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Wise investors know that one of the best ways to grow their investment is to take advantage of technological advances. To this end, many are turning to Robo-advisor apps.
If you’re considering a Robo-advisor in Canada, then you’ll want to get familiar with several key questions. These questions include: “What is a Robo-advisor?,” “Why should I use a Robo-advisor?,” and, most importantly, “What are the best Robo-advisory apps available?” Keep reading this guide to get answers to these and other important questions about investing in Canada.
What Is A Robo-Advisor?
A Robo-advisor is a financial tool that creates and manages your investment portfolio using an algorithm. This allows for a more passive approach to investing, however, investors may have the choice of becoming more involved. Robo-advisors will choose investments for you based on your financial situation and investing style, build a portfolio based on your risk tolerance and financial goals, and automatically rebalance your portfolio as needed.
While computers play an important part in investment management, there are still human advisors working behind the scenes who help you manage your portfolio. Robo-advisors are an excellent choice for anyone wishing to save money on their investments, as their costs are a fraction of what a human investment advisor would charge. Plus, they’re ideal for new investors who don’t have a lot of money to start with.
What Are the Functions of Robo-Advisors?
Robo-advisors assist you in investing your money utilising low-cost Exchange-Traded Funds (ETFs), which are designed to optimise returns while reducing investment expenses.
Before you open an account, fund it, and begin investing, you’ll be asked a series of questions to help the Robo-advisor platform decide which investment assets and classes to recommend. Your answers will tell the Robo-advisor what your long-term goals are when you want to reach them, and how much risk you’re willing to take. Following that, an investment portfolio tailored to your needs will be created. After that, you can fund your account and begin investing.
Your account will be automatically rebalanced if any gains or losses fall outside of your allocated target range after your money has been invested by the Robo-advisor. Because you won’t have to do anything to make this happen, this sort of investing is referred to as “passive.”
Robo-advisors are fantastic for experienced investors with a lot of money to play with, but they’re especially useful for beginning investors with a limited amount of money to invest and who want to save money on fees. As a result, there’s a better probability of earning higher returns in less time.
3 Top Robo-Advisor Apps in Canada
It might be difficult to sort through the numerous Robo-advisors offered in Canada. A brief overview of some of the greatest Robo-advisor apps to consider is provided below to assist you in making your pick.
Wealthsimple is a popular Robo-advisor all throughout the world, not only in Canada. They’ve worked with large investment firms and have a board of directors with extensive investment sector experience. Wealthsimple currently manages roughly $5 billion in assets, making it Canada’s largest Robo-advisor.
There is no minimum investment amount, and no income need to start an account. Your loan portfolio will be created to match your investing style and risk tolerance, and your investment portfolio will be made up of ETFs. When your account varies outside of a specified range, Wealthsimple algorithms will automatically rebalance it and reinvest your dividends. Tax-loss harvesting, financial guidance, and a customised portfolio analysis are also available.
Pricing by Wealthsimple
Wealthsimple has three simple pricing plans to choose from, as their name suggests.
Basic: For accounts under $100,000, there is a 0.05 per cent fee.
Black: For accounts between $100,000 and $500,000. Black charges a 0.04 per cent fee.
Generation: For accounts over $500,000, Generation charges a 0.04 per cent fee.
For Whom Is Wealthsimple Intended?
Wealthsimple is ideal for novices because there is no minimum investment required. Wealthsimple is an excellent location to learn about Robo-advisors and see how your money will be invested.
2. CI Direct Investing
CI Direct Investing, formerly known as WealthBar, was one of Canada’s first affordable investment platforms, making professionally managed investment portfolios more accessible to the average investor.
To avoid risk and increase returns, CI Direct Investing emphasises long-term investing and portfolio diversification. The platform promotes assets to be spread among multiple ETFs so that if one falls out of favour, the others can fill in. This guarantees higher returns than normal mutual funds while simultaneously providing lower fees than traditional investment advisors.
The hybrid strategy, which combines algorithms with real-life human support to help manage portfolios and ensure they perform as expected, is perhaps the most notable characteristic of CI Direct Investing. To assist you to adapt your investments to your particular financial goals and risk tolerance, the platform offers eight distinct investment portfolios to pick from.
Pricing for CI Direct Investing
The cost of CI Direct Investing is determined by the amount of money you invest. The annual pricing structure for Wealth Bar is as follows:
- 0.6 per cent for the first $150,000
- 0.4 per cent for the next $350,000.
- 0.35 per cent for amounts over $500,000
For Whom Is CI Direct Investing Intended?
CI Direct Investing is ideal for those who are more knowledgeable about the stock market and want to invest in higher-quality assets.
It is a division of Questrade, a well-known Canadian investment management firm with over $9 billion in assets under management. Questwealth, formerly known as Portfolio IQ, allows investors to build and manage investment portfolios online using ETFs, equities, mutual funds, FX, CFDs, and more.
TFSAs, RRSPs, LIRAs, RRIFs, and LIFs are among the accounts available to investors. You can invest in a variety of portfolio styles ranging from conservative to aggressive, all of which are low-cost ETFs in various proportions, depending on your financial goals and risk tolerance.
Questwealth is a terrific Robo-advisor for Canadian investors searching for an affordable and accessible method to invest, with socially responsible investing alternatives, low management fees, good customer care, and a user-friendly website.
Pricing at QuestWealth
0.25 per cent for accounts with balances between $1,000 and $99,999
0.20 per cent for accounts valued at $100,000 or more
For Whom Is QuestWealth Intended?
Individuals who wish to have a say in their financial decisions should consider QuestWealth.
Robo-advisors are safe and simple to use if you’re new to investing. Your money will be created and managed based on your risk tolerance and investing objectives. A human advisor, on the other hand, is recommended if you want to tailor your investments or have more influence over them. Investing your money, whether with a human advisor or a Robo-advisor, is critical to developing a more secure financial future.
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