Whether it’s for an ISA, JISA, pension or a basic investment account, Wealthsimple aims to do what it says on the tin, and simplify investing for those looking to build their wealth.
What is Wealthsimple?
Wealthsimple is a Canadian online investment management firm that was founded in 2014. One of the so-called “robo-advisers”, Wealthsimple is geared towards millennials or inexperienced investors, and offers risk-based portfolios, low fees and socially responsible investing options.
It invests your money in a range of exchange-traded funds (ETFs), using both technology and human investment advisers and offers three types of portfolio, each with a different level of risk.
How does Wealthsimple work?
You can sign up for a Wealthsimple account online in a couple of minutes. Your money is invested based on your risk profile, so you’ll need to answer a few questions about your financial goals when signing up. You’ll then be matched to an appropriate portfolio and can begin making deposits. There is no minimum investment deposit, but the amount you invest will determine what account you are eligible for.
Your portfolio will be automatically rebalanced over time, and your dividends can also be reinvested to increase your potential returns. You can manage and track your portfolio online or by using the slick Wealthsimple app.
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Types of Wealthsimple account
There are three tiers of Wealthsimple account, based on the amount you deposit into your account. Each type of account has different fees and benefits.
Wealthsimple Basic account
With a Wealthsimple basic account, you get access to investment advice, automatic rebalancing of your portfolio and dividend reinvesting.
Investment amount: £0-£100,000
Adviser fee: 0.7%
Average fund fee: 0.18%
Wealthsimple Black account
In addition to the benefits of a basic account, a Wealthsimple Black account also offers investment planning and VIP airport lounge access.
Investment amount: £100,000-£500,000
Adviser fee: 0.5%
Average fund fee: 0.18%
Wealthsimple Generation account
The Wealthsimple Generation account offers all the features of a Black and Basic account, along with a dedicated investment adviser, customised budgeting and cash flow planning, as well as ongoing portfolio monitoring.
Investment amount: £500,000+
Adviser fee: 0.5%
Average fund fee: 0.18%
What products does Wealthsimple offer?
Pension. Wealthsimple offers a self-invested personal pension (SIPP), which is then managed by the Wealthsimple investment team, as opposed to a regular pension, which is organised through your employer. You can start a new pension account with Wealthsimple, or transfer your existing pension, and will then be assigned a portfolio based on your risk appetite.
ISA. The Wealthsimple ISA is a stocks and shares individual savings account that lets you invest up to £20,000 per year in a Wealthsimple portfolio. Any profits you make are then exempt from tax. As with a pension account, your investment portfolio will be based on your risk profile.
JISA. A Junior ISA, or JISA, is an individual savings account for those aged under 18, which can be either set up by a parent or legal guardian, or by the child themselves if they’re at least 16 years old. The annual JISA allowance for 2019/2020 is £4,638 per year while the 2020/2021 allowance is £9,000. It and benefits from the same tax exemption as a regular ISA.
Personal account. If you’re looking to open a regular investment account, you can use a Wealthsimple personal portfolio to begin investing. There is no upper limit on how much you can invest, but any gains will likely be subject to capital gains or income tax, depending on your current tax status.
How much does Wealthsimple cost?
Like many robo-advisers, Wealthsimple charges a simple management or adviser fee on its accounts. This is either 0.5% or 0.7%, depending on the size of your investment. You’ll also pay a small fund fee, which averages around 0.18%.
Is Wealthsimple safe?
Wealthsimple is authorised by the FCA and also covered by the FSCS, meaning your money will be protected up to a total of £85,000, and investments up to £50,000, in the case the company folds. Your account and data is also protected by encryption and two-factor authentication.
Like any investment, your capital is at risk when you use Wealthsimple, and you may end up with less than you initially invested. Your investments will be based on your risk profile, but there’s no guarantee of returns on any portfolio.
Frequently asked questions
Yes, you will be liable to pay capital gains or income tax on any profit you make using Wealthsimple. The only general exception is any profits you make on an ISA or JISA account, as these are exempt from tax.
The Wealthsimple app is available in the App Store and Google Play, and can be used on both iOS and Android.
Also known as ethical, or green, investing, SRI is an investment strategy that looks to invest only in companies or assets that have a positive social or environmental impact.
There is no minimum investment amount on the basic Wealthsimple account, so you are free to invest as much or as little as you want.
An exchange-traded fund (ETF) is a type of investment available on the stock market. It’s similar to a regular stock, but is instead made up of multiple assets, including bonds, stocks and commodities.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.
Tom Stelzer is a writer for Finder specialising in personal finance, including loans and credit, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football for publications like FourFourTwo and Man of Many. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney.
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