Simple Steps for Investing With a Robo Advisor

So you have decided to invest some money in the stock market using a robo advisor.

Or perhaps you are still on the fence?

Click here to read about the top Canadian robo advisors in 2020 and how they work.

It is intimidating trying something new, and changing from investing with a traditional bank to using a robo advisor is no different. I know I was nervous when I moved my RRSP savings over to Wealthsimple.

To make it easy for new investors, I’ve created these step by step instructions. Follow these five simple steps to invest your money with a robo advisor.

Read: Smart Money Ideas For Women At Every Age

Step 1 – Choose the right robo advisor for you

Deciding which robo advisor to invest with can be scary if you are new to investing. It doesn’t need to be. The benefit of a robo advisor is that they cater to people who want a hands-off approach.

See my list of Top Canadian Robo Investors.

Compare the management fees you’ll pay with each one with the services they offer. If you already have investment savings in mutual funds at a bank, know you are probably paying around 2% in management fees (MERs).

Step 2 – Find out what it will cost to move from a bank to a robo advisor

If you don’t already have money saved in an RRSP, TFSA, or RESP with a bank, you can skip this step. I had two registered retirement savings plans invested in mutual funds. I found out from the bank that they would charge me $75 to transfer each RRSP to another investment firm (robo advisor).

The top Canadian online brokerage firms and robo advisors will reimburse you part or all of those transfer fees. For example, Wealthsimple will cover up to $150 in transfer fees if you transfer over $5000.

Read: Investment Ideas For Low And Middle Income Earners

Step 3 – Set up profile and choose an investment portfolio

I chose to open an account with Wealthsimple. Maybe it was because their feel-good commercials were all over the television, but they seemed like a good fit for me.

When visiting their website, you’ll be prompted to set-up an account and enter your personal information.

The program will ask you a series of questions about your income, debt, risk tolerance, and retirement age goal. It will recommend an investment portfolio based upon the amount of risk you are willing to take investing and for what purpose you are saving money (retirement, down payment on a house, university tuition, etc).

It will calculate how much money you need to contribute each month to reach your goal. There were no questions about any pension savings you may have, so keep that in mind if you are contributing for retirement.

Read: Top Canadian Robo Advisors 2020: Which One Is Right For You

Step 4 – Transfer an existing account or create a new one

After you choose a portfolio type, you can create a new account.

If you already have investments, you can transfer the holdings over.

You’ll be prompted to choose which type of account you wish to transfer money from (RRSP, Locked-in RSP, TFSA, RESP, Pension, Savings or Chequing Account, etc). There is a nice description of each account type which is helpful if you aren’t familiar with your investment terms.

Click on the bank that holds your current portfolio and enter account number.

Next you’ll be asked if you want to transfer your holdings as they are (transfer in kind) or sell off your current investments and transfer in cash. This is where trading fees (Step 2) come in to play.

• 

• 

Step 5 – Read and sign the management agreement

Read the management and client agreements for information about your responsibilities and liabilities. These are similar to the stacks of paperwork you sign when opening a mutual fund account at a bank….more environmentally friendly for sure.

Adding your electronic signature is the last step. It takes a 2 to 4 weeks to transfer any holdings from another account. At that point you can contact the robo advisor to be reimbursed for transfer fees.

All in all, it is a very straightforward process. It took me about an hour to complete but I was interrupted several times taking care of my baby daughter. I also called Wealthsimple directly to ask about reimbursement of transfer fees and setting up an automatic monthly deposit into my new investment RSP. Both can be done online through my new account.

Please share this post if you found these Simple Steps to Investing with a Robo Advisor helpful!

Read: How To Invest Money In The Stock Market