There are four general ways you can earn more money in this world.
You can invest in real estate, get a side hustle, save and pay down your debt, or invest in the stock market.
With memories of the financial crisis of 2007-2008 still relatively fresh in our minds, investing in the stock market can feel pretty daunting.
News reports of stock market crashes don’t help either.
And if you don’t have much financial background, stock trading can seem like an altogether foreign language.
If you’re not sure how to start investing and are looking for a low-cost way to begin your foray into the stock market, you may want to consider using a robo-advisor such as Wealthsimple.
This service can help take the guesswork out of investing and guide you towards successful personal finance.
What Is Wealthsimple?
Helmed by CEO Michael Katchen, Wealthsimple is a Canadian automated investing service (or robo-advisor) that was launched in 2014.
Today, with its head office based in Toronto, its services are available in the United States, Canada, and the U.K.
The company is backed by a team of world-class financial experts and technology talent.
Its staff — software engineers, designers, and data scientists — have previously worked at companies such as Amazon, Google, and Apple.
The company also has an Investment Advisory Committee, made up of recognized thought leaders in the investment community.
With some 150,000 clients with over $4 billion in assets under management, you can have confidence that the company has the expertise and knowledge to help build up your net worth.
What Does Wealthsimple Do?
As an investment company, Wealthsimple gives you access to automated software that will invest your money in the stock market.
As a robo-advisor, their services may sound strictly automated.
But it’s not.
When you sign up, you’ll also have access to financial advice from expert financial advisors (read: real people) who can guide you with financial planning to help you achieve your monetary objectives faster.
They’ll also answer questions you might have about potential risks or what sort of investment accounts you should have depending on your risk tolerance level or investment goals.
The benefits of investing with Wealthsimple is their low fees and account minimums, as opposed to traditional investment management.
Wealthsimple’s management fees are 0.40%-0.50% and $0 trading fees, with a $0 account minimum.
By comparison, many financial services will charge at least 1% in management fees, and anywhere between $9.95 to $50 in trading fees.
Stock brokers will generally want you to make a minimum investment of at least 100 shares, which means if a share is priced at $6, you’ll need at least $600 in your account.
Such high initial output can be quite deterring if you’re a first-time investor still trying to determine if stock market investing is right for you.
How Wealthsimple Works
Based on modern portfolio theory, one of the key rules to investing is to diversify, and that’s exactly what Wealthsimple offers.
The main aim of diversification is to minimize risk, because when you spread your money across different areas of the stock market, you won’t lose all of it if one business sector you’ve invested in does poorly.
Using Exchange Traded Funds (ETFs), Wealthsimple Invest will put your money in a globally diversified portfolio of low-cost index funds.
Once you’ve chosen a risk level and accept the custom portfolio they create based on your financial goals (more on that later), you can sit back and let the robo-advisor do all the work.
That work includes things like dollar cost averaging (with automatic deposits), automatic rebalancing, dividend reinvesting, and tax loss harvesting — services that most people find too time-consuming and tedious to do on their own.
For the more savvy investor, there’s also Wealthsimple Trade, which lets you buy and sell thousands of stocks and ETFs on major Canadian and U.S. exchanges.
They don’t charge any commissions, and with no account minimum, you could get started with as little as $1.
You can also opt for a high-interest savings account, with rates generally higher than the big banks.
Wealthsimple save integrates seamlessly with your other Wealthsimple accounts, and you don’t have to pay fees for transfers, withdrawals, or if you have a low balance.
Finally, you can manage your account, buy and sell stocks, or check your account balance either through their website or on their mobile app, which is great for investing on-the-go.
Personalizing Your Custom Portfolio
Wealthsimple offers four unique features and investment options that you can use to help manage your money and adopt some smart saving strategies.
Roundup
If you’re the type who finds it difficult to save or put money aside for investing, you’ll want to turn on the Roundup feature.
This will automatically invest your spare change into your account.
Whenever you buy something with your debit or credit card, your purchase will be rounded up to the nearest dollar — the difference is then diverted into your Wealthsimple account.
Overflow
This feature helps you become more disciplined in your monthly spending while growing your investment portfolio by using any extra cash you have.
Before you turn this feature on, you’ll need to have a pretty good idea of how much you’ll need to keep in your bank account for day-to-day expenses.
Once a month, Wealthsimple will move any extra money into your Wealthsimple account for investing purposes.
Socially Responsible Investing
If making the world a better place is one of your core values, Wealthsimple allows you to put your money in socially responsible investment portfolios, investing in companies that are doing good in the world.
Called your SRI portfolio, your money will still be invested using lower-fee ETFs, but it will only be invested in companies that have been carefully screened and weighted for environmental and social impact, as well as performance.
A typical portfolio will include stocks in companies that provide affordable housing, and have low-carbon emissions, clean tech innovations, a focus on gender diversity, and a positive record on human rights and corruption.
Halal Investing
The company’s Halal portfolio isn’t exclusively for Muslims, although these companies and investments comply with Islamic law.
If you would prefer not to invest in companies that profit from gambling, arms, tobacco, or other restricted industries — or businesses that derive significant income from interest on loans — this could be the investment option for you.
All investments are screened by a third-party committee of Shariah scholars.
The 50 stocks selected track the market as closely as possible and are optimized for diversification.
The Perks of Investing With Wealthsimple
The service offers three types of plans, each with different perks listed below.
Wealthsimple Basic
As its name suggests, this is the platform’s entry-level option, with a minimum deposit of $0.
With this plan, you pay 0.5% fee when you invest and $0 trading fees.
You’ll also earn 2% interest through Wealthsimple Save.
Wealthsimple Basic will give you a personalized portfolio, access to expert financial advice, and their auto-rebalancing, auto-deposits, and dividend reinvestment services.
On top of that, they’ll do a free portfolio review of your non-Wealthsimple financial accounts and assess the fees you’re paying and their tax efficiency.
Wealthsimple Black
If you deposit more than $100K, you get all the Basic plan features, but pay only 0.4% fee with Wealthsimple Invest.
Extra perks include a financial planning session and VIP airline lounge access to more than 1,000 airport lounges in over 400 cities, including a Priority Pass membership for you and one traveling companion.
You’ll also have access to Wealthsimple’s tax loss harvesting and tax efficient funds services.
Wealthsimple Generation
Depositing more than $500K will give you access to holistic financial planning designed to build a legacy.
In addition to features from the Black plan, you’ll get in-depth financial planning, a dedicated team of advisors, a personalized financial report, individualized portfolios, and 50% off the Medcan health plan.
Grow Your Wealth Simply
If you’re looking at ways to increase your wealth but aren’t quite sure where to begin, consider setting up an account with Wealthsimple.
With its low fees and access to real financial experts, it’s a relatively easy way to gain some experience in investing in the stock market.
Even if you can’t ever seem to find the time to learn more about investing in stocks and shares, the unique services that a robo-advisor provides can truly make growing your wealth as simple as possible.
