Many would-be investors are hesitant to start investing believing that you need a substantial amount to begin with. It is still true in some countries and the norm in big banks and some online brokerages. They require a minimum amount to open an account for investors.
However, as many investors are now more proficient, doing self-directed or DIY investing they see – that costs play a huge factor in the return of their investments. Therefore, investors are now seeking a cost effective way of investing their hard-earned money.
Current banks and traditional brokers
Many of the banks and online brokers require a minimum balance of $1,000 and above – to start investing. Additionally, every time you make a trade you have to pay a transaction fee of $5 per trade or up to a maximum of $10.
Other fees involved with investing
Many of these brokerages also charge annual management fees if you fall below the minimum balance. In addition, some brokers are also notorious for charging inactivity fees if you don’t make a trade in a certain period of time.
Moreover, there are other miscellaneous fees such as broker-assisted fees, short term redemption fees, phone order fees, and other various fees which add up to the cost of investing.
No Commission trade was born
As the investing community becomes very competitive comes –Enter NO commission brokers in the market. Robinhood, a California-based company was founded in 2013. They launched their first brokerage to the public in 2015. By 2016 it had over 1 million users. As of today, it is believed to have over 10 million users which is popular for young and first time investors.
This has led to other US big banks and online brokerages in 2019 to follow suit.
Freetrade is now also available for UK clients. You can now invest for free, forever.
Finally the wait is over for Canadian investors. Wealthsimple trade was launched in March of 2019. It started with a basic non-registered personal account and non-registered accounts such as TFSA and RRSP was later added on.
Here’s the key features of Wealthsimple Trade
- No minimum deposit
- Commission- free buying and selling of Canadian and US ETF’s and stocks
- You can hold non-registered, TFSA, and RRSP accounts
- It is available as a mobile app on phones (IOS and Android). No access to desktop at this time
- Does not support real time quotes (delayed 15 minutes)
- WS Trade does not allow its clients to hold U.S. dollars, so they charge a conversion fee when you want to buy U.S. listed stocks and ETFs.
- Wealthsimple Trade will reimburse fees on transfers of more than $5,000.
How does Wealthsimple Trade make money if clients are not paying commission?
WS Trade makes money from the 1.5% conversion fee charged from Canadian to US conversions (and vice versa) that are required to trade US-listed securities.
What are the limitations of WS Trade?
It may not be ideal for new investors as WS Trade platform is very basic and doesn’t allow any research on products and tools.
My Final Thoughts
I’ve waited till September of last year 2019 to open an account with WS Trade. Be mindful that WS Trade App does not support older smartphones hence I have to upgrade my – Jurassic but still functioning Samsung J7 smartphone. Despite its simplicity, it does the job for long haul dividend investors. Overall, I am a satisfied customer.
In summary, the main drawback in the lack of functionality and other tools with WS Trade is not a problem for many investors even beginner investor-alike.
All other activities such as studying and researching an individual stock, ETF, mutual funds can easily done on Google Finance, Yahoo Finance, and other financial sites. A NO commission trading is a NO – brainer for all DIY investors. No fees means – additional funds to your investment.
Disclaimer: I am in No way affiliated to any of the companies mentioned above. I am however a client of WS Trade and have shared my personal experiences with the application. The content of my blog is for entertainment and/or informational purposes only and should not be seen as any kind of advice.
“Stay indoors and exercise social distancing. We are all in this together. We can beat this virus. Stay safe everyone.“