If youâre a hands-off investor, choosing a robo-advisor could be a great option. You can invest your money and set up recurring deposits, and the robo-advisor will do all the heavy lifting. If youâre trying to decide on the right robo-advisor for your investments, both Wealthsimple and Betterment are great choices.
Both robos allow you to invest in exchange-traded funds (ETFs) based on your risk tolerance level. However, Betterment offers lower fees and cheaper expense ratios for investors with $100,000 or less under management. By contrast, Wealthsimple caters to more seasoned investors. And, if you have over $100,000 under management, youâll get access to elite perks like VIP airport lounge access.
We created a side-by-side comparison to help you decide between these two excellent robo-advisors and choose the one thatâs right for you.
Neither Betterment or Wealthsimple have account minimums, allowing new investors to get started right away. Both charge a flat annual management fee, with no extra fees for transactions or trades.
With Wealthsimple, your annual fee is dependent on the amount you invest:
For beginner investors, those fees are significantly higher than Bettermentâs. For Betterment Digital accounts, which have a $0 minimum, the annual fee is just 0.25%. With that fee, youâll get personalized financial advice, diversified investment portfolios, automatic rebalancing and tax-saving strategies.
If you have over $100,000 invested with Betterment, you can sign up for a Premium plan, with an annual 0.40% fee â putting it at the same price as Wealthsimple. Youâll get all the benefits of the Digital plan, plus in-depth advice on investments you have outside of Betterment, such as your 401(k) accounts. Youâll also have unlimited access to certified financial professionals (CFPs) to get guidance whenever you have a major life change, like getting married or retiring.
Regardless of which company you choose, make sure you pay attention to expense ratios. The expense ratio is a fee you pay when you invest in ETFs, which covers the companyâs operational and administrative costs. Itâs deducted directly from your investment, and can impact your total returns.
The exact expense ratio youâll pay depends on your investment portfolio, but in general, the range for average expense ratios of Bettermentâs recommended portfolios was 0.07% to 0.15%, depending on allocation. At Wealthsimple, the expense ratio tends to be higher; itâs about 0.20% each year.
Both Wealthsimple and Betterment support individual investment accounts, traditional IRAs, Roth IRAs, SEP IRAs, joint accounts and trust accounts.
Rather than investing in individual stocks, both companies focus on investing in ETFs. They look at your finances and risk tolerance level to determine your portfolio. For example, more aggressive investors will invest mainly in stocks, while conservative investors will place more of their money in bonds.
In particular, both companies offers socially responsible portfolios, allowing you to invest in companies that are supporting the common good.
However, one instance in which they differ is in investor education. While Betterment does post informational articles, Wealthsimple takes it a step further, offering an âInvesting Master Class,â a free 45-minute video course that will teach you investing basics. Thereâs also a series of personal finance articles to help give you a background in essential financial topics.
And if you are looking to get a higher rate of return for your savings, both Betterment and Wealthsimple offer high-yield options. However, they work very differently from one another.
Betterment Everyday is a simple savings account. Youâll earn up to 2.13% APY. When you deposit your money, Betterment distributes it to up to four different partner banks. That means youâll get up to $1,000,000 in FDIC insurance, protecting your money. One thing to keep in mind is that youâll have to join the waitlist for Betterment Everyday checking to get the maximum APY offered; otherwise, youâll earn just 1.90% APY (as of September 24, 2019).
Wealthsimple offers the Wealthsimple Save option. Itâs not a savings account, but a low-risk investment account. Youâll earn an average annual yield of 1.66% (as of September 26, 2019), but that number can fluctuate based on market conditions. Plus, as an investment account, your Wealthsimple Save account isnât FDIC insured.
If youâre looking for a safe place to grow your money and are trying to decide between the two options, Betterment Everyday savings is likely a better choice than Wealthsimple Save. It offers a higher rate of return, thereâs no risk of losing money and itâs FDIC insured.
However, thatâs still a lower APY than you could get elsewhere. For example, with VioBank, you could earn up to 2.42% APY by opening a high-yield savings account.
|Betterment||Betterment Everyday Savings||2.13%**|
|VioBank||High-Yield Online Savings||2.42%|
If youâre looking for a robo-advisor, both Betterment and Wealthsimple and strong options. However, new investors will likely prefer Betterment. For investors with $100,000 or less under management, Betterment offers lower fees and lower expense ratios.
Conservative investors who are looking for a safe place for their emergency fund will likely find a better home for their money with Betterment, too. As an FDIC-insured savings account, your money can grow without the risks of an investment account, like Wealthsimpleâs Smart Savings option.
However, seasoned investors who want more personalized attention, comprehensive financial planning and more luxurious benefits will prefer Wealthsimple. Once you get over $500,000 under management, youâll get access to a dedicated team of advisors and get an individualized investment portfolio. And, of course, the VIP airport lounge access perk is an added benefit jet-setters will enjoy.
If youâre still exploring your investment options, make sure you check out the best robo-advisors of 2019.
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