Looking to open a Wealthsimple Trade TFSA or Wealthsimple Invest TFSA? This post is for you.
The TFSA is a popular savings tool that lets Canadians save for any financial goal and grow their investments tax free.
In this post, you’ll learn about the TFSA accounts at Wealthsimple Trade and Wealthsimple Invest, how to open an account and how they compare to Questrade’s TFSA.
What is TFSA?
Tax-free Savings Accounts (TFSA) is one of the several tax-sheltered accounts available to Canadians. Since its introduction in 2009, it has grown to be one of the most popular registered accounts with over 14 million TFSA accountholders as at 2018.
TFSAs allows your contributions to grow tax-free and withdrawals can be made anytime without paying taxes. And unlike RRSPs, you don’t need to have earned income to contribute to a TFSA.
You automatically start accruing TFSA contribution room in the year you turn 18 or become a resident of Canada.
The annual contribution limit is benchmarked against inflation, but it’s $6,500 since for 2023. Like RRSPs, you don’t lose your contribution room if you don’t contribute in a year.
That is, the contribution room can be carried over to future years. Someone that was 18 in 2009 when TFSA was introduced and never contributed, have an accumulated total of $88,000 in TFSA contribution room in 2023.
Related Post: Beginners Guide to TFSA
Wealthsimple is a Toronto-based financial technology company with the goal to “democratize wealth by giving the financial tools of the rich to everyone.”
It started in 2014 by providing an easy and low-cost way for Canadians to start investing through its robo-advisor product, Wealthsimple Invest, but it has expanded to the USA and UK.
Its product offerings now include:
- Commission-free trading app (Wealthsimple Trade)
- Wealthsimple Cash
- Tax-filing product: Wealthsimple Tax
- Cryptocurrency trading (Wealthsimple Crypto) ; and so on.
The company currently serves more than 1.5 million people worldwide, with over $10 billion assets under management.
Investors can choose from one of the several available account types at Wealthsimple including TFSA, RRSP, RESP, LIRA, RRIF, Personal (non-registered) and so on.
You can open a Wealthsimple TFSA account at either Wealthsimple Invest or Wealthsimple Trade.
Note that both accounts are separate and distinct. The choice between the 2 will come down to how involved you want to get with your investments.
We’ll cover each of the options in details below:
Wealthsimple Invest TFSA
Wealthsimple Invest TFSA is a robo-advisor or managed account offering. That means, all the investment decisions such as when to invest or rebalance are made by the portfolio manager.
This is a hands-off investment approach. You simply contribute to the account and every other thing will be handled by Wealthsimple.
This could be perfect for beginners and even experienced investors.
Here are some features of Wealthsimple Invest TFSA:
- No account minimums: start with as little as $1. Ideal for those investing small sums at a time
- Lower management fees starting at 0.5%
- Simple online account opening: as little as 5 minutes
- CIPF Protection: bankruptcy coverage of up to $1 million
- Choice of Risk Level: build a portfolio that aligns with your risk and investment goals
- Auto-pilot investing: Automatic rebalancing, dividend reinvesting and option to setup auto-deposits
Another cool feature is the contribution tracker for RRSP and TFSA contributions. Overcontributing to your RRSP or TFSA can be costly, so the tool definitely helps.
Unfortunately, the tracker only considers your contributions to Wealthsimple Invest.
You can’t use it to track other contributions, even the ones to Wealthsimple Trade. But you can download a free TFSA contribution spreadsheet here.
Wealthsimple lets you pick a portfolio with a level of risk that you’re comfortable with and one that aligns with your financial goals. The portfolio options vary from conservative to growth, with different levels of exposure to equities.
For example, investors with medium to high risk tolerance can choose one of the growth portfolios that have 75-90% equity exposures.
Irrespective of the one you choose, you’ll be getting a portfolio built using low-cost, diversified ETFs covering investments across Canada, US, Developed and Emerging markets.
You can also invest in a portfolio that reflects your values by picking either the Halal Investing Portfolio or Socially Responsible Investing Portfolio.
Wealthsimple Trade TFSA
This is Wealthsimple’s self-directed TFSA option.
Want to handle all the investing decisions yourself while keeping your costs low, then Wealthsimple Trade TFSA is for you.
Wealthsimple Trade is a commission-free stock trading app that lets Canadians buy thousands of stocks or ETFs listed on major U.S. and Canadian exchanges.
It is available in 3 different account types: TFSA, RRSP or Personal (non-registered) account.
Here are the features of the Wealthsimple Trade TFSA:
- $0 account minimums
- No commissions on all trades (buys and sells)
- Easy and paperless account opening
- Clean and intuitive investing app
Wealthsimple TFSA Fees
The Wealthsimple TFSA fees depend vary between the two investment platforms of Wealthsimple.
Below is an overview of the TFSA fees on Wealthsimple robo-advisor and self-directed brokerage.
Wealthsimple Invest TFSA Fees
So what are the Wealthsimple TFSA fees for the robo-advisor accounts?
The pricing is the same as the other account types. It varies depending on your account value
- Basic ($0 – $100,000): 0.50%
- Black (Above $100,000): 0.40% management fee
- Generation ($500,000 +): 0.40% plus extra benefits like in-depth financial planning, dedicated team of advisors, 50% off Medcan Plan etc
In addition to the management fees above, there’ll be extra fees for the underlying ETFs the portfolios invest in. But this would generally be below less than 0.20%. For example, the fees for the ETFs used for the RRSP growth portfolio is just 0.13%.
Meaning you can expect a total fee of about 0.70% if investing below $100,000. Compared to the median MER for Canadian mutual funds of 1.94%, this is a great option.
There are no hidden fees – so you won’t pay any monthly/quarterly maintenance or inactivity fees, rebalancing fees, withdrawal charges etc.
Wealthsimple Trade TFSA Fees
There are no fees to buy or sell in your TFSA with Wealthsimple Trade, making it perfect for investors that want to build a portfolio with small amounts at a time.
Withdrawals are also free and there are no monthly maintenance fees or fund transfer charges.
The only fees at Wealthsimple Trade is on currency conversion spread when you buy USD denominated securities. You’ll be charged a fee of 1.5% on the corporate rates for both buys and sells.
Depending on how much you’re investing, you may be better off opening a Questrade TFSA account and paying the $4.95 fees if you’ll be buying a lot of U.S stocks.
How to Open a Wealthsimple TFSA Account
Whether you’re opening a Wealthsimple Trade TFSA or Wealthsimple Invest TFSA, the process is simple and completely online.
For Wealthsimple Invest, you’ll be asked a series of questions to establish your risk tolerance, investment knowledge, time horizon and past investment experience.
Based on your responses, you’ll be provided with a recommended portfolio that reflects your risk. Of course, you can choose another portfolio or make changes later through the account profile.
Once the account opening is completed, simply fund your account. You may also set up auto-deposit into your account to automate your investment and reduce the emotional barriers or temptation to time the market.
Wealthsimple Trade can also be opened in a few simple steps – either online or through the mobile app. Get $10 welcome bonus when you trade your first $100 using this Wealthsimple Trade link.
Wealthsimple TFSA vs Questrade TFSA
Questrade is another Canadian that provides low-cost, full brokerage services. In addition to several other registered and non-registered accounts, Questrade also offers TFSAs to its customers.
Like Wealthsimple, Questrade TFSA can be held in a managed or robo-advisor account through Questwealth Portfolios, or in a self-directed TFSA.
So how does Questrade TFSA compares to Wealthsimple TFSA.
Wealthsimple Invest TFSA vs Questwealth Portfolio TFSA
Both TFSAs are managed by professional portfolio managers. Accountholders simply transfer their funds to their TFSA account or setup auto-deposits.
Investors will also get a portfolio built using low-cost, diversified ETFs irrespective of the company they choose.
But there are a few differences between the Wealthsimple Invest TFSA and Questwealth Portfolio TFSA.
Questwealth Portfolio TFSA fees start 0.25% for assets below $100,000. That’s half of the fees for Wealthsimple Invest. The management fees drops further to 0.20% when the balance exceeds $100,000.
So going by management fees alone, Questwealth Portfolio looks like the better offering. But note that for deposits above $100,000, Wealthsimple provides extra benefits like financial planning session, tax-efficient funds and tax- loss harvesting.
These perks are important and can save you the extra costs of getting them from a fee-only planner for example.
Check my Wealthsimple Black Review to read about its extra perks.
Both Wealthsimple and Questwealth Portfolios are diversified across and within different asset classes, but the investment strategies are different.
Wealthsimple Invest portfolios follow are passive, buy and hold strategy. On the other hand, Questrade uses active management to “help reduce your risk and preserve your initial investment over the long run”
All things being equal, an active investing strategy would cost more than a passive approach. But Questrade still manages to keep its cost low through “smart technology.”
Minimum Investment Account
You need a minimum of $1,000 to start investing with Questrade but Wealthsimple lets you start with as little as $1. This is something to consider if you want to start with a few hundreds and build your portfolio gradually.
Read more: 10 Ways To Start Investing With Little Money
Wealthsimple Trade TFSA vs Questrade Self-directed TFSA
If you like the idea of managing all the investment decisions in your portfolio, a self-directed TFSA may be a better fit for you.
Gone are the days when self-directed investing is both stressful and costly. These days, you can easily build a globally diversified portfolio at low-cost and even commission free.
Both Wealthsimple Trade and Questrade lets you do just that.
Here’s how they compare:
|ETF Fees (Buy)||Free||Buy|
|ETF Fees (Sale)||Free||1cent/share|
min: $4.95; max: $9.95
|Stocks (Buy & Sell)||Free||1cent/share|
min: $4.95; max: $9.95
|Hold USD Cash||No||Yes|
|Currency Conversion Fees||1.50%||N/A|
Transferring TFSA to Wealthsimple
Wealthsimple lets you transfer your existing TFSA (and other accounts including RRSP) at other brokerages or financial institution in a few simple steps.
You can transfer to either Wealthsimple Invest or Wealthsimple Trade, both online or through the mobile apps.
You’ll get a prompt for this during the account opening process.
To get started with transferring a TFSA to Wealthsimple Invest after your account has been opened, follow the steps below:
- Login to your Wealthsimple Invest Account
- Go to “Move Funds” and click “Transfer an account”
- Provide the account details for the current financial institution.
- Choose how you want to transfer your investment: “as cash” or “as is”
- Sign the transfer request digitally
If you typed your financial institution in the search box but can’t find it, it means they don’t support electronic transfers. You’ll need to fill in the name manually and enter the details to continue.
To transfer your TFSA to Wealthsimple Trade, click on the profile icon in the top left corner of the mobile app. Select “Funding”, then click on “Transfer an account.”
Then follow the instructions to provide your account details at your old institution.
The great part is:
Wealthsimple will cover your transfer fees when transferring over $5,000. But they will not reimburse any Deferred Sales Charge (DSC) or trading fees incurred due to the transfer.
Related Post: TFSA and RRSP Transfer Fees
Is Wealthsimple Safe?
Wealthsimple accounts are held at Canadian ShareOwner, their affiliated custodial broker. Canadian ShareOwner is a member of the Investment Industry Regulatory Organization of Canada (IIROC).
That means your investments are protected by the Canadian Investor Protection Fund (CIPF) in the event that ShareOwner becomes insolvent.
All your financial information is also protected using state-of-the-art data encryption.
FAQs: Wealthsimple TFSA Review
Yes, Wealthsimple offers TFSA accounts through Wealthsimple Invest and Wealthsimple Trade.
Yes, you are allowed to have multiple TFSA accounts. In fact, many Canadians do. As long as you keep track of your contributions and don’t over-contribute, you’re good.
Yes, you can open a self-directed TFSA at Wealthsimple Trade. There are no fees to buy or sell thousands of stocks and ETFs. There’s, however, currency conversion costs if you trade USD denominated securities.
Wealthsimple TFSA is good especially for investors that want to trade without commission.
Yes. There are no deposit, withdrawal, interest or dividends taxes on a Wealthsimple TFSA as it is with other investment platforms in Canada.
Wealthsimple doesn’t charge fees on its self-directed brokerage besides the 1.5% FX fee on basic account. The Wealthsimple robo-advisor charges 0.4% to 0.5% management fee on TFSA and other investment accounts.
Final Thoughts: Wealthsimple TFSA
With Wealthsimple TFSA, you’re getting one of the best tax-sheltered accounts available to Canadian investors at Canada’s biggest robo-advisor.
Whether you’re new to investing or a seasoned investor, you can’t go wrong with either the Wealthsimple Invest or Trade TFSA.
A word of advice:
Don’t let the commission-free trading of Wealthsimple Trade tempt you into a turning your TFSA to a trading account.
CRA frowns on this. You should keep your day-trading activities in taxable or non-registered accounts.
Also check my Wealthsimple RESP Review here.
- 9 Costly TFSA Mistakes to Know and Avoid
- TFSA Statistics: Interesting & Surprising Data on Adoption and Usage
- How To Withdraw From TFSA (TFSA Withdrawal Rules)
Wealthsimple TFSA Review
Learn about the Tax-free Savings Account offerings at Wealthsimple, Canada’s largest robo-advisor.