Wealthsimple Trade Fees | Simple Breakdown with Examples

Looking to get started in investing with Wealthsimple Trade?

But maybe you’re a little concerned about the fees that they charge and if it’s even worth it.

If so, this quick article will help break down everything you need to know about Wealthsimple Trade’s fees and how you’ll be charged.

Above we’ve given you a quick overview of what you can expect regarding Wealthsimple Trades fees, but to learn more about them, plus how their fees compare to their main competitor, Questrade, continue reading as we break down everything in more detail.

What is Wealthsimple Trade?

If you are wondering what the fees are for Wealthsimple Trade, you likely know what Wealthsimple Trade is, but for those who don’t, it’s a self-directed investment platform available to Canadians.

Wealthsimple has many different products (my review of all 5 of them here), but its Trade platform is the one people use when they want to invest their money on their own personally.

So, for example, if you wanted to buy three shares of Apple stock, then you could do this on Wealthsimple Trade.

Many people get confused, thinking Wealthsimple is just a robo advisor – that is Wealthsimple’s Wealthsimple Invest product which is used for investors who want managed investing.

Wealthsimple Trade, on the other hand, is for those who want a little more control over their investments and want to pick what to buy personally and when to buy and sell it—also known as “do-it-yourself investing.”

You can also use both – like I do. But for a full breakdown of how Wealthsimple Invest and Trade differ, I have a comprehensive article here on their main differences.

Okay, now that we have that out of the way, let’s break down the fee structure of Wealthsimple Trade.

Wealthsimple Trade Fees

When it comes to Wealthsimple Trade’s fee structure, it’s pretty straightforward and the next “How the Math Works” section will explain how this fee is calculated and applied.

Currency Conversion Fees

In short, when you buy and sell any Canadian stock or ETF, there are no fees whatsoever. On the other hand, when you trade US stocks or ETFs, you’ll pay a 1.5% currency conversion fee every time you buy and sell these assets.

Now, back in 2022. Wealthsimple came out with a Wealthsimple Trade Plus version of their Trade platform, which gives its users USD accounts so they don’t have to pay this conversion fee every time they trade American equities.

I personally have Wealthsimple Trade Plus, and I really like it.

It’s not much different than the basic plan, but again, if you trade enough US stocks, it’ll save you money. As you can see in the image below, I have both CAD and USD accounts in my TFSA.

Withdrawal Fees

Another fee you could run into with Wealthsimple Trade is when you want to withdraw your funds from your Trade account. I do a full breakdown of Wealthsimple withdrawals in my article here, but long story short, if you want instant access to your withdrawals from Wealthsimple Trade, it’ll cost you 2.5% of your withdrawal amount.

So if you want to withdraw $100 cash from your account instantly, you’ll only get $97.50 as you’ll be charged $2.50 ($100 and 2.5% = $2.50)

A few other things to note when your withdrawing funds from Wealthsimple Trade:

• Withdrawals from RRSP accounts also have tax implications, which could come in as tax bills. So if you have an RRSP open with your Trade account, be aware of this.
• If you’re withdrawing funds from your Wealthsimple Trade account to another Wealthsimple product like Wealthsimple Cash, this process is both free of charge and instant.

Examples – How the Math Works

Alright, now that we know Wealthsimple Trade’s fee structure, let’s look at some examples.

Buying Canadian Stocks and ETFs

With Wealthsimple Trade, you can buy and sell Canadian stocks and ETFs without trading commissions.

Buying

If Alice buys $1,000 worth of Air Canada stocks through Wealthsimple Trade, she will only pay the $1,000 with no additional costs. The calculation is simple: $1,000 (Air Canada stocks cost) + $0 (commission) = $1,000 (total cost).

Selling

If Alice decides to sell her holdings of Air Canada stocks that are worth $1,000 through Wealthsimple Trade, she will receive the full $1,000 with no deductions. The calculation is straightforward: $1,000 (sale value of Air Canada stocks) – $0 (commission) = $1,000 (total proceeds).

Buying and Selling U.S. Stocks and ETFs

When buying and selling U.S. stocks or ETFs from a basic Trade account, a 1.5% currency conversion fee ^[1] applies, which is included in the total foreign exchange rate.

Buying

Now let’s say Bob wants to purchase $1,000 USD worth of Tesla stock.

Assuming the exchange rate for converting Canadian to US dollars is 1.3, here’s how the calculation works:

• First, we adjust the exchange rate to include the 1.5% currency conversion fee: 1.3 / (1 – 0.015) = 1.3198. This is the total foreign exchange rate.
• Then, we calculate the total cost in CAD: $1,000 * 1.3198 = $1,319.8 CAD.

So, if Bob wants to buy $1,000 USD worth of Tesla stock, it will cost him $1,319.8 CAD with the exchange rate fee included.

Selling

On the other hand, let’s say Bob wants to sell $1,000 USD worth of Tesla stock.

Assuming the exchange rate for converting US dollars to Canadian dollars is 1.3, here’s how the calculation works:

• First, we adjust the exchange rate to include the 1.5% currency conversion fee: 1.3 * (1 – 0.015) = 1.2805. This is the total foreign exchange rate.
• Then, we calculate the total proceeds in CAD: $1,000 * 1.2805 = $1,280.5 CAD.

So, if Bob sells $1,000 USD worth of Tesla stock, he will receive $1,280.5 CAD after the exchange rate fee is deducted.

And, of course, as mentioned before, this fee can be eliminated with a $10/month Wealthsimple Plus subscription, which offers $0 commission on U.S. trades and provides a USD account to bypass the exchange fee.

Now you will still have to pay a conversion fee when transferring your funds from USD to CAD or back from CAD to USD, but this is just a one-time fee, as opposed to paying a fee every time you buy and sell US stocks or equities.

Instant Access to Funds

Wealthsimple Trade allows you to access your funds instantly for a 2.5% fee.

For example, if Charlie wants to access $1,000 from his account immediately, here’s how it would work:

• Instant access fee: $1,000 * 2.5% = $25
• Total amount he would receive: $1,000 – $25 (fee) = $975

Alternatively, he can wait 1-3 days for a standard withdrawal at no cost.

Transferring Between Wealthsimple Accounts

If you want to move your funds from Wealthsimple Trade to another Wealthsimple product like Wealthsimple Cash, it’s free and instantaneous.

Let’s assume Daisy is moving $1,000 from her Wealthsimple Trade account to Wealthsimple Cash. In this case, she would have a full $1,000 in her Wealthsimple Cash account with no fees deducted.

Remember, funds transferred must be “ready to withdraw,” meaning they’ve cleared the necessary waiting period after selling assets.

Withdrawing from RRSP Accounts

Remember that withdrawals from RRSP^[2] accounts have tax implications.

For instance, if Emily withdraws from her RRSP account, the exact tax she’ll pay depends on her income level and province of residence. It’s best to consult with a tax advisor or use a tax calculator to determine the potential tax cost.

Also, note that any RRSP withdrawals will have to be made through the Wealthsimple desktop application.

Questrade vs Wealthsimple Trade Fees

Before diving into the comparison, let’s break down Questrade’s fee structure based on all the information provided in this thread.

Questrade Fees

Stock Trading Fees

Questrade charges a commission on buying and selling stocks. The fee is $0.01 per share, with a minimum charge of $4.95 per trade and a maximum charge of $9.95 per trade.

For example, if you buy or sell 100 shares, your fee would be $1.00, but since that’s below the minimum fee, you will be charged $4.95. If you buy or sell 1,000 shares, your fee would be $10, but since that’s above the maximum fee, you will be charged $9.95.

ETF Purchase and Selling Fees

Questrade offers commission-free ETF purchases, which means you won’t be charged any fees when buying ETFs. However, when you sell ETFs, the regular commission structure applies ($0.01 per share, minimum $4.95, maximum $9.95).

Currency Conversion

Questrade doesn’t charge a separate currency conversion fee. However, it applies a retail conversion rate, which typically includes a spread from the mid-market rate. The actual rate may vary based on market conditions.

Other Fees

Questrade may charge other fees for services such as wire transfers, inactivity (which can be avoided by placing one trade in a quarter or maintaining an account balance above $5,000), and account transfers.

Now, with a better understanding of Questrade’s fee structure, let’s compare it with Wealthsimple’s fees in the context of trading Canadian and U.S. stocks.

Is Wealthsimple Cheaper than Questrade?

When comparing the costs of trading on Wealthsimple Trade and Questrade, it’s important to take into account the specific trading fees, currency conversion fees, and other potential costs like ECN fees. The cost can also depend on the type of trading you are doing (Canadian stocks, U.S. stocks, or ETFs) and the platform you choose.

Here is a comparison table that outlines the different fee structures for Questrade and Wealthsimple Trade:

Canadian Stocks

If you’re planning to buy and sell Canadian stocks, Wealthsimple Trade offers a significant cost advantage because it does not charge any trading fees. For example, if you bought 200 shares of a company at $10/share, it would cost you $2,000 on both platforms.

However, with Questrade, you would also pay a trading fee (around $4.95 to $9.95) and potential ECN fees ($0.0035/share, which could add up to $0.70 in this case).

U.S. Stocks

When it comes to U.S. stocks, the picture is a bit more complicated due to the currency conversion fees. Wealthsimple Trade charges a 1.5% conversion fee when you buy and sell U.S. stocks, but this fee is waived if you have a Wealthsimple Trade Plus account. Questrade, on the other hand, charges a 2% conversion fee.

Let’s take an example: If you were to buy $1,000 USD worth of a U.S. stock, with an exchange rate of 1.3, the costs would break down as follows:

Wealthsimple Trade:

• Without Wealthsimple Trade Plus: $1,000 * 1.3198 (exchange rate including 1.5% conversion fee) = $1,319.8 CAD
• With Wealthsimple Trade Plus: $1,000 * 1.3 = $1,300 CAD

Questrade:

• $1,000 * 1.3266 (exchange rate including 2% conversion fee) = $1,326.6 CAD. Plus the trading fee (around $4.95 to $9.95) and potential ECN fees.

In both cases, selling the U.S. stock would also incur the respective conversion fees.

Overall, while both platforms have their own strengths and weaknesses, Wealthsimple Trade tends to be more cost-effective, particularly for those trading Canadian stocks and those with a Wealthsimple Trade Plus account, to waive the conversion fees on U.S. stocks.

But as always, it’s important to consider your individual trading habits and needs when choosing a platform.

Trade

Noel’s Take on Wealthsimple Trade

Due to its low costs, diverse investment options and overall ease of use, I think Wealthsimple Trade is Canada’s best self-directed online brokerage platform, and I would give it a score of 4.5/5.

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FAQ about Wealthsimple Trade’s Fees