Wealthsimple Invest vs. Wealthsimple Trade: What's the difference?
Money.ca / Wealthsimple
Updated: January 30, 2024
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Based in Toronto, Wealthsimple is an online investment management service that is largely responsible for introducing many Canadians to the joys of robo-advisors. Since its launch in 2014, Wealthsimple has branched out to offer numerous products to consumers. The company’s two main products are Wealthsimple Invest and Wealthsimple Trade (though they also offer other products like Wealthsimple Cash, Wealthsimple Tax, and Wealthsimple Crypto). While both Wealthsimple Invest and Wealthsimple Trade platforms are related to investing, they function very differently and serve distinct needs. Read on to see how both platforms compare so that you can figure out which Wealthsimple investing platform best meets your investing goals.
At a glance:
Though the services offered by both Wealthsimple Invest and Wealthsimple Trade relate to investing, the forms of investing and platforms each one uses are radically different.
Wealthsimple Invest is the company’s robo-investing wing and as such it only offers passive, automated investing. When you join, you fill out a questionnaire with information about your income, investment goals, investment time horizon, and risk tolerance. Based on the information you provide, Wealthsimple then automatically matches you to a portfolio from one of three categories: conservative, balanced, or growth. Each portfolio is comprised of low management fee ETFs. Wealthsimple then manages the portfolio for you, rebalancing it and buying and selling funds based on market conditions. You never have to lift a finger.
With Wealthsimple Invest, all you’re required to do is periodically add more money (if you want to) or make withdrawals based on your needs. The role of the individual investor is as a passive investor and your interaction with your account is minimal. Even if you wanted to, you can’t buy or sell ETFs within your portfolio because all of the work is done for you. Though you don’t control your own portfolio, it’s notable that Wealthsimple does offer an impressive array of portfolios. On top of the conservative, balanced, or growth portfolios, they also have socially responsible investing options, as well as Halal portfolios.
Where Wealthsimple Invest takes a passive investing approach, Wealthsimple Trade is 100% active investing. It’s an online-only, commission-free investing platform that gives would-be investors access to U.S. and Canada-listed stocks and ETFs. There’s nothing automatic about Wealthsimple Trade. When you sign up there is no questionnaire to fill out because Wealthsimple isn’t generating an automatic, pre-built portfolio for you.
It’s up to you to pick what stocks and ETFs you want to buy. It’s also up to you to rebalance your own portfolio and do your own research about stocks. You can buy or sell as many funds as you want. Because Wealthsimple Invest sticks with relatively low-risk ETFs, the risks with Wealthsimple Trade are also potentially much greater, depending on what equities you buy.
Type of accounts
Wealthsimple Invest offers a plethora of accounts, including personal accounts, RRSPs, TFSAs, RESPs, RRIFs, LIRAs and even corporate accounts. You can also open joint accounts. Additionally, be aware that all account types offered by Wealthsimple Invest are covered by the Canadian Investor Protection Fund (CIPF), an insurance program that protects investors and their funds up to one million dollars if an investment firm goes bankrupt.
Wealthsimple Trade offers fewer account types. With Wealthsimple Trade you can hold your assets in a TFSA, RRSP, or a personal (not joint) investment account. Wealthsimple Trade accounts are also protected by the Canadian Investor Protection Fund.
There are three separate fee structures with Wealthsimple Invest. Wealthsimple Basic is for clients with net deposits from $0 up to $100K; clients are charged a monthly fee of 0.5% of their account value. The fee includes portfolio setup, automatic rebalancing, automatic dividend reinvesting, and unlimited customer service.
Wealthsimple Black is for clients with net deposits of more than $100,000. The fee for Wealthsimple Black accounts is 0.4% of the account value. Aside from a reduced fee, Wealthsimple Black has some nice extras like a financial planning session with an expert and tax loss harvesting assistance.
Recently, Wealthsimple Invest introduced a third fee plan called Generation. Generation is for accounts of $500,000 or larger and includes a management fee of 0.4%, a customized personalized financial report, tax-loss harvesting, and 50% off a comprehensive health plan from Medcan. All Generation accounts are optimized for tax savings.
The big selling point of Wealthsimple Trade is that it’s Canada’s first commission-free broker. There are no fees for buying and selling stocks. Furthermore, there are no inactive account fees or transfer fees and there is no minimum deposit required to start trading. Fees only come into play in rare cases, like when you trade or sell a US-denominated asset (there is a currency conversion fee of 1.5%), request a paper account statement (a charge of $20), or want a broker-assisted phone trade (fee of $45).
Ease of getting started
Robo-investing is a new concept for many people so Wealthsimple Invest clearly makes it a priority to make sign-up as easy, quick, and pain-free as possible. You begin by clicking “Get Started” on the home page and then you’ll be asked some basic info like your name and email.
Next, you’ll go through a series of questions regarding your previous investment experience. Once you’ve been matched with a portfolio, you’ll then e-sign some investment management agreements. Finally, you’ll need to upload a bank statement, provide a screenshot of your bank account or a void cheque to confirm your banking information.
On average your account will be ready within 5 business days. The whole sign-up process takes under 10
minutes. Whether or not you have any experience with investing or online banking as a whole, the sign-up process for a Wealthsimple Invest account is very user-friendly and unintimidating.
Starting up with Wealthsimple Trade is even easier than with Wealthsimple Invest because you don’t have to answer investment experience and goal questions. You’ll be in charge of your own investment portfolio. You begin by downloading the Wealthsimple Trade app. If you don’t already have a Wealthsimple account, you will have to quickly set up an account by answering a few questions. After you set up an account you just need to connect your bank account so that you can deposit funds. That’s it. You can be trading in as little as 5 minutes (though it will take up to 5 days to get your bank accounts connected if you’re not already a Wealthsimple client).
Robo investing is all about making investing as simple as possible and that philosophy is reflected in Wealthsimple Invest’s streamlined easy-to-navigate website. The website has colourful interactive slider graphs and charts that make it clear how much you have invested and how much your investments could grow over time. The dashboard shows you a clear overview of your investments, recent activity and portfolio growth. Fees are also clearly marked so there are no issues with transparency.
In fact, Wealthsimple was awarded a Best Financial Services and Banking Website Webby two years in a row. You can access your Wealthsimple Invest account on any PC or laptop, as well as on your smartphone with the Wealthsimple Invest and Cash app (note that this is a separate app from the Wealthsimple Trade app), which is available for Android and iOS.
Until recently you could only access your Wealthsimple Trade account via the Wealthsimple Trade app, which was a big drawback and hindered accessibility. Now, you can access Wealthsimple Trade via your PC, laptop, or smartphone. The interface is pretty much the same as Wealthsimple Invest’s with a no-frills aesthetic that’s easy to navigate. You can also add a stock to a watch list, and see some minimal information about a stock but there is little in the way of in-depth stock coverage, research or news on the website. Despite its pared-down style, you can easily perform sales and trades quickly and the site is easy to navigate.
Experience required to use
Setting up an account and monitoring how the account is doing is incredibly easy even for a complete newbie (whether that be a newbie to investing or digital financial services) thanks to the user-friendly website and the fact that you don’t have to set up your own portfolio.
Following the same streamlined and engaging website design as Wealthsimple Invest, Wealthsimple Trade is easy to join and buying and selling stocks is a straightforward process. You would certainly not need any experience with investing to start using Wealthsimple Trade, however, if you are new to investing it can be very overwhelming to decide what stocks to buy and sell since there is little in-depth equity information on the site.
Who should use Wealthsimple Invest?
Wealthsimple Invest is restricted to passive robo-investing and as such is ideal for new investors who are intimidated by investing and would rather take a hands-off approach and let someone else manage their portfolio. However, despite being ideal for new and inexperienced investors, Wealthsimple Invest is also good for experienced investors who just don’t have the time or inclination to manage their own investments.
Though suitable for inexperienced investors, it is completely online with no brick-and-mortar offices. It would not be a good fit for a person who isn’t comfortable with an online-only interface and who needs and enjoys meeting with an investor face to face.
Who should use Wealthsimple Trade?
While it’s certainly easy to set up an account to start investing, getting the most out of Wealthsimple Trade does require some experience with investing. You have to be comfortable buying and selling stocks with no supervision and advice. Wealthsimple Trade is a better match for investors who don’t need a lot of hand-holding and who feel comfortable and have the time to manage their own portfolios.
Despite not being necessarily an ideal fit for new investors, the fact that there are no commission fees does make Wealthsimple Trade a good option for those who have at least a basic knowledge of the stock market and are ready to give interactive investing a try.
Plus, Wealthsimple Trade will reimburse an outgoing administrative transfer fee of up to $150 on investment account transfers valued at more than $5,000.
For a limited time, get a $25 cash bonus when you open a Wealthsimple Trade account and fund at least $150. Sign-up today to take advantage of this exclusive offer!
Pros and cons of Wealthsimple Invest
Easy to set up an account
Low fees with three different plans depending on how much you have invested
Requires no investing experience
A variety of account and portfolio types, as well as sustainable and Halal portfolios
No control over what specific ETFs go into your portfolio
No expert advice from a financial advisor
No physical offices, digital-only
Pros and Cons of Wealthsimple Trade
Easy to use website
Access to thousands of stocks and ETFs from Canadian and U.S. exchanges
No USD accounts
Not a lot of investment news and resources
Limited account types
No physical offices, digital-only
Wealthsimple Trade and Wealthsimple Invest are both appealing options for investors of all levels. Knowing which one will work best for you comes down to being honest about your understanding and aptitude for investing, as well as figuring out how much time you really want to spend building and managing your own portfolios.