When we think of the investment landscape in 2020 and 2021, a few things come to mind.
The second thing that comes to mind? The platforms they've used to trade them on, particularly Robinhood.
In fact, Robinhood has, whether you agree with it or not, been blamed for a lot of the stock market craziness we are currently seeing moving in to 2021.
So, this article will aim to answer the main question many are asking right now. Is Robinhood available in Canada, and if not, what are my alternatives when looking to buy Canadian stocks?
Is Robinhood available in Canada?
Unfortunately, Robinhood is only licensed to grant accounts to United States citizens, United States permanent residents or those with a valid United States visa.
This means that as a Canadian, you will not be able to trade stocks in Canada using Robinhood.
Now keep in mind, if you are from the United States, you are completely capable of trading stocks in Canada using Robinhood if you're traveling abroad.
The issues lies within Canadian citizens trading stocks on Robinhood, which as of right now you cannot do.
Is Robinhood eventually going to come to Canada?
Unfortunately, there is no confirmation that Robinhood plans to, or ever will come to Canada.
The company did plan to expand to other countries like Australia and the UK, but its plans were eventually thrown out and its focus right now is on the United States.
Is there an app like Robinhood in Canada?
If you're looking for a zero commission brokerage here in Canada besides Robinhood, then Wealthsimple Trade is probably your best bet.
But, it's not the only alternative, and I'll get to that in a bit.
Wealthsimple originally was simply a robo-advisor platform in which the company required you to fill out a simple survey and it would invest your capital into a portfolio of ETFs based on your answers.
This allowed for Canadians to achieve passive investment returns so they could worry about other things more important to them.
However, with the addition of Wealthsimple Trade, it has essentially become the Robinhood in Canada so to speak.
Why? Well, the platform is commission free. But, there are some catches you need to know about.
Lets take a look at what Wealthsimple Trade is.
The "Robinhood of Canada" - Wealthsimple Trade
Commission free brokerages are catching on in a big way in the United States.
However, the same cannot be said for Canada. Except Wealthsimple Trade.
This is the only commission free trading platform in the country, and is home to hundreds of thousands of Canadians looking to earn more with their investments.
The company has over $8.4 billion in assets under management and is quickly making a name for itself here in Canada.
Wealthsimple Trade allows Canadians to buy and sell stocks here in Canada and The United States on a whim, and offers the vast majority of stocks located on major exchanges here in North America.
The positives of Wealthsimple Trade
As a Canadian alternative to Robinhood, the commission free aspect of Wealthsimple Trade is obviously huge.
But to add to this, there are some other significant advantages to using the platform, including:
- No account minimums
- A very friendly mobile app
- A variety of non-registered and registered accounts such as a TFSA, RRSP and margin accounts
- Deposit times are very minimal, allowing for quick access to the markets
- The launch of Wealthsimple Crypto is bringing yet another dimension to an expanding company
But you likely know the phrase nothing in life is free. After all, in order for companies to survive, they need to make money. This is no different when we look at something like Robinhood or Wealthsimple.
And, the way Wealthsimple Trade makes money can end up costing you a ton of money, quickly erasing the "free commission" draw.
The negatives of Wealthsimple Trade
So, how does a company like Wealthsimple and Robinhood make money?
Well, I can't speak much on Robinhood's tactics as I haven't looked in-depth, but for a company like Wealthsimple Trade, it will primarily make its money off currency conversions, which is a negative if you're looking to buy US Stocks.
Wealthsimple Trade doesn't allow you to hold US Dollars, and will charge you a conversion fee of 1.5% every time you buy US stocks.
The key to long standing investment returns is to invest in a diversified portfolio, which contains US stocks.
So, unless you plan on holding a 100% Canadian portfolio and exposing yourself to huge economic dependency, your time at Wealthsimple Trade will certainly not be free.
The platform is extremely costly if you're consistently buying in and out of US stocks.
And, considering you can't hold US funds, you can't perform something like Norbert's Gambit to save on fees.
The company also doesn't allow you to trade options, or buy fractional shares. It also doesn't include some Canadian stocks with low volume, or trading on other exchanges like the Venture or Neo Exchange.
And finally, the app promotes itself as somewhat of a "trading" platform, but it doesn't have any advanced data packages to give Canadians access to the tools they need to truly succeed at trading.
Overall, Wealthsimple Trade is an excellent platform for pure beginners, but there is better options
Although there is no Robinhood in Canada, and likely won't be anytime soon, Wealthsimple Trade is an excellent alternative for Canadians who are just starting out.
No account minimums and commission free trading can help them gain some footing and start earning some returns.
However, for those looking to take their investments seriously, I'd highly suggest moving over to a company like Questrade when you have enough of an account balance to justify paying their small $4.95 commission.
Why I prefer Questrade much more than Wealthsimple Trade
For one, Wealthsimple Trade does not contain some low volume options.
For example, at the time of writing this article, the platform does not have a stock like Equitable Bank or Calian, two very popular small cap stocks here in Canada.
The ability for me to be able to purchase the investments I want is absolutely critical for me as an investor. So, this is why I prefer Questrade.
With a 1.5% conversion fee on both ends of a US stock purchase, if you buy $1000 worth of a US stock, you'll be charged a total of $30 to buy and sell.
With a brokerake like Questrade? Likely less than $10, depending on the amount of shares inside of that $1000 purchase.
Commissions are not the be all end all of choosing a brokerage, and careful thought should be placed into the customer service, security and overall platforms of the brokerage.
Questrade's IQ Edge platform, along with their browser based platform, are best in class. As someone who's been with them for over a decade, I can vouch for the quality of their service.
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