In my last article, “The Best Way to Invest your Money for Recent Grads” you learnt that online brokerage platforms are one of the most affordable and effective ways to invest your own money as a recent graduate. However, there are hundreds of different online brockerages that you can use to invest your money. That’s why in this article, I will compare the two of the best platforms to invest your money: WEALTHSIMPLE AND QUESTRADE.

OVERVIEW

Questrade is one of the most popular online brokerages and it is known for having one of the lowest fees. With Questrade you have the option of invest in just about anything! (ETFs, stocks, mutual funds, etc). At the same time by using Questrade, you are investing SOLO. There is no one to guide and advise you on what you should buy or invest in. 

Wealthsimple has two different platforms: Wealthsimple invest, and Wealthsimple trade. For the sake of simplicity, we will only focus on Wealthsimple Invest.

Wealthsimple Invest provides pre-determined investments based on your Investor Risk Profile. An Investor Risk Profile is based on how much risk you are willing to take. A risky investor would invest 100% in the stock market, while a risk adverse investor would invest 100% in the fixed income market. You are probably somewhere in-between, so try to find out what your risk profile is!

PLATFORM USABILITY

Questrade’s user interface is quite complex and not as user friendly as Wealthsimple. Even for me coming from a accounting/finance background, there were some terms and features that I had to google for further clarification. As a beginner investor, Questrade may feel overwhelming, but, once you get the hang of it you can do a lot of customized market research and investment analysis.

Wealthsimple prides themselves in having an extremely “simple” and user-friendly platform. Within a few minutes, even a first-time investor can open a TFSA or RRSP and
starting investing their money. Wealthsimple provides a beautiful website and mobile app interface, and definitely beats Questrade in platform usability.

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FEES

Questrade is known to have one of the lowest fees of all of the online brokerage platforms. Questrade commission fees are based on how many “TRADES” are made.

A TRADE is when you buy or sell your shares. Questrade charges between $5 – $10 per trade, however it is free to BUY ETFs. This means that if you invest in ETFs through Questrade, you will pay a commission fee only when you sell your investment. This makes your money in Questrade harder to convert to cash or a LOWER LIQUDITY,  because you are charged a commission fee when you sell.

Wealthsimple Invest uses a completely different fee structure. With Wealthsimple Invest, there are NO FEES ($0.00) to buy or sell ETFs. Therefore, the money in Wealthsimple has a HIGH LIQUIDITY, since there are no penalties to convert your investments back into cash.

However, Wealthsimple charges a 0.5% which is applied to your whole portfolio. So if you invest $10,000, every year they will charge you $50 (10,000*.05%) to manage your portfolio. If your money grows, then the amount that they charge also increases.

FEE COMPARISON – Questrade vs Wealthsimple

 

Since Questrade and Wealthsimple have completely different cost structures, it is difficult to determine which one ACTUALLY has the lowest fees.

So let’s do some analysis and look at the numbers for three different scenarios.

  • Case #1, you invest $5,000
  • Case #2 you invest $10,000
  • Case #3 you invest $20,000

Next, lets make some realistic assumptions.

    1. You only invest in ETFs
    2. You make a 7% annual returns on your investments
    3. You invest your money for 5 years 
    4. Each year you make 1 trade (total of 5 trades)

    Below is a cost comparison between Wealthsimple and Questrade.

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FINDINGS – SO WHICH ONE?

You should use Wealthsimple when:

  • Investing with less than $5000
  • If you need easy-access to your money.

If you are planning to only invest $0 – $5000, than Wealthsimple is likely to be cheaper than Questrade. Also, if you suddenly need the money, then you can easily take out your money without any penalty.

You should use Questrade when:

  • Investing with more than $5000
  • Adopting a passive investing strategy 
  • Willing to self-educate

As you can see above, Questrade is cheaper than Wealthsimple once your portfolio exceeds $5000, since the commission fees are based on frequency, rather than the size of your portfolio. If we assumed only one trade when you sell, than Questrade is the winner is all 3 cases. However, keep in mind that with Questrade you really have to self-educate and put in time to learn how to invest.

Conculsion

I hope this article help you make a decision on whether you should choose Questrade or Wealthsimple as your investment platform.

Let me know in the comments below on which platform you are planning to use!

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