Why I DO Use Wealthsimple For Investing 💸
Today we’re going to go into more detail about a nice fresh topic: Why I DO use Wealthsimple as my brokerage, and why it’s great for the beginner and average investor (I do not use any other brokerage, therefore this will be a bias review and just an opinion, it’s personal preference).
Starting off with the elephant in the room: The conversion fees. For anyone who invests into USD stocks or etfs will be hit with a 1.5% conversion on both the buying and selling (The fee is actually around 1.9% for those wondering since their calculations are somewhat different). This may be a significant chunk for those who are investing large sums of money. But how much does this actually matter? For every $100 you invest in USD you will lose between $1-2 on the trade. This may seem like a lot now, but the longer you invest the less it becomes relevant. Think of it this way, that 1.5% rather than a dollar amount, it’s a percent of future gains cancelled out. Maybe the USD stock you bought is very volatile and you can make that 1-2% back within the week. Rather than spending the time getting it converted through something like Norbert’s Gambit, you can buy your stock today and not miss out on your potential earnings. If your timeframe is 20-30 years and you’ve multiplied that stock numerous times in value, is that extra 1-2% on the end going to have significant financial impact? Probably not. The majority of people who invest with USD are buying single companies rather than an index, which means you may see that fee brought back in the form of gains much quicker than the index (or slower, if you make a bad investment 😉). The USD account is also an option if it benefits you as an investor. Either getting it for free ($100k invested with the company) or at $10 a month, you can hold USD alongside your CAD. This means you only pay the conversion on the way in and out. Whenever you buy or sell USD stocks you keep those funds in USD and don’t convert every time; this is true for US dividends as well. The account is very beneficial for those planning on either spending more than $10 a month on conversion fees, or if you plan on going in and out of positions regularly. The average person and investor also does not have a 6 figure portfolio, blossom is simply skewed heavily towards people with more financial knowledge; most Canadians don’t even know how to invest. Their fee is also one of the ways they make profit for the company, and allow you to use the other great features on the platform that we’ll go into.
Moving onto other features, what else makes Wealthsimple great? Well by far one of my favourite things is the UI for their app and website. I’m a big fan of simplistic but in-depth web/app design and I HATE when UI is very complex and confusing. I already spend enough time learning about my investments, I don’t need more barriers to cross trying to use an app. The simple layout on their platform is very easy to understand as a beginner, and it makes learning about investments a whole lot easier. Many people will give up on achieving something if the first steps are way too complicated; simplicity is best. The layout of accounts, finding investments, your funds, and adding/sending funds are laid out in a way with both understandable language (not high level investing terms) and easy accessibility. Everything you need can be figured out all within the app, you shouldn’t have to research how to use a program OUTSIDE of the program.
One of, and if not THE most important offering of Wealthsimple is FREE commission trading. This means that outside of conversion, every time you’d like to buy and sell stocks or ETFs, you pay $0 to do so. This is a concept that hasn’t always existed, and for most brokerages or firms they make you pay a set dollar amount for every trade you do. This is the bread and butter of the platform, there’s practically 0 entry barrier to new investors looking to start investing. This means for those who can only invest maybe $10 or $20 a week to start, they can buy as much or as often as they want without a flat rate on every share. This coincides with the offer of fractional shares meaning it does not matter how much you have, you can buy as little or as much of 1 company share as you’re able.
Investing and adding money on Wealthsimple is also as easy as a few clicks. For those old enough to use Banks to invest from decades ago, it was never this simple. From getting physical copies of your stocks, to finding out the price one time in the newspaper, there were way more hoops to jump through to get into investing. Wealthsimple provides you with easy access to funds, being able to transfer in and out, setting up recurring payments, and getting access to your money instantly which is something not every brokerage has. Instead of waiting for it to be cleared, or big long transfers Wealthsimple can pre-clear your money up to a certain amount so you can start trading immediately. Whether it’s regular payments daily to your TFSA, or adding lump sums all at once, you get your money ASAP and don’t miss out on any opportunities.
The Cash account is another great addition recently that gives any investor a great place to hold some cash or some sort of emergency fund. Taxable interest (Currently at 2.75%) that’s just as easy to access as your bank. In and out transfers possible with either direct or e-transfers, and it allows you to keep track of some cash and investments all in one program.
Most accounts are also available self-directed and it’s as simple as setting them up. You don’t have to worry about setting yourself up through your bank or through your employers company, you’re able to get everything in one place by following their steps and adding your funds. They even offer transferring fee coverage over $15,000 for those looking to switch over an account to them.
For those who like it, there’s also direct crypto investment options which is definitely not an option at every brokerage.
There are a lot of other small things I didn’t go into because they don’t affect most people or I have not taken the time to fully research them (private equity, mortgages, milestone tiers for $100,000 or $500,000, rewards programs, etc.) but I think you understand the sentiment of this post. The point is, for 99% of the population Wealthsimple is a great option for investors and there are other things to consider than strictly your dollar values. Time, convenience, easy access etc. are all aspects that affect you directly as an investor. As always, do your research and happy investing!
(PS, Referral Code ZBU-XG if you want $25 when signing up for wealthsimple!)
