Starting with a robo advisor might seem complicated or confusing, but really it is the opposite. A few weeks ago I gave my review of the robo advisor Wealthsimple, what it’s fees are and how it compares to other index investment methods. Today, I’ll break down the simple 4 step process of how how to invest with Wealthsimple, including signing up and funding your account. Part 1 of the guide will go over the personal information step and the personal income and risk assessment step. Part 2 of the guide will look at the account types and funding your account steps.
- Wealthsimple: What is it, how do I invest, and how much does it cost?
- Step-by-step: How to invest with Wealthsimple Part I – personal information and risk assessment
- Step-by-step: How to invest with Wealthsimple Part II – account types and funding your account
Step 1: Wealthsimple personal information
The first of four steps in the Wealthsimple registration process, step 1 consists of collecting personal information about you. Each of the steps starts with a page giving an overview of what is needed during the step.
For step 1 of the process, you’ll need to provide:
- Personal information
- Employment information
- Residential and mailing address
The screenshots that follow give an overview of the information collected in step 1. Fill them out to the best of your ability:
The next few fields collect typical information, and are all required to continue:
The gender field is optional, and looks like information they use for internal assessment to see how to make their investment platform more inclusive:
Residential and mailing address
Continue by providing your residential and mailing address:
If your mailing address is the same as your residential address, you can use the “Same as my residential address” option to fast track the process:
When signing up for credit cards, bank accounts, and other financial institutions, they will often ask for your employment information, and Wealthsimple is no different. As Wealthsimple puts it, they are required to collect this info, but keep it and any other personal information collected, private:
Describe the company as best that you can. It can be difficult to find examples that best fit your employer, so it’s usually easiest to stay broad:
Again, I find my role within my company very specific, and hard to generalize in these sections. I just find the closest descriptor I can, and use it:
Wealthsimple is required by law to collect a Social Identification Number, so this field is required:
Make sure that you read the assumptions list very carefully, and identify if any of the assumptions apply to you. If any of them do, make sure that you select the “one or more of these is NOT correct” option at the bottom of the page. If it is true that all of the assumptions accurately reflect you, select the “All of these are correct” button:
And in the final part of Step 1, ensure that all of your details are correct. If you input any of these incorrectly, you may find difficulties moving forward, and have a hard time getting the information updated correctly:
Step 2: Wealthsimple income and risk assessment
In Step 2 of the Wealthsimple signup process, you’ll need to provide some information about your current income, assets and investment preferences to determine what is your appropriate level of risk.
Step 2 of the process will ask for your:
- investment goals and timelines
- income and savings
- assets and debts
- risk and investment preferences
Investment goals and timelines
Providing your current age and purpose of investing helps determine what your investment goals are, and how much time you have to reach them:
These steps of the process are as important for your self reflection as they are for Wealthsimple to know. If you haven’t thought about your investment goals, what you can afford to invest, and how long you have to do it, now is a good time to start!
Providing your investment experience helps Wealthsimple better understand your level of risk. Previous experience with risk indicates what kind of gains and losses a person might be prepared to receive:
Your investment preferences can help Wealthsimple understand if index investing is right for you. If you indicate in the following question that you would prefer to “invest all my money in one stock or bond” then index investing might not be right for you:
Income and savings
Understanding what your actual income is can help indicate how much you can afford to invest. This doesn’t have to be exact, just a rough estimate.
Your type of income (salary, hourly, pension) indicates how steady and regular your income is. This also indicates how easily you’ll be able to budget investment contributions. If you earn your income mainly by hourly or commission, you may make more infrequent, larger contributions. If you earn your income by salary, you are more likely to be able to put aside a set amount each month to contribute to your investments.
In this step, it’s a good idea to look back at what your monthly spending is. How much do you really want to start putting aside for the future and how much can you afford. Again this number doesn’t have to be exact. You can change this easily, but it gives an idea of how much you can add to maximize your investments. But you won’t be committed to whatever number you put here, so don’t worry about it too much.
Your current investments and assets help Wealthsimple understand how close you already are to your investment goals. Again, an estimate, and not important if it isn’t entirely correct.
Assets and debts
Again, your current debts will help show how close you are to your investment goals:
Risk and investment preferences
This following question is incredibly important to help understand your investment risk tolerance. This question essentially addresses the topic of short term and long term risk. The more risk your portfolio has, the more profit you may be able to earn. But you may need to wait it out over the long term to see those profits. In the short term, you may see more losses.
This theme is essential to the passive index investing world, so it’s good to understand it and really think about what the timelines are for your investment money.
Confirming your portfolio
Based on the answers you provided in this section, Wealthsimple will now provide you a portfolio suggestion. This suggestion matches your risk tolerance and investment goals, and provides a timeline of how you might meet those goals. My previous article provides an in-depth breakdown of the different Wealthsimple portfolios, and what their levels of risk are.
If you aren’t happy with the portfolio Wealthsimple has provided you here, you’ll need to re-evaluate your answers in this section. If you are looking for more or less risk in your portfolio, you will need to answer your questions accordingly.
You’ll also see here the option “Make my portfolio socially responsible”. You can select this if you want your portfolio to focus on investments with positive social and environmental impact. You can read more about socially responsible investing with Wealthsimple here.
Once you have confirmed that the plan that Wealthsimple has provided you is appropriate, you will receive an email to the address you provided to confirm your account.
On to Wealthsimple signup guide part 2
Now that we’ve covered the first 2 steps getting started with Wealthsimple, go to part 2 of the guide to learn about the different account types, and how to connect Wealthsimple to a bank account.