Wealthsimple, a popular robo-advisor, streamlines investing for millennials, making it easy to automate financial growth. With portfolios catering to different values, such as socially responsible and Halal investing, it offers various options, but be mindful of management fees impacting long-term returns.
Wealthsimple is a robo-advisor popular for millennial investing, putting your “investing on autopilot,” as the company itself describes its services.
Wealthsimple is one of the best online investment managers in the industry, but is it right for you?
Let’s take a more in-depth look at this robo-advisor, including how Wealthsimple works, how the platform invests your finances, and its advantages and disadvantages.
Table of Contents
- Wealthsimple Overview
- How Wealthsimple Works
- Wealthsimple Portfolios
- Opening a Wealthsimple Account
- Bottom Line
Wealthsimple Overview
Wealthsimple is a key player in the robo-advising world, and it’s worth your time and consideration, offering comprehensive and enriching investment opportunities.
About Wealthsimple
It has over $1 billion in assets under management and is backed by a team of experienced financial gurus and some of the best technological brains in Silicon Valley.
Wealthsimple’s personnel is composed of designers, data scientists, and software engineers who have previously worked at big corporations such as Google, Apple, and Amazon.
Wealthsimple is perfect for:
- Beginner investors
- Anyone who’s comfortable managing their funds online
- Socially responsible investors
- Those seeking Halal investment options to fit Islamic law
- If you’re looking to save money on fees.
What Wealthsimple Has to Offer
Wealthsimple is an automated investing service that delivers premium-quality, long-term investment management service with no account minimums.
It invests your funds in a diversified portfolio of exchange-traded funds (ETFs) that target low-cost index funds. This allows for the creation of a portfolio that has invested in thousands of different companies across various industries around the world.
Wealthsimple offers a wide range of services, including:
- Tax-Loss Harvesting: Wealthsimple helps protect you with tax-efficient investments.
- Dividend Reinvesting: The beauty of a robo-advisor is that it reinvests dividends to keep you on target.
- Automatic Rebalancing: Along those lines, Wealthsimple rebalances your investment allocations to help you reach your goals.
How Wealthsimple Works
Wealthsimple employs the Modern Portfolio Theory in its investment strategy. Developed by Nobel Prize-winning economist Harry Markowitz, the theory states that you can minimize risk and maximize returns by diversifying your investments.
Signing up for Wealthsimple services is as simple as filling out a risk assessment questionnaire. The information you give will help in determining your initial risk profile.
Then, the robo-advisor will recommend a portfolio mix based on your investment goals, risk tolerance, time horizon, how much you understand about investing, and past investment experience.
The good thing is that you have the option to adjust your portfolio based on your specific needs, especially when the determining factors change over time. You can do that by making a call or sending an email to Wealthsimple. They’ll discuss your situation and make the necessary adjustments.
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Wealthsimple Portfolios
Wealthsimple offers four different portfolios designed to meet the needs of different investors:
- Wealthsimple Basic Portfolio
- Wealthsimple Black Portfolio
- Wealthsimple Halal Portfolio
- Wealthsimple Social Responsible Investing (SRI)
Basic Portfolio
Basic is the simplest Wealthsimple portfolio, targeting accounts with balances not exceeding $100,000. It charges a .50 percent management fee annually. Services offered by the Wealthsimple basic plan include:
- Dividend Reinvesting
- Automatic Deposits
- Rebalancing
- A Customized Portfolio
- Tax-Loss Harvesting
- Human Financial Advisor
With Basic Portfolio, you can get any one of the portfolios represented in the table below:
| PORTFOLIO TYPE | STOCKS | BONDS |
|---|---|---|
| Balanced | 50% | 50% |
| Growth | 80% | 20% |
| Conservative | 65% | 35% |
The Basic portfolio comprises ten different ETFs. Six of those are stock funds, and the rest are bond funds.
Wealthsimple Black Portfolio
The Black portfolio is ideal for large investors who are looking to invest at least $100,000. The management fee for this portfolio is 0.40 percent.
The Black portfolio gives you an opportunity to sit down with an experienced financial advisor to review your long-term goals and see how this portfolio can help you attain them.
With this portfolio, you also get to enjoy increased tax efficiency. Namely, the robo-advisor builds your portfolio with tax-efficient funds.
It’s also worth noting that the Wealthsimple Black Portfolio is created in the same way as the Basic Portfolio. That means it also encompasses balance, conservative, and growth portfolios.
Moreover, this portfolio comes with some exciting perks, such as access to over 1,000 VIP airline lounges in about 400 cities around the world. You’ll also receive a complimentary Priority Pass membership for two.
Socially Responsible Investing (SRI) Portfolio
If you are looking to invest in organizations that focus on positively impacting society or the environment, then the Wealthsimple SRI portfolio would work well for you.
This portfolio invests mainly in companies that promote either gender diversity, affordable housing, or low carbon emissions.
It invests in six different funds, which include stock funds and fixed-income funds. There’s not much difference in cost from the Basic and Black portfolios.
If your investments fall below $100,000, you’ll need to pay a 0.50 percent annual management fee. However, the fee for the first $5,000 is waived.
For investments above $100,000, you’ll pay a lower management fee – 0.40 percent per year.
Wealthsimple Halal Investing Portfolio
If you are looking for investment opportunities that uphold Islamic principles of investing, then you might want to know what the Wealthsimple Halal Investing portfolio has to offer.
One major attribute of this portfolio is that it doesn’t include bonds. That’s in line with the fact that Islamic law doesn’t allow profiting from debt. Hence, the Halal portfolio invests solely in individual stocks.
The Halal Portfolio is a single portfolio that can’t be customized for every individual investor. It invests in the stock of 50 different companies. These companies have to represent those that largely follow Sharia law.
The Halal portfolio is created by a team of experts at Morgan Stanley Capital International (MSCI), a worldwide provider of hedge fund stock market indexes, fixed income, equity, and multi-asset portfolio analysis tools.
You should also realize that Halal Portfolio doesn’t offer conservative or balanced portfolios, and this is a higher-risk portfolio as it is comprised entirely of equity.
Opening a Wealthsimple Account
Opening an account with Wealthsimple is quite simple. All you need to do is follow the steps below:
- Click the “Start investing” button on the Wealthsimple website and complete the online application.
- Answer a couple of questions about investing and then proceed to e-sign the company’s investment management agreement.
- You’re required to either upload a bank statement, void a check, or take a screenshot of your bank account to verify your bank.
If you get stuck along the way, you can call Wealthsimple customer service at 1-855-782-3559.
You can also email them at [emailprotected]. You may not get enough educational content on Wealthsimple’s website, but the user-friendly website is impressive if you can do without the in-depth details.
Bottom Line
If you’re looking to invest in portfolios that are consistent with your values, you’ll never go wrong with Wealthsimple. Wealthsimple’s values-based investment offerings are unmatched.
It offers a variety of socially responsible investing and halal portfolio options. You also get to enjoy some additional goodies like tax-loss harvesting, no minimum balance, and access to experienced financial planners.
The major downside of Wealthsimple is its account management fees.
Management fees can have a significant impact on long-term investment returns, and hence you should consider the 0.4 and 0.5 percent management fees before you invest, especially if your account balance isn’t eligible for Wealthsimple’s lower advisory fee rate.
Learn more about Wealthsimple>>
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Product Name: Wealthsimple Product Description: Wealthsimple is a cutting-edge robo-advisor that automates investment management for users, aiming to simplify the complexities of finance. Catering especially to millennials and new investors, the platform offers diverse investment opportunities, including unique portfolios like Halal and Socially Responsible Investing. Summary A frontrunner in the digital investing world, Wealthsimple boasts a robust investment algorithm combined with an intuitive user experience. With over $1 billion in assets under management, it’s backed by an ensemble of financial experts and top-tier tech minds from Silicon Valley. The platform uniquely positions itself to cater to a wide audience by offering specialized portfolios such as Halal, for those wanting to invest in line with Islamic principles, and Socially Responsible Investing, for those aiming to make a positive societal impact. 4 Pros ConsWealthsimple Review
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