Wealthsimple vs. Vanguard

[E in DC]

Hello out there.  I recently turned the corner from paying off student loan debt to investing.  Right now I'm trying to fill my 401K and IRA buckets, but soon enough I'll have some money to start investing with otherwise.  I'm not necessarily risk-averse, but I don't plan to actively manage whatever fund(s) I contribute to - sort of just keep dumping money in until I hit my FIRE breakpoint. 

So, I just read a great Anthony Bourdain article (link below) that this Wealthsimple company put out.  I browsed their site, which is pretty slick, and they seem like they might offer a pretty good service.  Having read a ton of MMM posts, I've only ever seen recommendations for Vanguard (I think), so I always figured I'd just invest with them when the time came.  Is anyone out there familiar with Wealthsimple?  For my approach to investing, is there any reason I should consider them, vs Vanguard?

Thanks in advance for any tips!


UPDATE:  Article Link - https://www.wealthsimple.com/en-ca/magazine/money-diary-anthony-bourdain

[matchewed]

So you basically pay them to middle man your index fund investing?

I'd pass. Come up with an Investment Policy Statement and just use the lowest fee funds to accomplish that directly. Using middlemen generally just costs more.

[letired]

Get your first million squared away and then worry about the kind of optimizations that come from paying the extra for fancy money advice.

But seriously. I know Vanguard has a boring website compared to Wealthsimple (and other fancy investment websites). That's because they don't spend their money on fancy web devs, or fancy writers who interview Anthony Bourdain. They spend their money on actual people who do money things and buying the assorted indexes. Since they don't spend money on the fluff, you get to save that half a percent and retire even earlier.

+1 to an investment policy statement, and start shoveling all that money you were using to pay off debt into investments.

[MustacheAndaHalf]

You might also have seen commercials by Voya.  The problem is those commercials are paid for by a 0.25% fee that Voya charges it's investors.  When you see commercials, keep in mind they are making enough profits to put out those ads.

Unfortunately most people don't know how much costs matter.  Most mutual funds still charge about 1.00% of your money every year to keep the fund running (and in some cases, paying for advertising).  Meanwhile you have funds like Vanguard's S&P 500 index charging 0.05% per year to match the market.  It's actually better to learn about expense ratios than to visit websites reading sales material.

You could also start an account with Fidelity or Schwab if anything about Vanguard doesn't appeal to you.  Both Fidelity and Schwab have low cost options, and passive index funds that have low annual costs.  But make sure you understand how paying someone a percentage of your assets every year can impact your nest egg - it gets more significant the longer it goes on.

[E in DC]

Thanks everyone for the added perspective.  I had a feeling that was the case.  Don't judge a book by its cover, as they say.  And that said, I still recommend the Anthony Bourdain article!

[HAPPYINAZ]

Thanks everyone for the added perspective.  I had a feeling that was the case.  Don't judge a book by its cover, as they say.  And that said, I still recommend the Anthony Bourdain article!

I like Anthony Bourdain's Parts Unknown show, but I am curious about what you like in his article?  What appeals to you?  did you learn something you didn't know before about finances?  why are you recommending the article?  I don't see what he is offering other than saying how terrible he was at managing money and now he pays someone else to do it.  I must have missed the point.

[seattlefreeze]

Hi! I’m on the Wealthsimple team, and wanted to offer a bit of a different perspective. Obviously I'm biased, but I'm interested in the conversation you're having and this is not a pitch.

You might be surprised to hear that we have a ton of respect for Vanguard. In fact, pretty much every single portfolio we’ve built for clients contains a large share of Vanguard ETFs. They’re an inspiration for our company, and our founder quotes Jack Bogle all the time.

If you have the time, ability, and knowledge to manage your own diversified portfolio yourself — we believe that is what you should be doing. You can actually take a risk assessment on Wealthsimple and get the exact breakdown of the portfolio of ETFs we’d invest your funds in (some are Vanguard ETFs, some are iShares and others). Then you can go open a brokerage account, and start buying those ETFs. You can set up automatic deposits, and set aside time each month for rebalancing and dividend reinvestment. If you're interested, this is a great way to manage your money.

However, many people (like me) would rather have someone do that for them. Maybe we know we should start smart investing, but in the meantime we have thousands sitting in a savings account. So our goal is to take all the hassle out of long-term passive investing, and reduce the barriers to getting started as much as possible. For that service, we charge what we think of as a small convenience fee (half-a-percent or less)

We also believe that investing isn't all about asset optimization, but also about personal life goals. So all our clients have unlimited access to a team of expert financial advisors. If you're planning to get a mortgage or have a child, advice on taxes and planning from a real-life human can be quite valuable (when you need it).

Look forward to hearing your honest thoughts.

[Joel]

Consider buying a target retirement fund from vanguard if you don't want to worry about your asset allocation.

[frugledoc]

I do it myself but in the UK, the only company offering a similar service is Nutmeg, and they charge 0.75% so the American offerings seem cheap from a UK perspective.

[Cwadda]

Fidelity is an option, but only some of their funds called the Spartan series. These are comparable to Vanguard.

Vanguard also has great customer service.

[SeattleCPA]

Consider buying a target retirement fund from vanguard if you don't want to worry about your asset allocation.

+1

And a postscript: I think it's really, really, really hard to come up with a better plan than just using an IRA or 401(k) to invest in cheap target retirement funds.

[SeattleCPA]

Fidelity is an option, but only some of their funds called the Spartan series. These are comparable to Vanguard.

Vanguard also has great customer service.

+1 (based on, gosh, thirty years of experience as a Vanguard customer...)