The introduction of Wealthsimple Cash has brought good news to Canadian savers. Options Questrade has four approval levels for option trading that require different minimum balances in your account before placing your trade. Disclaimer: By trading with securities and derivatives you are taking a high degree of risk. This number—called the maintenance margin—is based on the types of securities you own and whether you buy shares or use short selling. You think that the stock might rise to $150 a share by some future date, so you’d buy a call option at a strike price below $150, so let’s say $120 a share. You need to have all these things worked out before you start trading options. It’s basically like a contract that stipulates that the owner of the option has the right to buy or sell the stock the option is based on at an agreed-upon price, at an agreed-upon date or throughout a certain period of time. The bank or broker who lends you money can take the security if you fail to pay back the loan. John still has to pay back the $5,000 he borrowed, which means his original investment is down to $4,700, a loss of $300. But there’s a catch. Instead of gaining 3 percent, let’s say it loses 3 percent. Read our (investment risk disclosure) for more information. You’ll need to complete an application with the brokerage before you can open an account. He’s required to put up 50% of the purchase price, which means he can borrow another $5,000. This currency exchange fee is the only fee we charge on trades. We do not endorse any third parties referenced within the article. Buying on margins is not for beginners. If they issue a margin call on your account but you can’t pay, they’ll be forced to eat the loss. Buying securities on margin is similar to making any other trade, you just have access to more money. While, technically, Questrade also charges a … You can also use margin to borrow securities (instead of simple cash). The card uses the Visa payments system, and … See a side by side comparison of Vanguard vs Wealthsimple. Cryptocurrencies purchased and held in an account with Wealthsimple Crypto are not protected by CIPF, the Canadian Deposit Insurance Corporation or any other investor protection insurance scheme. Below, you can read brief reviews of Wealthsimple and Questrade that can help steer you in the right direction of what investment platform is best for your short-term and long-term investing goals. Ask yourself— what kind of investing is right for me? We implore you not to risk your entire portfolio on a single trade! In the United States, for example, you usually need to fund the margin account with at least $2,000. In Canada, investors can borrow up to 70 percent of the security’s price. Wealthsimple Trade App As of March 2019, the Wealthsimple Trade app is now live and available to all Wealthsimple clients. The same limit exists in the United Kingdom. When you invest, your money is at risk and it is possible that you may lose some or all of your investment. You’re essentially speculating on whether a stock’s price will rise or fall, which will determine what kind of option you choose. This is a minimum amount of equity that must be in your account to keep it open. Wealthsimple is the smart way to invest, trade, save, spend and file your taxes. Customer accounts are protected by the Canadian Investor Protection Fund within specified limits. If you can invest more, then you can potentially earn greater returns. When will registered account types be supported? Buying on margin is effectively taking out a loan. Because it amplifies your buying power. You have to be confident that your purchases will increase in value. He now has $10,000 worth of buying power that he uses to purchase a security. Wealthsimple Trade charges a currency exchange fee for USD trades of our Corporate FX rate x 1.5% — most brokerages charge around 2% on top of the rate for currency conversion. We hope to support other account types in the future! Can Wealthsimple offer me advice on which type of account I should open on Trade? Past performance is no guarantee of future results. Wealthsimple Trade currently supports individual, non-registered cash accounts, TFSAs, and RRSPs. Our Cash product is offered by Wealthsimple Payments Inc., a money services business registered by FINTRAC. Once you’re set up and you’ve chosen what assets you want to trade, it’s time to get into the nitty-gritty: are you agreeing to buy or sell a stock once it hits a certain price? That's why you should use extreme caution before buying on margin and understand the risks. By using this website, you accept our (Terms of Use) and (Privacy Policy). We’ve already mentioned that when you’re trading options, you need to decide whether you’re predicting that the price of a stock will rise or fall. It’s surprisingly easy to buy Uber stock, or any other that’s publicly traded. There are legal limits to buying on margin as well. With any investment, your capital is at risk. Broker automated, robo-advisor investing, account fees, RRSP, RRIF, TFSA cost, mutual funds. If you want to play around with trading yourself and buy individual securities, use commission-free trading in a standard brokerage account without margin. Buying on margin is when you borrow money from a bank or broker to purchase securities. The process requires just two things: a broker to make the trade and enough money to buy at least one share. Your first step is to consider other alternatives to buying on margin. Most big banks have brokerages that charge $10 to $30 per trade, and account minimums range from $1,000 to $10,000. WealthSimple review, rating 2020. Usually a brokerage will ask for your trading experience, your income, and what your financial goals are. Can I open more than one account type on my profile? One exception to this is when you make a USD trade, you pay a 1.50% currency conversion fee. EQ Bank also recently upped rates on the EQ Bank … You can join Wealthsimple crypto by opening an account online. Wealthsimple Questrade Big Banks Fees per USD trade 1.5% $4.95 USD $9.95 USD Fees per CAD trade $0 $4.95 CAD $9.95 CAD Real Time Quotes 15 … This will ensure that your individual circumstances have been considered properly and that action is taken on the latest available information. Even a simple high-yield savings account is a low-risk way to grow your money and probably better for short term savings goals. And if you’re looking for a more hands-off, less time-intensive way to get into the investment game without having to pay exorbitant brokerage fees and keeping constant track of the market, then Wealthsimple’s “investing on autopilot” method will create a personalized portfolio calibrated to your financial goals and risk tolerance. Learn more about our online broker margin rates today. Trading on margin involves risk, including the possible loss of more money than you have deposited. They are currently offering brokerage accounts with no minimum account balance, and no fees or commissions. Before taking any action based on this information you should consult a professional. Compare all Wealthsimple plans and fees. If you wouldn’t call yourself experienced, you should probably stay away from this kind of trading. An option needs to fall above or below a certain price (depending on what kind of option you’re trading) within a certain time period or by a certain date. Depending on your location and brokerage, you’ll be limited as to how much you can borrow. Interest. WealthSimple: Get first $5,000 managed for FREE at Wealthsimple. That’s why options trading is really only advisable to experienced traders who have the time and energy to keep abreast of the market and its developments. Since trading options is usually riskier and more complex than trading stocks, the requirements for opening a brokerage account are a bit stricter. Get started today. What’s your time frame? You’ll have to make up the difference from your pocket. John deposits $5,000 in his margin account. WASI is a member of the Mutual Fund Dealers Association of Canada and a member of the MFDA Investor Protection Corporation. Make sure you understand the consequences of every margin trade before making your purchase. Our Trade and Save products are offered by Canadian ShareOwner Investments Inc. (ShareOwner), a registered investment dealer in each province and territory of Canada. The asset in the transaction (usually a security like stocks, bonds, or funds) is the collateral. Your broker will have this information, usually somewhere on your trading account’s interface. With options, you're predicting whether a stock's price will rise or fall within a certain time period. An investment that seeks to outperform the market by employing complicated trading strategies. In fact, it’s not for anyone who can’t spend a significant amount of time analyzing their portfolio and the market. But if it doesn’t and the company is a bust, your losses are limited to what you paid for the option contract. Wealthsimple Fees, Commissions, Margin Rates and Account Minimums There are no direct fees associated with opening an account or making a purchase with Wealthsimple. This is a demand to deposit more money or sell some of your holdings to pay down what you borrowed. Is it good? If you’re not, you lost $500. So if you paid $500 for a binary option for a stock that’s trading at $100 a share and set the strike price at $150, thinking that the stock will rise above that price on June 5th at 9:30am, then you’ll receive a payout if you’re correct. When you buy on margin you're making a speculative decision with money that you don't have. What do all loans come with? 2. Questrade reserves the right to margin certain securities it deems risky at higher rates than listed above. With some competitors charging almost $10 per trade, this is a huge savings. Still, as you can probably tell, binary options start veering very closely into gambling territory and are not for the part-time or newbie investor. If you want to get exposure to the cannabis industry without taking an absurd amount of risk, these top cannabis ETFs could be right for your portfolio. Well, now’s the time to add options to that list. If you think options trading might be a little too much for you, and you’d rather stick to good old-fashioned stock trading, then Wealthsimple Trade offers you a low-cost platform with commission-free trading across Canadian and U.S. exchanges. Before taking any action based on this information you should consult a professional. If you can’t maintain this minimum, your broker will issue a margin call. Past performance is not a guarantee of future results. Money in your Cash account is held in an account with ShareOwner. Not all brokerages permit buying on margin because of the risks we mentioned above. By using this website, you accept our (Terms of Use) and (Privacy Policy). It's a high-risk investment strategy because you could lose more money than you have yourself. Wealthsimple Trade is trying to replicate a lot of what has made Robinhood so popular in the US but I feel left out to not get various features. There are also online resources such as Option Alpha or TastyTrade, which offer (mostly free) courses and podcasts on the basics of option trading. Trading a binary option means answering the question: “Will this stock be above this price at this time?” If you think the answer is yes, then you buy the option. Automated investing through low-fee funds is probably suitable for many people without high-interest debt who want to "set and forget" their investments. A brochure describing the nature and limits of coverage is available upon request or at (www.cipf.ca). The brokerage may also set a limit on how much you can borrow for purchases based on your financial situation and history (they have to protect themselves, too). Wealthsimple Crypto is in its early stage and is being rolled out to Canadians. Thus he could profit twice as much. Most importantly, buying on margin requires a risk tolerance most novice investors don’t have, especially when they’re playing with their retirement funds. Dennis holds a Bachelor's degree from the University of Connecticut. Wealthsimple offers Socially Responsible Investing, so you can do well and do good at the same time. Margin refers to the amount you need to borrow for the transaction. If you are an existing user of the Wealthsimple Trade app, most likely you have Step 4: Make a margin trade Buying securities on margin is similar to making any other trade, you just have access to more money. Your margin account will have a minimum margin. ShareOwner is a member of the Investment Industry Regulatory Organization of Canada (www.iiroc.ca). Which account types are supported? Margin interest rates were last updated February 22, 2016. The most common use of options is probably something you’ve already heard of, if not benefit from it yourself: companies giving their employees stock options. The Pros and Cons of Wealthsimple Many benefits come with this wealth management platform, including top-notch user experience, no balance requirements, excellent customer services, ethical investing options, tiered rate options and perks, and mobile and desktop accessibility. As is the case with stocks, you’ll need to go through a brokerage before you can start buying and trading options. Well, it can be a great way to maximize profits if you’re an experienced trader, but it’s also a good way to test out the strength of new companies. You can circumvent this by getting up to date prices on a website like BNN. Learning how to invest can seem confusing and complicated, but investing in index funds like the popular Vanguard fund can simplify the whole act of investing. The silver lining with binary options is that you never lose more than what you invested. If John had only invested his own money (without buying on margin), he would have only lost $150. Companies like Charles Schwab have options trading resources available to their clients, and Fidelity has an options strategy guide that helps you learn about different options trading strategies. Your broker will have this information. So there’s a cap on the risk you’re taking on. But in this example, he was able to borrow twice as much. Wealthsimple Crypto is currently not registered as a securities adviser or securities dealer. Say there’s a hot new Company X on the market, and you think they’ll probably grow quite quickly but you’re not 100% sure. But if you don’t have much capital on hand, you could be disappointed in your portfolio’s earnings. The amount of money you have in the margin-approved account determines the amount of purchases you can make. We provide investment services and other financial products through several affiliates. At least that's what you hope happens. Using Wealthsimple Trade Explanations around … WealthSimple Overview There are two types of investors. Wouldn’t it be great if you could borrow money to invest? This isn’t like a regular cash account. Historical returns, hypothetical returns, expected returns and images included in this content are for illustrative purposes only. Rates are set at the discretion of E*TRADE Securities with reference to commercially recognized interest rates, such as the broker call loan rate. Some clients of Wealthsimple for Advisors have accounts with Wealthsimple Advisor Services Inc. (WASI), a registered mutual fund dealer in each province and territory of Canada. An option allows you to buy or sell shares—usually a set amount of 100 shares—at a specific time, but an option is not a stock itself, meaning it doesn’t represent ownership of a company and the owner of an option is not entitled to benefits like dividend payouts. Open a RRSP We keep your money safe Your security and trust are important to us. But, we’re unable to offer a timeline on when additional account types will be WASI is a member of the Mutual Fund Dealers Association of Canada and a member of the MFDA Investor Protection Corporation. In this case, buying on margin increased his losses. Some clients of Wealthsimple for Advisors have accounts with Wealthsimple Advisor Services Inc. (WASI), a registered mutual fund dealer in each province and territory of Canada. The content is not intended to be investment advice, tax, legal or any other kind of professional advice. Historical returns, hypothetical returns, expected returns and images included in this content are for illustrative purposes only.