Wealthsimple Trade is one of the financial platforms offered by Wealthsimple, whose main shareholder is Power Corporation. While National Bank Direct Brokerage recently announced free commissions on the purchase and sale of stocks and ETFs, Wealthsimple Trade has already been a pioneer in Canada in this regard. But some things need to be put into perspective. Here’s how it works.
Wealthsimple Trade is an online broker that allows you to trade stocks and ETFs without any brokerage commissions. As with other online brokers, this platform dedicated to independent investors does not offer financial advice or portfolio management recommendations.
But beware! Wealthsimple offers several different financial platforms. Wealthsimple Trade should not be confused with Wealthsimple Investments. The latter is a cheap robo-advisor that allows you to build a personalized portfolio of ETF funds.
Wealthsimple offers a variety of services under one roof. You can think of it as a one-stop shop, so to speak. On their website, in the “Our Products” tab, there is the Wealthsimple Investments robo-advisor, the Wealthsimple Cash savings account, which is a brokerage account with payment options, the Wealthsimple Crypto cryptocurrency trading platform, and Wealthsimple Tax, which allows you to file a tax refund claim. But for now, let’s focus on the stock trading platform.
How is Wealthsimple Trade different from the competition?
Wealthsimple Trade’s popularity has skyrocketed this year in the wake of the stock market saga. Young investors who were very active on Reddit and social networking sites artificially increased the value of some shares. According to our latest research, 13.3% of Canadian investors hold these types of stocks in their portfolio, despite the high volatility associated with them.
As mentioned earlier, there are no transaction fees for buying or selling individual stocks or ETFs. This is Wealthsimple Trade’s first competitive advantage. However, it is important that clients stick to their investment profile and maintain a long-term investment philosophy despite the fact that it is free.
Wealthsimple Trade’s goal is clear and targeted: we want to democratize access to financial tools. And my goodness, it looks like it worked. Revolutionary when it entered the country as some online brokers were charging $24.99 per trade at the time, this online brokerage platform now has a responsibility to educate its customers.
And this is where the second competitive advantage lies: there are plenty of theories that allow you to learn the secrets of investing in the stock market. It’s worth checking out educational resources such as masterclasses and Personal Finance 101 magazine. Hats off to you!
This platform is mainly intended for mobile phones. The application is available for iOS and Android. It seems to appeal to Generations Y and Z: influencers promote the benefits of financial literacy, and the website is fun and colorful. Who said investing has to be too serious a responsibility?
Here are some things about Wealthsimple Trade worth paying attention to.
Fractional shares
Currently, you can trade a fractional share of a specific company for as little as $1. Wealthsimple Trade offers this feature for the stocks of 14 publicly traded companies, including four Canadian companies such as Shopify (SHOP-T), RBC (RY-T) TD (TD-T) and Canadian National Railway (CNR-T) and 10 US companies including Amazon (AMZN-Q), Alphabet (GOOGL-Q), Apple (AAPL-Q), Microsoft (MSFT-Q) and Facebook (FB-Q).
This is a great way to diversify your portfolio and limit the asset allocation you want to give to each of these giants whose stocks are often outside the reach of the average portfolio!
Your first share as a gift
The initiative is original and worth emphasizing. Although this is not a feature, but rather a promotion, it has the advantage of enriching the consumer. Wealthsimple Trade offers free shares of various companies when you open an account, under certain conditions.
Instant deposit up to $250
Instant Deposit is aptly named and allows you to deposit up to $250 into your account with just a few clicks. The Premium plan, offered for $3 per month, allows you to deposit up to $1,000 and, of course, offers other upgrades to improve the basic experience.
Does the Wealthsimple platform have any weaknesses?
A platform under development, designed with mobility in mind
In this case, the ability to invest at a low cost requires some compromises. Several important features offered by competitors are not currently available. There isn’t much information to analyze individual stocks, nor is there an analytical tool to evaluate the portfolio as a whole.
Some popular US stocks are not available for trading
MoneySense and analyst firm Surviscor note that some important US stocks, including the Walt Disney Company (DIS-N), are not available for trading.
The offered quotes are not provided in real time
Share quotations are offered with a 15-minute delay, which may lead to a buy order being placed based on an incorrect price. To benefit from real-time quotes, an investor must select the Premium option, offered as mentioned above at a price of $3 per month.
What are the fees associated with using Wealthsimple?
On August 23, the Brokerage House of the National Bank of Poland announced free commissions on the purchase and sale of shares and ETF funds. Wealthsimple Trade has already been a pioneer in Canada in this regard. So, compared to other online brokers, Wealthsimple Trade has a very attractive fee structure. No transaction fees, no commissions, no annual fees and no account maintenance fees.
Wealthsimple: what’s the verdict?
The first question to ask is whether Wealthsimple’s free offering allows you to provide a trading experience comparable to other online brokers. Depending on the type of investor, the answer will likely be mixed.
For example, a lower per-unit strike price using delayed data may make you wish you had saved $5-10 in commission costs with another broker offering real-time data.
Keep GameStop (GME-N) or AMC (AMC-N) highly volatile in the middle of a stock market frenzy. A trade based on a delayed price could mean hundreds of dollars in lost revenue. Do the math: The price of a single stock traded during this period could have varied by more than $100, which is 10 times the commission charged by most brokers.
Wealthsimple Trade has it all. The promise of future features is a sign that the best may be yet to come. For now, however, an independent investor must agree to certain compromises in exchange for using a platform that stands out from others and is free in the basic version.
What we like about Wealthsimple Trade
- Lower currency conversion fees than the competition.
- The quality of the educational resources provided.
- Commission-free trading when integrated with a well-defined investment strategy.
- Possibility to trade fractional shares.
- The youth he brings to the industry.
- Quality of mobile applications.
What we like less about Wealthsimple Trade
- Some account types are not offered: Unregistered, TFSA and RRSP accounts are currently offered.
- The quoted quotes are not real-time.
- Lack of portfolio management functionality.
