Wealthsimple Trade Review
Wealthsimple Trade is an online brokerage that allows you to trade stocks and ETFs without any brokerage commissions. As is the case with other online brokers, this platform dedicated to independent investors does not offer financial advice or recommendations on how to manage your portfolio.
How does Wealthsimple Trade differ 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 networks artificially boosted the value of certain stocks. According to our most recent survey, 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 charged for buying or selling individual stocks or ETFs. This is the first competitive advantage for Wealthsimple Trade. However, it is important that clients stick to their investment profile and maintain their long-term investment philosophy despite the fact that it is free.
The objective of Wealthsimple Trade is clear and aimed at the bull’s-eye: we want to democratize access to financial tools. And my goodness, it seems to be successful. Revolutionary when it arrived in the country because some online brokers were charging $24.99 per transaction at the time, this online brokerage platform is now making it its duty to educate its clientele.
And this is where the second competitive advantage lies: there is plenty of theory to learn the ins and outs of stock market investing. Educational resources such as the Master Classes and the magazine, Personal Finance 101, are worth the detour. Hats off to you!
This platform is designed primarily for mobiles. The application is available on IOS and Android. Generations Y and Z seem to find it appealing: influencers promote the virtues of financial literacy and the website is fun and colourful. Who says investing has to be too serious a chore, anyway?
Now here are a few things about Wealthsimple Trade that are worth bringing to your attention.
Fractional shares
It is now possible to trade a fractional share of a certain company for only $1. Wealthsimple Trade offers this feature for shares of 14 publicly traded companies, including four Canadian companies like Shopify (SHOP-T), RBC (RY-T) TD (TD-T) and Canadian National Railway (CNR-T), and 10 U.S. companies including Amazon (AMZN-Q), Alphabet (GOOGL-Q), Apple (AAPL-Q), Microsoft (MSFT-Q) and Facebook (FB-Q).?
This is an excellent way to diversify your portfolio and limit the asset allocation you wish to give to each of these giants, whose stocks are often beyond the reach of the average portfolio!
A platform in development designed for mobility
In this case, the ability to invest at a low cost requires some compromises. Several important features offered by the competition are not available at this time. There is not much information available to analyze individual stocks and no analysis tool to evaluate the portfolio as a whole.
Some popular U.S. stocks are not available for trading
MoneySense and analytics firm Surviscor note that some important U.S. stocks, including Walt Disney Company (DIS-N), are not available for trading.
The quotes offered are not in real-time
Stock quotes are offered on a 15-minute delay, a situation that may lead you to place a buy order based on an incorrect price. To benefit from real-time quotes, the investor must choose the Premium option, offered as mentioned above, at a cost of $3 per month.
What are the fees associated with using Wealthsimple?
On August 23, National Bank Direct Brokerage announced free commissions on the purchase and sale of stocks and ETFs. Wealthsimple Trade was already 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 is the verdict?
The first question to ask is whether Wealthsimple’s free offer allows it to provide a trading experience comparable to other online brokers. And depending on the type of investor, the answer is likely to be mixed.
For example, a lower unit execution price using delayed data may make you wish you had saved the cost of a $5 to $10 commission with another broker offering real-time data.?
Remember the high volatility of GameStop (GME-N) or AMC (AMC-N) in the midst of the stock market craze. A trade based on a delayed price could have meant hundreds of dollars in lost revenue. Do the math: the price of a single stock traded during that time frame could have varied by more than $100, an amount 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 the moment, however, the independent investor must accept to make some compromises in exchange for the use of a platform that stands out from the crowd and that is free in its basic version.
This article is the shortened version of an article originally published on Hardbacon.ca by Dominique Lamy under the title "Wealthsimple Trade: Pros and Cons".