Wealthsimple Trade review: A better Robinhood?

Note: If you sign up for Wealthsimple Trade through this article, I’ll receive a $25 commission. This doesn’t affect my objectivity, however. I’ve been using Wealthsimple’s products for years, which is why I’m confident in recommending them.

Wealthsimple Trade is an app that lets Canadians trade stocks and cryptocurrencies with zero commissions and no minimum balance. But is it really any good? Or would you be better off trading with your Big Five bank brokerage account? Keep reading this Wealthsimple Trade review to find out.

Wealthsimple Trade review: The basics

Let’s start this Wealthsimple Trade review with a rundown of the app’s pros and cons.

Detailed Wealthsimple Trade review

Now, let’s take a deeper dive into Wealthsimple Trade and gauge whether it’s the right platform for your investing needs.

Wealthsimple Trade is the right platform for you if…

You value simplicity

Wealthsimple is a very aptly-named company. Its products are all incredibly easy to use and Wealthsimple Trade is no exception. It makes buying and selling stocks as simple as ordering an Uber.

This is a far cry from what many of Wealthsimple’s major competitors in Canada (including some of the Big Five banks) offer – comparatively clunky applications that are excruciating to use on mobile devices.

You’re a Canadian looking to easily manage a stock portfolio from your smartphone

If you live in Canada and want to manage your own stock portfolio from a smartphone, you won’t find an app better than Wealthsimple Trade. We just don’t have very many options up here (as you probably know).

Wealthsimple Trade is the closest thing we have to Robinhood in terms of accessibility and simplicity – at least on the stock market side of things. There are some sleek options for Canadian cryptocurrency traders (i.e. Coinbase) but stock investors need look no further than Wealthsimple Trade for an app of this variety.

You’d like to start investing with relatively little money

Canadian brokerages charge commissions as high as $10 per trade. This makes investing with little money very impractical. Just imagine if you wanted to invest $50 per paycheck, for example. You’d be incurring a 20% loss right off the bat!

Wealthsimple Trade solves this by eliminating commissions altogether. Buying shares? No commission. Selling shares? No commission.

You’re a buy-and-hold investor

Wealthsimple’s entire product line is geared towards passive investors. Wealthsimple Trade is no different.

A classic example would be the app’s intuitive yet extremely simple stock performance charts.

They’re good enough for passive investors looking to quickly visualize a stock’s performance. Active traders looking to conduct technical analysis, meanwhile, would find them lacking.

Another example would be Wealthsimple Trade’s lack of options trading functionality. If you’re a passive investor, this won’t bother you at all. If you’re an active investor who likes timing the market, that’s a different story.

You enjoy choosing your own investments

Wealthsimple Trade (as with all self-directed brokerages) puts you in the driver’s seat, letting you pick your own stocks and ETFs. This contrasts sharply with the company’s robo-advisor, which chooses assets for you. In fact, Wealthsimple Trade is clearly an attempt to attract investors who prefer taking a hands-on approach many of whom would never use the company’s robo-advisor.

Wealthsimple Trade is the wrong platform for you if…

You’d like to trade options

While Wealthsimple Trade and Robinhood have their similarities, the former’s lack of options trading is worth noting. For this feature, you’ll need an account with one of Canada’s larger brokerages (i.e. RBC Direct Investing or CIBC Investor’s Edge).

Note: I don’t recommend options trading, especially if you’re relatively new to investing. You won’t be missing out on much in the absence of this feature. Check out this Motley Fool article for a breakdown of why most investors should avoid options like the plague.

You’re looking to purchase fractional shares

With Wealthsimple Trade, you can’t purchase fractional shares. If you want to purchase shares of Apple, for instance, you’ll need enough money to purchase a full share ($134.32 as of writing). This is the case with most self-directed brokerages in Canada. Interactive Brokers is a notable exception.

You can, however, purchase fractions of Bitcoin and Ethereum through Wealthsimple Trade, which is nice.

You want to invest in cryptocurrencies and care about owning your private keys

When you buy Bitcoin or Ethereum through Wealthsimple Trade, the assets are held by a company called Gemini Custody on your behalf. The downside of this arrangement? Your cryptocurrency holdings are ultimately at the mercy of Gemini’s cybersecurity systems. You lack control.

Will this ever be a problem? Probably not, unless you’d like to buy cryptocurrency on Wealthsimple Trade and subsequently transfer it to your own hardware wallet (which isn’t possible). Die-hard cryptocurrency enthusiasts almost universally hate the idea of relinquishing control like this, though.

You’re looking to sell your existing cryptocurrency holdings

Another limitation of Wealthsimple Trade’s cryptocurrency side is that you can’t transfer Bitcoin or Ethereum from elsewhere (i.e. your own hardware wallet) onto the platform for trading. So if you already have holdings and are looking to liquidate them, Wealthsimple Trade isn’t for you.

You have U.S. dollars and would like to invest them

Wealthsimple Trade accepts deposits in Canada’s currency. You can’t deposit U.S. dollars, which makes the platform less-than-ideal if you get paid in U.S. dollars or have lots of greenbacks to trade for some other reason.

How to sign up and start investing with Wealthsimple Trade

I’ve mentioned Wealthsimple Trade’s simplicity a few times now. To show you what I mean, let’s take a closer look at the process of signing up and placing your first trade.

Step 1: Visit the Wealthsimple Trade website and sign up

Even if you have a Wealthsimple Invest account, getting started on the Trade side of things requires some setup. You’ll need your:

• name
• phone number
• email
• address
• Social Insurance Number (SIN)

Step 2: Choose the type of account you’d like to open

Wealthsimple Trade currently supports three account types:

• Tax-Free Savings Accounts (TFSAs)
• Registered Retirement Savings Plans (RRSPs)
• non-registered (taxable) investment accounts

Which account should you choose? It all depends on your investment needs and goals. Check out this guide from Wealthsimple for a breakdown. Note that you can also open an account of a different type later on. I started with a taxable account and opened a TFSA a short while later.

Note: If you’re looking to buy and sell cryptocurrency with Wealthsimple Trade, you’ll be forced to create a taxable investment account by default. You can’t hold crypto in a tax-advantaged account just yet, per Canadian government regulations.

Step 3: Connect your bank account

When you make a deposit on Wealthsimple Trade, the app will pull it directly from your bank account. You can easily connect accounts from just about every Canadian bank imaginable, which is nice. If your bank somehow isn’t among the listed options, you can still connect it. The verification will just take a bit longer (72 hours according to this page).

Step 4: Make your first deposit

Once your bank account is connected to Wealthsimple Trade, you’re ready to make your first deposit. You don’t have to pick a stock or cryptocurrency to buy at this point; the money will arrive in your account as cash and sit there until you’re ready to buy.

As of writing, this page states you can deposit up to $250 instantly in your Wealthsimple Trade account every three business days. Deposits higher than that amount will take between three and five business days to settle and become available for trading.

Note: Decide before initiating your transfer whether you’d like to trade Bitcoin and Ethereum or stocks. Transferring funds from the platform’s cryptocurrency trading side to its stock-based side may result in an additional hold period.

Step 5: Begin trading

Once your deposit has settled, you can begin trading. On the stocks side of things, you can purchase anything available on these exchanges:

• Toronto Stock Exchange (TSX)
• TSX Venture Exchange (TSXV)
• New York Stock Exchange (NYSE)
• NASDAQ
• NEO

For all intents and purposes, this gives you access to virtually every major stock you’d likely want to buy. Apple, Amazon, Tesla – you name it.

On the cryptocurrency side of things, you can currently only purchase Bitcoin and Ethereum.

The actual process of trading assets on Wealthsimple Trade is ridiculously simple. Seriously, as I mentioned earlier, if you’ve ever ordered an Uber, you can trade with this app. Just search for the stock you’d like to buy, enter the desired number of shares, and you’ll be on your way.

Note: When you purchase a stock priced in U.S. dollars, Wealthsimple Trade will carry out the conversion for you. When you’re ready to sell, they’ll also convert your funds back to Canadian dollars.

Step 6: Withdraw your money when you’re ready

Whenever you’re ready to withdraw money from Wealthsimple Trade, you can do so quite easily. Once your money has settled following a trade (which usually takes two business days), you can withdraw it to any bank account connected to the Wealthsimple Trade platform. A withdrawal usually takes no longer than five business days. You may see your money as soon as one business day after initiating the withdrawal. There is no fee to withdraw money from Wealthsimple Trade.

Wait, how does Wealthsimple Trade make money?

Now, you might be wondering how Wealthsimple Trade keeps the lights on without charging any commissions whatsoever. According to this page, the company also doesn’t sell your information or receive incentives for routing your orders through particular exchanges. So what gives, then?

The answer lies in Wealthsimple Trade’s currency conversion mechanism. You’ll incur a 1.5% fee whenever the app converts your Canadian dollar deposits into U.S. dollars for purchasing shares of American companies. Here’s how that might look based on current currency conversion rates:

1. You deposit $1,000 Canadian
2. Your funds remain in Canadian dollars until you’re ready to trade
3. You decide to purchase shares of an American company or ETF worth $785 U.S., at which point Wealthsimple Trade converts your Canadian dollars to U.S. greenbacks and charges $15 (1.5% of $1,000) for the service

You’ll also pay a 1.5% currency conversion fee on the flip side when you sell the asset. Of course, if you’re buying stocks priced in Canadian dollars, there’s no currency conversion or associated fee.

It’s worth noting that just about every brokerage in Canada charges currency conversion fees. These are typically on top of trade commissions whereas Wealthsimple Trade’s currency exchange fee is all you pay.

You can, however, subscribe to a “premium” version of Wealthsimple Trade for $3 per month plus tax. This ups your instant deposit limit from $250 to $1,000 and offers more frequently updated stock price quotes. In more than a year of using Wealthsimple Trade, I’ve never found myself wanting those features but the option is nice.

The final verdict: Should you use Wealthsimple Trade?

Wealthsimple Trade is among the better brokerages in Canada thanks to its zero-commission trades, sleek interface, and wide selection of available assets. In fact, I have a hard time envisioning a scenario in which you’d regret signing up. Even if you decide it’s not for you, the application is so easy to set up and use you won’t feel like you’ve wasted time.

While the app lacks some nice features (i.e. the ability to deposit U.S. dollars), Wealthsimple has incrementally added new functionality since its introduction. Based on my experience using Wealthsimple’s products for roughly two years, I expect this will continue.

Frequently asked questions about Wealthsimple Trade

Is Wealthsimple Trade legit?

Wealthsimple is a regulated financial services company based in Toronto. According to The Toronto Star, Canadians have invested more than $8.4 billion through Wealthsimple’s services as of writing.

I personally have no problem trusting Wealthsimple Trade with my money. I also keep my entire six-figure retirement portfolio invested through the company’s robo-advisor.

Is Wealthsimple safe for entering your SIN?

As I mentioned earlier in this Wealthsimple Trade review, you’ll need to enter your Social Insurance Number (SIN) when setting up an account. This is typical of online brokerages in Canada. While you should certainly be careful regarding who you provide your SIN, Wealthsimple is a licensed and regulated financial institution. There have been no reports of data breaches.

What is the difference between Wealthsimple and Wealthsimple Trade?

Throughout this Wealthsimple Trade review, I’ve made the distinction between this platform and Wealthsimple Invest. The latter is Wealthsimple’s robo-advisor service, designed for those who prefer taking a hands-off approach to investing.

With Wealthsimple Invest, an algorithm chooses and maintains a portfolio of ETFs based on your risk tolerance and goals. With Wealthsimple Trade, you’re completely responsible for assembling and maintaining your own portfolio.

Is it easy to withdraw money from Wealthsimple?

You can withdraw money from Wealthsimple Trade anytime. The funds will typically arrive in your bank account within five business days. I’ve seen it happen as quickly as one business day.

Can you day trade with Wealthsimple?

There’s nothing technically stopping you from day trading with Wealthsimple Trade. The company says as much here. As I mentioned earlier in this Wealthsimple Trade review, though, you may find the platform’s charts lack the analytical tools required for technical analysis. This reflects the company’s values; they don’t advocate for day trading but rather long-term investing.

How much does it cost to withdraw money from Wealthsimple Trade?

There’s no cost to withdraw money from Wealthsimple Trade. If you hold assets priced in U.S. dollars, you’ll simply pay a 1.5% currency conversion fee upon selling. If you purchase assets priced in Canadian dollars, however, there’s obviously no exchange fee.