A Warning About Wealthsimple... | Canadian Investing 2021

---
(or JOIN Button)

Join our DISCORD Server to Discuss and Ask Questions:

---

0:00 Intro
1:10 The Problem
7:50 The Solution
⚠ #Wealthsimple #CanadaInvesting #Questrade⚠

And full disclosure, I DO use Wealthsimple for a portion of my portfolio, and generally like the company, and I always love when more companies like this open up in Canada, creating jobs for Canadians in the financial tech industry.

So I’m not just slamming it - this is what you need to know if you already are using Wealthsimple, or are trying to decide whether or not to sign up

It has to do with Fees - and whenever a company offers something for free, it’s best to take a closer look to see how they’re actually making their money.

Not a big deal, most brokerages charge a fee on the conversion of currency.

The problem is with something called the ‘currency settlement’.

As of right now, they don’t allow you to sell your US stocks, and keep the funds in US dollars. Instead, every time you sell or buy a US stock, the 1.5% currency conversion fee is charged.

This is how Wealthsimple trade makes their money. Because you can only hold CAD in your account. Anytime you interact with a US or foreign stock, wealthsimple is able to collect this 1.5% fee on the entire value of the transaction, whether sell or buy.

Now don’t get me wrong, Wealthsimple is a great brokerage, and if you only intend to invest in Canadian stocks, or Exchange Traded Funds, Wealthsimple is pretty hard to beat, with zero commissions or fees on these transactions. It’s a great way for people to get started investing, because it is by far the most user friendly and intuitive platform - by miles.

But it can be a gateway

For most people, I recommend simply sticking to an etf strategy, so that you don’t have to put in the time and energy to research individual stocks. But if you make the decision that you do want to buy US stocks, and plan on occasionally selling, or rebalancing your portfolio, I wouldn’t always recommend WS.

Questrade allows you to settle your transactions in USD. This means their currency conversion fee of 2% only applies when you decide you want to convert your USD to CAD.

While this fee is half a percentage higher than wealthsimple, in most cases, especially if you plan to be even remotely active with your US stocks, the higher fee is worth it, to not have to pay the fee every time.

---

DISCLAIMER: This video is intended to be used for entertainment purposes only, and is not to be interpreted as advice, financial, investing, legal or otherwise. Any decision or action made by any viewer of this video is entirely at the discretion of that individual. Russell Matthews does not warrant or represent that any information is accurate. This description contains affiliate links, and if you purchase an item, a portion of the sale will go towards supporting the channel, at no additional cost to you.

[russellmatthews]

What brokerage do you use? Have you started investing with Wealthsimple Trade?

[j.clarke]

If something is free, YOU are the product.

[metalmonkey]

I pretty much keep my investments in Canada and don't shuffle investments much so the US funds conversion isn't a big deal for me. My only complaint with WS is that you can't set your dividends on a DRIP. Would make life easier for people like me to just have dividends reinvested into the same company for more shares.

[EricJrWang]

So weird I just saw Wealthsimple ad before this video 😂

[psychedelicmushroompeople]

Russell, you just saved me some CAD. Thanks. I'd stick with the $7 commission fees (after 150 trades) at TD. I'm Canadian, but I prefer trading in USD; that is, in a USD TFSA.

[joevaatuitui]

*I DON'T KNOW WHO NEEDS TO THIS, YOU'VE GOT TO STOP SAVING MONEY TO BUY LUXURIOUS AND EXOTIC CARS, INVEST YOUR MONEY WISELY TO GET RICHER, BUY CRYPTOCURRENCIES, STOCKS AND SO MANY OTHERS IF YOU REALLY WANT FINANCIAL SUCCESS.*

[pablocano]

Just found your channel and I have to congratulate you on the great content! (subscribed)

I use multiple brokerages for that exact reason, plus it's also useful in case any of the brokerages ever have a malfunction (like Robinhood had a few months ago). By the way, you should really consider organizing your bookshelf lol.

[rms]

Hi thanks for the video. I originally wanted to use questrade did my research etc in 2020 but i waited for over a month for my account to go through and it didnt lead anywhere i dont know if i was on a waiting list or what but yeah customer service was almost non-existent. So i ended up with wealth. And i am very happy with it.

[thecanadiangamer]

Hey man liked the video...keep up the good work. is there anything people should know about exodus? I'm currently using it but am unaware if they charge fees?

[katsadventures]

I’m probably going to sign up to the Wealthsimple, but I want to do the all in one XBAL do you think that will be good?

[Manikzmusic]

Thank you for your help Russel I really appreciate this! As a young individual getting started in Stocks, ETF's, NTF's etc this asserted other questions I had, and took away some of the nerves I had about it. I'll be back for more you got a sub from me! Stay safe and blessed brotha, keep ya head up and have a great day!😁🤞🏻👍🏻

[AlpineDividends]

I use Wealthsimple Trade. I have only been buying Canadian stocks, and no ETFs. Honestly I'm super happy with it. I have paid $0 in fees, and made good returns on my Canadian stocks. Having no commissions means that I can just buy one or two stocks at a time, and take advantage of individual dips. This actually lets me lower my average price of each position when it's possible, and occasionally sell off some when they are high. I don't plan to buy US stocks or ETFs any time soon. If I ever do, I might use Questrade, but for now I'm very happy with WST and Canadian stocks! 🇨🇦

[alcusminix]

Very good video. Clear and to the point. Wealthsimple needs to stop exchanging currencies. They must be the only broker left to correct this issue within registered accounts. Imagine if you choose one of their managed packages. They rebalance it for you for a management fee and charge the currency exchange to reduce each US position and the currency exchange to increase each position unnecessarily!!!
Switching from one risk level to another = rebalancing = another opportunity for them to swap currencies!!!
1.5% or 2.0% is already extremely high for what they actually do. Once is bad enough!

[chasesmith]

What are your thoughts on MetaTrader and Binance? I've been told to use these platforms to start

[tylerg]

Can’t you just add a US dollar account to you WS account? Every major Canadian bank offers them now. Then all transactions for US stocks would be in US dollars. Please correct me if I’m wrong. Great video none the less.

[hodmedia]

What camera(s) are you using? I love the quality of your video

[mbabcock]

You can literally go an entire TFSA investing lifetime on Wealthsimple, buy CAD stocks and ETFs and PAY NOTHING in fees!!!
Let me repeat this:
You can literally go an entire TFSA investing lifetime on Wealthsimple, buy CAD stocks and ETFs and PAY NOTHING in fees!!!

[kentb]

I don’t comment on videos often, but I do like to give credit where credit is due. Thanks for this video, very clear, easy to digest, and you were able to answer my questions in a clear and concise way! Very well done.

[nicolasdiotte]

I’m a beginner!! Just turned 18, and this information is pretty helpful👌

[TheFabrice]

Although Questrade doesn't charge conversion fees every time you trade a stock, they do charge a commission fee that is quite high. For example, I just bought some US stocks for US$137 on Questrade and it charged me a commission fee of $4.95, which is 3.6%, definitely higher than the 1.5% for wealth simple. If Questrade will charge me this commission fee every time that I buy and sell my US stocks, then it will be way more expensive compared to the commission-free from Wealthsimple