Passiv is an investing tool that simplifies the investment process for do-it-yourself investors.
A passive investing strategy is a proven way to grow your investment portfolio and save on fees. It is for this reason that many self-directed investors are willing to take on the challenge of rebalancing their portfolio a few times every year and to learn about the financial markets.
Investing in mutual funds is actually easy to do. Simply walk into your bank, answer some questions, and you have a mutual fund account.
However, mutual funds are based on an active investing strategy that often results in your mutual fund manager charging you a hefty management fee every year.
The problem though is that expensive fees can be detrimental to your retirement plan by slowing the growth of your retirement pot.
Your “real returns” are calculated after fees have been deducted and if a big chunk of it goes to the bank, over time, you are essentially losing money.
And by the way, active management does not necessarily mean you will do better with your investments. In fact, research shows that the opposite is often the case.
If you have decided to use passive investing to lower your fees and improve your returns, a tool like Passiv simplifies the process and gives you the best of both worlds.
What is Passiv?
Passiv is a web app that syncs with your brokerage account (e.g. Questrade) to automate tasks you would otherwise have to do manually. Passive simplifies the process of rebalancing your portfolio.
The software was started by Brendan Lee Young and Brendan Wood and launched in 2017. They are based in New Brunswick.
In 2019, Questrade announced that they were going to partner with Passiv in order to give investors on their platform access to the portfolio management tool.
As of this writing, over $100 million is being managed by Canadians using Passiv. Note that Passiv is not a robo-advisor.
How Does Passiv Work?
To get started with Passiv, open an account and link your brokerage account.
Syncing your Passiv account with Questrade is easy and utilizes Questrade’s API which means that your login details are not shared with Passiv.
Once you are set up and have decided on your target allocation, Passiv makes your investing really “passive” and easy. The tool:
- Automatically calculates trades needed to rebalance your portfolio and notifies you
- Sends you cash and dividend deposit notifications
- Helps you execute any required trades with one click
A big part of an active DIY approach to investing is that you must monitor your asset allocations every now and then.
When your portfolio’s target allocations drift from their preferred percentages, you have to bring it back to balance by purchasing more of the underweight assets or selling some of the overweight assets.
For example, if you started out with two ETFs “A” and “B” and allocate them at 50:50 ratio in your portfolio.
If ETF “A” performs better than ETF “B,” at some point your portfolio may become weighted in favour of ETF “A” and your target allocation may become 70:30 i.e. ETF “A” now makes up 70% of your portfolio.
In order to rebalance your portfolio back to 50:50, you would have to do the calculations and buy a specific number of ETF “B” (or sell a number of ETF “A”) so the target allocation falls back to a 50:50 balance.
Passiv does all of these calculations so you can easily rebalance with one click.
Passiv offers two tiers of service: a free complimentary user account for Questrade clients and an Elite member account.
The free account provides free rebalancing calculations and sends you notifications when you have cash or dividends to invest.
The Elite member paid account costs $40/year or $3.33 per month and offers a lot more including on-click trades, multi-account portfolios, and more.
Benefits of Passiv
Passiv comes in handy for self-directed investors as it minimizes the work you need to do in order to rebalance your portfolio.
It tells you when you have some cash to invest so you can log into your account and alerts you when your target asset allocations have drifted. The paid version of the software also makes one-click investing possible.
By default, the app is set to “Buy Only,” so you won’t be racking up trading commissions if your brokerage charges for those. If you prefer to sell assets, you can use the software to accomplish that too.
Questrade offers commission-free trading on ETF purchases, which makes Passiv a perfect tool if you typically purchase underweight ETFs to rebalance your portfolio.
Currently, Passiv only supports full integration with Questrade. You can’t use them on other brokerage services like Wealthsimple Trade.
My review of Passiv is positive.
I rebalance 1-2 times a year and do not really mind playing with the numbers manually in order to get my portfolio back on track.
Their free service works well enough for me since I really don’t make that many trades per year. I probably won’t be able to justify paying $3.33 per month for their one-click trading or stock picks Elite member features.
Investors who feel that DIY investing is too complicated would enjoy some of the relief that Passiv provides.
Also, if you used to put off rebalancing till later because you did not have the time to crunch the numbers, Passiv has come to the rescue.
If the idea of self-directed investing still puts you off, check out my guide to robo-advisor investing in Canada.
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Passiv is an investment management tool that automates your portfolio rebalancing and integrates seamlessly with Questrade. This Passiv review covers what you need to know about the software.