*Note: This article is about WealthSimple Trade, not the other WealthSimple products such as WealthSimple Invest or WealthSimple Cash. WealthSimple Invest, for instance, has an additional .5%/annum management fee on the balance of the account.
Everybody knows that if something looks too good to be true, it always is. In fact, it’s usually a scam. Once in a blue moon something comes along and shakes things up. WealthSimple is that thing. It advertises itself as a free broker and that’s the honest truth. It is also very easy and straightforward to set up and to use, and runs on a mobile app which you can easily install onto your Android or iOS device.
In fact, the only fee, as far as I am aware, is a 1.5% fee on the foreign exchange rate when buying US listed stocks. This fee is charged on both legs of the trade (buying and selling). This fee is only economical if you are trading low amounts of stock, however this is not economical for buying large sums of US stock. This article (https://personalfinancecanada.ca/wealthsimple-trade-review/) explains the fee better than I ever could (about half way down the page).
Coming from a traditional online broker which charges $9.95 a trade, I absolutely could not believe the freedom that no commissions gives you. This is especially true for those who have heavily diversified portfolios, or who otherwise have relatively low equity in individual positions. If you want to liquidate 100 Canadian positions, anticipating the next global financial breakdown, this would traditionally cost you $1000. With WealthSimple, this costs you nothing. You could exit the positions one share at a time, and then buy them all back one share at a time, and then sell them. How much does that cost you? Again: $0.
Alright we get it: $0 Commissions. Great, but what else?
What WealthSimple Trade is Not
WealthSimple is not where you research stocks. I would recommend doing entirely 100% of your research elsewhere. There are so many great resources out there that you can use, and if you have an account with a Canadian bank, the odds are they have a great interface for researching stocks. It does have price charts and all the very basics, but no frills.
WealthSimple is not where you go to get real time stock market information. It’s not real time. Much like yahoo finance used to be, its quotes are delayed by 15 minutes. Again, there are plenty of real time resources available elsewhere. And if you are investing for the long term, this shouldn’t be a concern in the least.
WealthSimple is not where you can store US Dollars. Currently, you cannot store USD in WealthSimple. This ties into why you must always pay the 1.5% foreign exchange fee twice. That’s why WealthSimple is really not for investing in US stocks for the most part.
To Conclude
WealthSimple is a terrific service. I would highly recommend WealthSimple to someone who intends to buy and then sell Canadian stocks. As far as I know, this is the only company which currently offers zero commission trading in Canada.
Thanks for reading.
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