features for Canadians

Wealthsimple started in Canada and offers some interesting features for its Canadian clients. While they have not announced any plans to expand these functions to the US. UU. And the United Kingdom, they can do it in the future. It would make sense for them to offer the same level of functionality to larger markets and increase their competitive advantage.

Stock free trade

If you are a Canadian investor in Wealthsimple, you can trade more than 8,000 shares, ETFs and other listed US instruments. UU. And Canada for $ 0 in commissions. The trade is done in the Wealthsimple Trade application, which is available for iOS and Android. It is an incredible feature to offer a theft warning, which will hopefully soon be extended to other markets.

Rodeos

A summary is a furtive way to save for your future. If you are a Canadian Wealthsimple customer, you can choose to have the additional change of your purchases sent to your Wealthsimple account. This may seem like a silly way to save, but your detours really accumulate over time.

How does our Wealthsimple money invest?

For investors outside Canada, Wealthsimple will allocate the money from their investment to industry-leading ETFs and other indexed investment funds. With this approach, Wealthsimple customers receive a diverse exposure in numerous markets and industrial sectors.

The investment angle adopted by Wealthsimple is in line with MPT, but it may not be perfect for all investors. The great benefit to MPT is that its portfolios will keep pace with the general direction of the market. It is also likely that the returns are of the same range as the broad market, and will not be left behind if there is a large rebound.

In the long term, an MPT-based approach has proven to be a good way to adopt a passive market stance and continue to earn money. The general measures of the stock markets tend to increase over long periods of time, probably due to inflation and the rebalancing of the indexes that eliminate the companies that mark flags.

On the other hand, if there is a large drop in stock prices, the MPT-based portfolios that are weighted towards the shares will close together with everything else. A large drop in the value of the shares just before retirement is a major risk for older investors.

US stock markets UU. They have fallen substantially several times in the last three decades, making it a realistic risk to consider.

Pros

  • MPT-based portfolios will expose an increase in stock prices if the portfolio is biased towards the shares.
  • In the event of a market collapse, your losses will not be increased by exposure to a specific sector and may be offset by the bond holdings of the portfolio.
  • MPT-based portfolios are an easy way to invest, and low-cost ETFs have made it easy to implement investment ideas in MPT.

Cons

  • There is no sure way to invest money, and MPT is no exception. If you have exposure to equities and markets in general fall, you will see losses along with everyone else.
  • It is common for a market sector to exceed the broad marker (for example, FAANG shares), a portfolio based on MPT will not give exposure to these sectors.

Wealth Rates and simple conditions

Wealthsimple has a very simple rate structure.

US investors who put less than $ 100,000 in their Wealthsimple account will pay 0.5% per year, and anyone who invests more than that pays 0.4%. Investors who put more than $ 100,000 in their Wealthsimple accounts will also receive some nice advantages, which were described above.

There is no minimum deposit, and for investors with less than $ 100,000, the Wealthsimple 0.5% management fee seems a great value. For wealthier investors, paying an annual management fee of 0.4% is a more difficult decision.

Other automotive advisors reduced much lower rates for accounts over $ 100,000 and also offer benefits. Wealthsimple gives richer investors access to human portfolio managers, which puts them in a slightly different position for comparison purposes.

The Wealthsimple Generation program for investments of more than $ 500,000 offers a substantial amount of financial information of 0.4% per year, as well as some very useful advantages. Compared to the use of tailored financial planning and the creation of a portfolio through the open market, it is worth considering Wealthsimple for larger portfolios.

Simple wealth plans

Socially Responsible Investment Portfolio (SRI)

Socially Responsible Investment (ISR) is not a new idea, but there are many portfolio options for socially conscious investors. Actually, there are robotic advisors who only make investments based on SRI for their clients.

SRI focuses on making investments in companies that are working on new ideas that could improve the economy. While a commodity company like Rio Tinto has no problem attracting capital, smaller companies that have new business models rarely have access to capital on preferable terms.

Wealthsimple creates its SRI portfolio by investing in several SRI ETFs. Customers can choose between:

  • Less carbon emissions through the iShares MSCI ACWI low carbon target: CRBN
  • Support for clean technology with the PowerShares Cleantech portfolio: PZD
  • Buy socially responsible companies in the US UU. Through iShares MSCI KLD 400 Social Index Fund: DSI
  • Gender diversity with the SPDR Gender diversity: ELLA
  • Local exchange programs through the PowerShares Build America: BAB bond portfolio
  • Creation of affordable housing with the iShares GNMA BD ETF: GNMA

To be sure, there are expert SRI advisors who offer much more in terms of SRI options and investment areas. The Wealthsimple approach is not an investment approach based on SRI, and it is good that they offer some SRI options to their clients.

SRI does not have to be an all or nothing investment philosophy. Investors can delegate a small part of their investment resources to an SRI portfolio with Wealthsimple, and leave the rest of their capital in other portfolios that are more in line with an MPT investment approach.

Simple wealth: the summary

Wealthsimple is a robust robotic advisor for investors who want to adopt an investment approach based on MPT. Its rate structure is more or less in line with other robbery advisors for investors who have less than $ 100,000 invested.

The company is fully regulated, and US investors will have the same deposit guarantee that would cover them with any other broker or SIPC member. Wealthsimple does not offer the range of ETFs or direct stock ownership options (for US or UK investors) that have other theft advisors, which can be inconvenient for some people.

While Wealthsimple could be a bit limited in its offers, its investment strategy is completely consistent with MPT. Instead of chasing the market sectors, Wealthsimple allows investors to buy in large stock markets, with a certain amount of debt holdings to help offset any possible downward action.

For established investors, Wealthsimple may seem a bit expensive. An annual management fee of 0.4% on accounts over $ 100,000 is on the high side, especially for an investment architecture that would be extremely simple to replicate with a brokerage account.

The benefits that Wealthsimple offers investors at the $ 100,000 and $ 500,000 levels are attractive. Direct access to a human financial planner is a great feature of their platform and could justify the management fee they charge.

Customer Rating

On the Trustpilot review website, Wealthsimple earned a “Trustscore” rating of 8.9 out of 10, which is excellent.

Simple richness

This is what Wealthsimple customers have to say about the company:

I signed up a couple of months ago. So far I am very satisfied. The new money transfers from my bank account have been perfect. I have had a couple of problems with my existing accounts, but the customer service team has been very attentive and helpful, which for me almost overcame the problems. It is a new business, so I expect some setbacks. I am very satisfied with my experience and performance so far (although I recognize that it is not a period long enough to really evaluate performance).
Alex Mercer

Wealthsimple is excellent if you make regular monthly contributions. (weekly for me) If you do this on a regular brokerage. the fees of $ 9.99 per transaction will consume your wallet. The best thing is that it automatically rebalances every time you invest money. and buy fractional shares.
Michael

I had no problems with them and I like the simplicity of a robbery advisor. I have 10 months and more than 9.5% of weighted money between my RRSP and TFSA invested in their aggressive growth choices. I have not had any need to contact them, in addition to the initial telephone interview to conform to my risk tolerance, so I really cannot comment on that. But I like its application, web interface and the ability to link with Mint. Of course, I could go directly to ETF with a low-cost broker, but I think the 0.5% fee they charge is worth it until they accumulate a larger portfolio.
Andrew Turner

An excellent way to start saving

Let’s be honest, someone who already has a $ 500,000 portfolio will have many options when it comes to how to invest. Wealthsimple is an interesting option, but there are many other services that could take care of your money for $ 2,000 a year.

Younger people have a harder time getting involved with savings and investment, and Wealthsimple is a really excellent tool for that market. MPT is a good way to invest for people who just want to “set it up and forget it,” and there is very little that can go wrong with an MPT-based approach.

Instead of having to devote time and resources to learn how financial markets work, how to minimize taxes and many other things, a twenties can open a Wealthsimple account for $ 1 and start saving.

Very few investors can really beat markets in general for any amount of time, because the indexes that measure markets replace bankrupt companies with successful ones. This is called rebalancing in financial jargon, and the ETFs used by Wealthsimple do it automatically and at very low prices.

Pros

  • Low account opening costs.
  • Lots of features.
  • Integrated sale of tax losses.
  • Many types of account types.
  • Halal accounts
  • SRI portfolio options.
  • Smart savings account makes sense.
  • Fully regulated in the United States, the United Kingdom and Canada.
  • Excellent functions for Canadian investors.

Cons

  • Limited portfolio options.
  • There are no direct stock ownership options for US clients. UU. Or United Kingdom.
  • Less competitive rate structure for accounts over $ 100,000.

Is it time to open an account in Wealthsimple?

If you are under 30 or need a good theft advisor who uses a very popular investment strategy to manage money, it is worth checking out Wealthsimple. They offer good value for their rates, and your money will be invested in good quality ETF of the best company names.

For investors with more than $ 100,000 to park with a robbery advisor, Wealthsimple is a less attractive platform. It is useful if you want to increase general markets and have access to a human investment advisor.

The real dilemmas begin to arise at the $ 500,000 level, since $ 2,000 buys a lot in the world of investment management. To be fair with Wealthsimple, its annual rate of 0.4% is very low according to historical standards, but there are other robbery consultants who offer similar services for lower rates.

Overall, Wealthsimple is a good option for young investors or anyone who wants to adopt an investment approach based on MPT. Its user interface is easy to use and will show you how your investments have gone over time.

For more information about Wealthsimple, visit their website here.

Visit Wealthsimple

Simple wealth

 

Simple wealth

Pros

  • Minimum minimum account and no additional charges
  • Investment in fractional shares
  • Easy to use
  • Access to financial planners.
  • Harvest for loss of taxes

Cons

  • Limited portfolio options
  • Rates may be higher than other platforms
  • There are no direct stock ownership options for US clients. UU. Or United Kingdom.

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