Wealthsimple Trade in-depth review 2022: The pros and cons
Watch: MoneySense – Investing in Cryptocurrency
Are there really no commission fees?
Yes, really! It can’t be overstated how key this is to Wealthsimple’s success. Many of its competitors charge a flat rate of around $5 to $10 per trade or a percentage of your trade value. Again, this is a particular boon for passive, long-term investors, especially those who invest small amounts regularly, who now can build a well-diversified portfolio for absolutely no commissions.
What is Wealthsimple Trade’s cost structure?
If there are no commission fees, how does Wealthsimple Trade cover its costs and earn profit, you might wonder. The company is very straightforward about this. According to Wealthsimple, its earnings come primarily from a 1.5% currency exchange fee charged on Canadian-to-U.S. dollar conversions (and vice-versa). It deems these as necessary for trading U.S.-listed securities in the basic plan.
As previously mentioned, you can avoid these foreign exchange fees by upgrading to the Trade Plus plan, which allows you to hold U.S. currency in your account. But that’ll cost you $10 per month, which is another way Wealthsimple Trade makes money.
When you buy or sell a cryptocurrency, you’ll pay a simple spread (of up to 2%) that’s already included in the price. The spread covers the cost to Wealthsimple’s custodian (Gemini Inc.), the liquidity providers, and operational overhead.
There are small fees associated with other transactions. That could be the $45 for a broker-assisted phone trade or $20 for a paper account statement—but you’ll rarely, if ever, require these.
Is there anything you can’t buy on Wealthsimple Trade?
Yes. But if you’re a passive, long-term investor without a lot of experience, you’re probably not going to mind.
Wealthsimple clients are restricted to trading equities like stocks and ETFs. So, if you want to, for example, buy mutual funds or participate in a company’s IPO, you’ll have to go elsewhere. It’s for this reason that some investors may opt for the likes of Qtrade or Questrade.