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Wealthsimple RRSP Review 2024: Investing for Retirement

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A Wealthsimple RRSP account can help you save towards retirement while enjoying tax-sheltered returns and portfolio growth.

When planning for retirement, a combination of low fees, appropriate asset allocation, and a long-term strategy works to your advantage.

This Wealthsimple RRSP review covers how it works, how to open an account, fees you can expect, historical performance, promotions, and more.

What is a Wealthsimple RRSP Account?

Registered Retirement Savings Plans (RRSPs) are government-registered plans designed to hold investments that provide income to you later in retirement.

Each year, you get an RRSP contribution limit that is equivalent to 18% of your earned income for the last year, up to a maximum ($31,560 in 2024). Unused contribution room can be carried forward for contribution in later years.

With a Wealthsimple RRSP, you can make contributions up to your deductions limit.

During your contribution years, your Wealthsimple RRSP earns returns (income, dividends, capital gains, etc.) that grow tax-free.

When you start making withdrawals from your account in retirement, taxes apply, howbeit at a lower rate for most people.

This tax-deferred status enjoyed by RRSPs is why they are an excellent tool for retirement planning.

If you are wondering how your RRSP savings can grow over time, there are several calculators online that allow you to play around with various numbers to get estimates.

With lower annual management fees, you could potentially grow your retirement pot a lot faster.

Open a Wealthsimple RRSP account and get a $25 bonus.

Wealthsimple RRSP Account Types

Wealthsimple offers four main types of RRSP accounts, including:

1. Individual RRSP: This is a regular RRSP account you open on your behalf of yourself and make contributions to. The assets held belong to you, and when you make withdrawals, applicable taxes are reflected on your income tax return.

2. Spousal RRSPs: A spousal RRSP is opened in the name of your spouse or common partner. You make contributions to it and get tax deductions; however, the assets are owned by your spouse.

A spousal RRSP can be great for splitting income between spouses who have significant differences in income.

3. Group RRSPs: Wealthsimple Group RRSPs can be used by employers to set up workplace retirement plans for their employees.

4. Self-directed RRSPs: If you have a Wealthsimple Trade account, you can manage your own RRSP portfolio and invest commission-free using stocks and ETFs.

Other retirement and pension accounts offered by Wealthsimple are:

  • Locked-in Retirement Account (LIRA)
  • Registered Retirement Income Fund (RRIF)

Wealthsimple also offers RESP and TFSA investment accounts.

How To Open a Wealthsimple RRSP Account

To open a Wealthsimple RRSP account, visit the online portal here.

The process takes about 5 minutes to complete. After providing your basic personal details (email address and name), select the type of account you are opening (e.g. Invest).

Complete your profile to get appropriate portfolio recommendations matching your financial goals, risk tolerance, and investment timeframe.

Proceed to fund your account, set up preauthorized contributions, and/or transfer investment assets from another financial institution to your Wealthsimple RRSP account.

Benefits of a Wealthsimple RRSP

Lower cost: Compared to traditional mutual funds, Wealthsimple’s portfolio management fees are a lot cheaper.

Stress-free Investing: Your portfolio is automatically invested and rebalanced as required. You don’t need to put in manual work.

Access to financial advice: You can speak to a financial advisor when you have questions about your investments.

Security: Your RRSP account is protected against firm insolvency up to $1 million. Also, Wealthsimple uses bank-level encryption and 2-Factor Authentication to protect your account.

Wealthsimple RRSP Portfolios and Performance

Based on your investor profile, you can invest your RRSP in a conservative, balanced, or growth portfolio. These three broad types of portfolios also have Socially Responsible Investing (SRI) and Halal options.

The asset allocation for these portfolios varies as follows:

  • Conservative portfolio: 35% equity and 65% fixed income
  • Balanced portfolio: 50% equity and 50% fixed income
  • Growth portfolio: 75% – 90% equity and 10% – 25% fixed income

If you are interested in how these portfolios have performed over time, the table below shows modelled performance on an annualized basis as of September 30, 2021.

Portfolio1 year3 yearsSince Inception
Conservative-0.33%4.49%3.50%
Balanced3.39%5.72%4.58%
Growth12.81%7.85%7.25%

The growth portfolio modelled in the table had an 80% equity to 20% fixed-income split. Also, the inception date for all three portfolios is August 20, 2014.

With regards to the ETFs held by Wealthsimple RRSPs, they may include:

  • Vanguard Total Stock Market (VTI)
  • iShares MSCI Min Vol Global ETF (ACWW)
  • iShares MSCI Min Vol Emerging Market Fund (EEMV)
  • iShares Core MSCI EAFE USD (IEFA)
  • iShares Core S&P/TSX Capped Composite Index (XIC)
  • Vanguard US Total Market ETF (Cad-Hedged) (VUS)
  • BMO Long Federal Bond Index ETF (ZFL)
  • iShares Core Canadian Short Term Corporate Bond Index ETF (XSH)
  • SPDR Gold MiniShares Trust (GLDM)

Wealthsimple RRSP Fees

The management fees you pay annually are based on your account size as follows:

  • Under $100,000: 0.50% fee
  • $100,000+: 0.40% fee

In addition to the management fee, you can expect to pay an average of 0.20% in built-in ETF fees.

Wealthsimple RRSP Transfers

It is easy to transfer your existing RRSP investment account at another financial institution to Wealthsimple.

If the amount you are transferring is more than $5,000, Wealthsimple pays any transfer fees the bank charges.

Wealthsimple RRSP Scenario

I consulted with James Choi, who is a portfolio manager at Wealthsimple, on a brief scenario showing how people can invest modest amounts over time in their RRSP account and grow a significant retirement portfolio. See below.

Background:

The client is 25 years old and living in Ontario. He currently earns an annual income of $75,000. He has just finished paying off his student debts and is now focused on saving for retirement, which he hopes to do by age 65.

Based on his monthly take-home pay of $4,679.50, he is able to set aside $920 a month after paying for his monthly expenses as shown below:

Monthly Spending Snapshot:

  • Rent = $2,100
  • Food/dining out = $700
  • Utilities, phone/cable = $300
  • Clothing/grooming = $300
  • Entertainment/travel = $350
  • RRSP = $920
    • Total = 4,670

Result:

Assuming the client invests $920 a month in his RRSP through a growth-oriented portfolio, he is expected to have approximately $1.37 million saved by the time he retires at age 65.

Key Takeaways:

One of the key benefits of contributing to an RRSP account is the ability to reduce your tax burden. For example, by contributing $11,040 a year to the client’s RRSP, he is expected to get a tax refund of around $3,423 a year.

If he chooses to invest his refund every year until retirement (about 40 years), it would amount to an additional $425,000. This would bring his total retirement portfolio to approximately $1.8 million.

Compounding is powerful, which is why it’s so important to start investing as early as possible.

In the above example, if we kept all the variables the same, but the client decided to delay starting to save for retirement until age 35, by the time he was 65, his retirement portfolio worth would be about $980,000.

This is only a little over half of what he would have had by starting at age 25.

If you were wondering how fees impact your investments, here’s what James had to say:

In the above example, if the client was invested in an average mutual fund in Canada, he’d be paying about 2% in fees, on average, vs. approximately 0.64% at Wealthsimple (0.5% in management fees + MER fee of 0.14%) for a standard portfolio.

Over the next 40 years, this would result in about $412,000 going towards fees, as opposed to his retirement fund, impacting his long-term return.

The above case study is hypothetical and has been developed for the purpose of demonstrating how investing in an RRSP works. Note: the calculations for this case study assumed a rate of return of 5.12% (5.77% gross return minus 0.65% fee for a standard investing portfolio with Wealthsimple). The following calculator was used to calculate the tax refund: https://www.wealthsimple.com/en-ca/tool/tax-calculator/.

Additional resource: https://www.cchwebsites.com/content/calculators/CACompareFees.html.

And a robo-advisor like Wealthsimple can help you reach your retirement dreams using time-tested investment strategies and more.

At Wealthsimple, we want to take the complexity out of investing and give clients access to high quality money management at a low cost. We cater to all investors by offering various investment themes such as socially responsible investing (SRI) and Halal investing, in addition to our standard portfolios. And we go one step further by providing everyone access to licensed, fiduciary advisors who will work with you to ensure you’re on track to meeting your retirement goals.

Wealthsimple RRSP Promotion

New Wealthsimple clients who open an RRSP account get a $25 bonus when they fund it with $500 or more.

If you opt for a self-directed Wealthsimple Trade RRSP account, you receive a $25 bonus after depositing at least $150.

Is Wealthsimple RRSP Safe?

In my opinion, Wealthsimple RRSP accounts are safe.

Wealthsimple is Canada’s most popular online wealth management service (robo-advisor).

Its custodial broker (ShareOwner) is a member of the Investment Industry Regulatory Organization of Canada (IIROC).

It is also a member of the Canadian Investor Protection Fund, which protects your assets against member-firm insolvency up to $1 million.

Wealthsimple RRSP Alternatives

If you are looking to learn about how Wealthsimple compares to some of its competitors, you can read my reviews of these platforms:

Wealthsimple RRSP FAQs

Does Wealthsimple Offer Spousal RRSPs?

Yes, you can open a Wealthsimple Spousal RRSP account and contribute to it on behalf of your partner.

Does Wealthsimple offer RRSP loans?

Wealthsimple does not offer RRSP loans. That said, you can withdraw your RRSP funds tax-free to pay for school (LLP) or to use them towards the purchase of a home (HBP).

Will Wealthsimple pay my RRSP transfer fee?

If the RRSP account you are moving to Wealthsimple is worth more than $5,000, they cover the transfer fee.

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Editorial Disclaimer: The investing information provided here is for informational purposes only and is not intended as individual investment advice or recommendation to invest in any specific security or investment product. Investors should always conduct their own independent research before making investment decisions or executing investment strategies. Savvy New Canadians does not offer advisory or brokerage services. Note that past investment performance does not guarantee future returns.

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Author

Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu, personal finance expert, author, and founder of Savvy New Canadians, has written about money matters for over 10 years. Enoch has an MSc (Econ) degree in Finance and Investment Management from the University of Aberdeen Business School and has completed the Canadian Securities Course. His expertise has been highlighted in major publications like Forbes, Globe and Mail, Business Insider, CBC News, Toronto Star, Financial Post, CTV News, TD Direct Investing, Canadian Securities Exchange, and many others. Enoch is passionate about helping others win with their finances and recently created a practical investing course for beginners. You can read his full author bio.

About Savvy New Canadians

Savvy New Canadians is one of Canada's top personal finance platforms. Millions of Canadians use our site each year to learn how to save for retirement, invest smartly, maximize rewards, and earn extra cash. We have been featured in prominent finance media, including Forbes, Globe and Mail, Business Insider, CBC, MSN, Wealthsimple, and TD Direct Investing. Learn more about Savvy New Canadians.

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