Questrade vs. Wealthsimple 2021

Questrade vs. Wealthsimple 2021: Which is Better for Canadians?

questrade-vs-wealthsimple

Questrade and Wealthsimple are two of the most popular online investment platforms in Canada today. They both claim to save their customers thousands of dollars in fees and offer a completely online interface through which to invest your hard-earned dollars.

That said, there are some critical differences between Questrade and Wealthsimple. In this comparative analysis, Wealth Rocket hopes that our Wealthsimple vs. Questrade review will help you choose which of these two acclaimed online investing platforms is the right choice for your money.

Questrade vs. Wealthsimple: How They Work

First, let’s discuss how each of these online brokerages works, starting with Wealthsimple, followed by Questrade.

Wealthsimple Invest

Wealthsimple is a robo advisor, which means they use algorithms to automatically (and inexpensively) invest your money in a diversified portfolio of low-cost index funds.

Their technology helps you earn a competitive return while optimizing your tax bill, automatically rebalancing your portfolio to suit your target risk tolerance, and reinvesting your dividends for future returns.

When you sign up for Wealthsimple, you’ll complete a short questionnaire that automatically chooses between several pre-built portfolios. When you fund your account and make future contributions, Wealthsimple automatically adds this money to your portfolio and rebalances as necessary. It’s all done for you, just set it and forget it.

Questrade

Questrade, on the other hand, was founded before the phrase “robo advisor” was part of the financial lexicon, and this platform gives users a more hands-on approach.

When you sign up for Questrade, you have free rein to invest your money as you see fit.

You could follow a passive investing strategy such as the Canadian Couch Potato portfolio or choose to buy and sell individual stocks and bonds for your portfolio.

There is no advisor offering advice on which stocks or exchange-traded funds you should choose, and rebalancing your asset allocations is your responsibility.

As you can expect, this gives Questrade users unprecedented control over their money, and the fees are very, very low.

Questrade vs. Wealthsimple: Account Types

Both Questrade and Wealthsimple allow you to invest your money with a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP), Locked-In Retirement Account (LIRA), or joint or personal non-registered account.

Wealthsimple offers additional portfolio account options like socially responsible investing and Halal investing.

Finally, Wealthsimple also offers Wealthsimple Cash, a digital savings account tool, a commission-free stock trading platform called Wealthsimple Trade, and crypto trading through Wealthsimple Crypto. Still, these add-ons are not how the vast majority of Canadians use Wealthsimple.

Questrade vs. Wealthsimple: Asset types

Wealthsimple uses your risk tolerance preferences to build you a portfolio made up of Exchange Traded Funds (ETFs), which are essentially bundles of securities that allow you to purchase dozens of stocks or bonds when you buy a single fund. These ETFs include Canadian, US, and foreign stocks, corporate debt, government bonds, and gold. The proportions of each ETF depend on your risk tolerance as assessed by your sign-up questionnaire.

You can also buy ETFs on Questrade and build a balanced and diversified portfolio yourself. If you’d prefer to purchase individual stocks and ETFs, you can also do that with Questrade, making this platform more flexible than Wealthsimple. You can also buy options, forex, mutual funds, Guaranteed Investment Certificates (GICs), and precious metals with Questrade – again, individually and without the help of an advisor.

Wealthsimple Logo
  • 0.4% to 0.5% MER fee
  • Mobile app and online interface
  • Additional banking and investing options available

Questrade vs. Wealthsimple: Fees

As with all financial products, you’ll need to pay fees to invest with either Wealthsimple or Questrade. That said, both Questrade and Wealthsimple have very low fees, much lower than the average 2-3% commission fees you’ll pay when investing in mutual funds in Canada. Here’s how the costs of these two online brokerages compare:

Questrade

Account opening or closing fees: No Annual RRSP or TFSA fees: No ETF purchase cost: $0 Stock purchases: $0.01/share, minimum $4.95 per trade As you can see above, Questrade charges per trade for stock purchases but doesn’t charge for ETF purchases, which means you could build an ETF portfolio for free.

Wealthsimple

Account fee for opening or closing: No Annual RRSP or TFSA fees: No Annual management fee: 0.5% of value for portfolios under $100,000, drops to 0.4% for portfolios over $100,000 Wealthsimple has very few fees, but they charge 0.5% of the portfolio’s value per year to invest and rebalance your portfolio automatically.

Questrade vs. Wealthsimple: Minimum Account Balances

There is no minimum balance for your Wealthsimple investment accounts, which means you can start with as little as $1 – super accessible for new investors. Questrade requires a minimum deposit of $1,000 to start investing.

Questrade vs. Wealthsimple: Funding

Both Questrade and Wealthsimple allow you to transfer existing registered accounts directly, so you won’t have to withdraw from your RRSP and pay taxes on that money before transferring it on.

After that, you can fund your Wealthsimple and Questrade accounts by linking them with your chequing account. You can set up automatic monthly contributions to your investment accounts or make your transfers manually.

Questrade vs. Wealthsimple: Resources

Both Wealthsimple and Questrade are online platforms, which means you can’t go to a local branch and speak with a financial advisor about your investing needs. That said, both have customer service reps available by phone, email, and chat if you have questions about how to use their software.

If you’d like more advice, Wealthsimple offers free financial coaching for anyone with a portfolio of $100,000 or more. 

Still, suppose you don’t reach this threshold. In that case, you can take advantage of their portfolio review service, which you can use to book an online appointment with a financial advisor to review your portfolio choices and even advise on other aspects of your financial plan.

Questrade is a little more hands-off with their advice. You won’t find the option to meet with a financial advisor through Questrade, but they have a library of helpful articles to answer your questions.

Is Questrade vs. Wealthsimple Safe to Use?

While all of Canada’s big six banks offer online banking and web portals for their services, they aren’t wholly online. So, are Wealthsimple and Questrade safe to use? The short answer is yes.

The long answer is that Wealthsimple uses state-of-the-art encryption and is protected by the Canadian Investor Protection Fund, which means if anything ever happened to Wealthsimple, your money is protected. Questrade was established in 1999 and has a long track record of safe operations. They also use state-of-the-art encryption and are members of Canadian Investor Protection Fund (CIPF).

Should You Choose Questrade or Wealthsimple?

While these two online investing platforms have many common features, their differences make them ideal for slightly different investing scenarios.

Wealthsimple takes much of the confusion out of investing, offering premade, automatically rebalanced portfolios, a beautiful mobile app, and no minimum account balance. For these reasons, we think that Wealthsimple is perfect for any investor that is new to self-directed investing (or investing in general, for that matter). Questrade, on the other hand, is less expensive overall.

Still, the downside of those lower fees is that you’ll need to build your portfolio yourself with no oversight, and you are responsible for rebalancing your portfolio quarterly. Some experienced investors may relish the chance to take their financial future into their own hands, and those are Questrade’s ideal customers.

If you are interested in Questrade but would like a little more advice and help to design your portfolio, Questrade offers Questwealth Portfolios, which is their robo advising product. Questwealth Portfolios has a 0.25% management fee, which is lower than Wealthsimple’s 0.50% fee.

Frequently Asked Questions

If you are currently investing for your retirement in mutual funds, you are paying some of the highest fees in the world, averaging between 2-3%. If you move your money to Questrade or Wealthsimple, you’ll cut down on fees dramatically, down to just 0.5% for Wealthsimple and possibly even lower for Questrade. This fee cut will help you save money immediately, which will transfer into thousands of dollars in additional returns over time.

The quickest and easiest way to fund your Questrade or Wealthsimple account is to link it directly to your chequing account. This link allows you to contribute money regularly, which is key to establishing a good saving habit. Linking your account is currently the only way to make contributions to a Wealthsimple account. With Questrade, you can fund your account using the following methods, in addition to linking your account:

  • Online bill payment
  • Interac online
  • Wire transfer
  • Certified cheque or bank drafs
  • Non-certified cheque
  • Money order
  • Stock certificate
  • Unfortunately, no one on the internet can definitively tell you which online investing platform to use (although many will try!) That said, consider the following criteria.

    If you:
  • Are new to either online investing or investing in general
  • Have less than $1,000 to start your investing journey
  • Appreciate advice and guidance on choosing how to invest your money
  • Don’t mind paying very low fees for the extra help
  • Then Wealthsimple’s user friendly platform is an excellent choice.

    If you:
  • Have been investing for awhile, either online yourself or through an advisor
  • Have a portfolio of at least $1,000
  • Have a solid understanding of risk tolerance, ETFs, and the principles of balanced portfolio building
  • Want total control over your money
  • Want to pay the absolute lowest fees possible

  • Then Questrade is where you’ll be happiest.

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