When it comes to successful investing the guidelines are pretty straight forward. Start as early as possible and do it often, because compound interest is one of the greatest discoveries known to mankind. Match the markets and don’t try to pick individual winners and losers. Index investing is the way to go for a majority of people out there. Keep the cost of investing low, meaning don’t pay unnecessarily high fees and taxes. Diversify your risk without hurting overall returns. Some investments go up, others go down, but in the end balance will pay off.
Just getting into investing in the first place can seem like a difficult task to some. But thankfully a relatively new service called Wealthsimple will help people invest using all the important principles outlined above.
Recently I was invited by a friend to attend dinner with himself and the CEO of Wealthsimple, a portfolio management company that combines technology with prudent financial strategies to make investing smart, simple, and low cost to everyone. The 3 of us had a great meal. And after speaking with the CEO, Michael, I realized that his company can provide a great option for many investors today.
How Wealthsimple works.
It’s basically an investment management service but it makes investing accessible to everyone, regardless of net worth or financial knowledge. First, an investor would sign up for an account online and be guided through the entire process: from assessing his risk tolerance and determining his investment goals, to setting up regular monthly contributions. Next, after a conversation with a dedicated Wealth Concierge, the company would build the investor a customized portfolio and start investing for him.
The investor’s portfolio is then automatically optimized for taxes and rebalanced over time using a computer algorithm. The client can see in real time the value of his portfolio, total fees paid to date, and total principle growth.
Wealthsimple recently launched its mobile app which can be found in the Apple App Store and the Google Play Store. The company has also expanded its services recently into Alberta, Manitoba, and Quebec.
I think Wealthsimple’s system works really well for the average investor and it makes managing money very simple and hands off. The company has a very competitive fee structure too. Management costs are between 0.35% to 0.50% of the portfolio amount and Wealthsimple covers all trading costs and administration fees. I believe the minimum investment requirement is $5,000 but at the same time there are no fees on the first $5,000 invested. There is also no fee or charge to take your money and leave. Wealthsimple tries to be upfront about its costs and does not believe in hidden fees.
My own investment strategy is a bit complicated. But for anyone who is tired of their mutual funds constantly underperforming or want to get started with investing I think Wealthsimple is a terrific solution and is definitely worth taking a look at.
Random Useless Fact:
The average Canadian investor pays more than 2% per year in management fees, more than any other developed country in the world.