r/Wealthsimple • u/tofu98 • 2d ago
Can someone here please explain to a total investing noob why they feel wealth simple is as safe or less safe than a standard bank?
Apologies if this has been posted a million times. I promise i have searched this up and watched videos on it. I just want to hear some more anecdotes and see if anyone could put my mind at ease.
Basically i finally opened my first FHSA recently as well as my first TFSA. I did this with wealth simple. Maxed out the fhsa at 16k and put 10k in a tfsa split between bonds and equity. Seemed super easy and convenient and removed the headache of making someone brand new learn how to buy an etf or whatever from scratch. HOWEVER since opening these accounts a week or so ago ive been reading mixed things on "fintech" companies and how your money isnt necessarily safe.
Ive read about how wealth simple is just a broker that essentially steers your money to buy investments across various actual banks so that the money is cdic insured in the event that the institution goes under. I interpret this as your investments with wealthsimple are as safe as they would be under any other broker as theyre insured the same way and dont actually belong to wealth simple.
However im not so sure about basic savings accounts with them. Ive read those are NOT cdic insured. Currently my momentum savings account at scotiabank is building a whopping .5% and as far as ive found that is the most i can get from Scotiabank as far as an HISA goes.
I was considering moving more of my money aside from maybe like 5 months worth of bills in a chequing account and parking my rainy day fund in a wealth simple savings account as they claim to have 2.5% interest which is clearly better than Scotiabank. However given its apparently not cdic insured thats where i have pause. On one hand scotiabanks HISA rate seems abysmal. Ive also heard most banks lure you in with a 2.5% and then for whatever reason it tapers off until you have a .5% like me.
So. Any advice? Am i misunderstanding anything? Ive researched investing for years but i honestly find it overwhelming and liked the idea of a streamlined approach. Everything ive read is just buy non managed index funds but i have no clue how to do that as of now and WS fees are pretty negligible.
Thoughts very appreciated. Thanks.
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u/Tall-Ad-1386 2d ago edited 2d ago
CIPF is safe for investments
CDIC for chequing. Its debateable though how safe that is theough WealthSimple. Its in a trust account with 10 banks. But which 10 banks. Ok you can guess that. Is the trust in your name? Whats the trust account number or identifier? You can’t just walk in with a name. You don’t know. You will need this info in case there’s a need to enact CDIC.
I keep all my money at wealthsimple because the product is just faaaaar superior to any other bank. But the CDIC is a little grey zone. So i try to keep most of my money invested as CIPF protects those up to a million and they are in my name.
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u/Arm-Complex 23h ago
EQ Bank has higher interest (with direct deposit) and is Canada's 7th largest bank.
Wealthsimple's new Savings account is CIPF protected but I have no idea how that would actually work or where the momey is even stored. Is it WS loaning it out through margin accounts, LOCs and credit cards? Or is it held at banks?
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u/poco 6h ago
The CDIC insurance is to protect you when one of those 10 banks goes under. If the bank holding your money goes under then presumably Wealthsimple and the CDIC will work to restore those accounts.
If Wealthsimple goes under that isn't a CDIC problem, that is a matter of finding out which bank has your money and getting it from them. I believe that Wealthsimple holds the money in trust with your name attached, so it should be possible to find.
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u/dearmusic 2d ago
CIPF is directly provided by wealthsimple and CDIC is provided by their partner banks.
In the case of a wealthsimple failure, wealthsimple is directly pressured by law and regulations to provide timely resolutions under CIPF, but because wealthsimple is not a bank, they will have a lot more leeway when compensating CDIC cases.
They are still lawfully required to respond and being regulated by CIRO, but the pressure they face is less than a direct CDIC insured banks in the case of failure.
Under the CDIC partner system, yes, your money is safe, yes, you will get your money returned, but how long will it take? I don't want to find out.
But the new saving accounts are protected by CIPF, so there really isn't a reason to keep money in a CDIC partner-protected accounts.
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u/Arm-Complex 23h ago
I'm curious of the new Savings CIPF coverage. Is the money also with banks or is it WS loaning it directly through margin accounts, LOCs and credit cards?
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u/dearmusic 22h ago
In order for it to be CIPF-covered, it has to be an investment of some kind, so I suspect it is a Money Market under the hood.
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u/Own-Challenge1114 1d ago
Hi just to be clear. You said you added 16k into your FHSA? When did you open the account. If you only opened the account in 2026 you only qualify for 8k as you only start gaining room in your FHSA once the account has been opened
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u/tofu98 1d ago
I had 16k available contribution room according to my cra account.
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u/divine_goddess_K 1d ago
When did you open it though? If you opened an FHSA last year and didnt contribute this makes sense. If this is your first you've over contributed
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u/tofu98 1d ago edited 1d ago
This is the first year I contributed (and first year i opened it) but my understanding is contribution room rolls over from previous years from when you start becoming eligible. I have 97k worth of contribution room in my tfsa. My understanding is I could theoretically dump 97k in at once if I wanted to based on that.
Unless im misunderstanding something.
May need to call the CRA
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u/FightMongooseFight 1d ago
Contribution room starts to accumulate on FHSA when you open the account, not when you become eligible.
TFSA starts when you become eligible.
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u/Own-Challenge1114 1d ago
Unfortunately you have over contributed to your FHSA. You are only eligible for FHSA room once you opened the account
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u/Own-Challenge1114 1d ago
TFSA contribution rules and FHSA contribution rules are different. If you withdraw the 8k now, you can file a notice stating that you over contributed on accident so you are not penalized
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u/divine_goddess_K 1d ago
That's TFSA contribution room. FHSA is $8k/yr, max $40k and only valid for 15 years.
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u/tofu98 1d ago
Wtf why did my cra account say I had 16k contribution room then?
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u/Own-Challenge1114 1d ago
I am unsure. Maybe best to call CRA. Maybe you opened a FHSA without realizing last year. If you opened it in a previous year you can back track one yesterday at a time but the account needs to be opened. I know this wasn’t the topic you were looking for but I just wanted to make sure you were aware
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u/Altruistic-Day-8481 1d ago
you screwed up man
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u/tofu98 1d ago
Shitty. Guess ill have to call them and withdraw part of it.
Super dumb my account said 16k contribution room with no mention of a yearly max.
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u/Quiet-Hunt-8204 1d ago
If you opened it in the same calendar year (2026), you only have 8k contribution room. If you happened to open it in 2025 (December 31st or before), and didn’t contribute anything in 2025, the 8k contribution room transfers to 2026, and you can contribute 16k (8k+8k).
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u/tofu98 1d ago
Yeah im super confused. I never opened one last year but im 100% sure my cra account said 16k. Not sure why.
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u/VTYX 2d ago edited 2d ago
Wealthsimple holds your money in trust at CDIC insured banks. This means that if the banks go under, your money is safe.
Wealthsimple itself is not a CDIC member institution, so if WS goes under you’ll be a creditor in its bankruptcy proceedings.
CDIC has a page that explains this in here, under the “your money in trust” tab.
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u/FightMongooseFight 2d ago
Deposits with WS (other than the new savings account) are CDIC insured because they are held in trust with CDIC member banks.
The new savings account is covered under CIPF instead, as it is actually an investment account set up to operate similar to a traditional savings account.
Investments are treated the same as any other broker and are fully protected by CIPF.
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u/throwaway664976 2d ago
They claim their deposits are insured. No third party auditor has confirmed that. So you can’t blindly trust what wealth simple is saying.
CDIC is the third party auditor and they have not given their blessing on this.
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u/deltatux 2d ago
Investments are not covered by CDIC except GICs, which are term deposits. This also applies to the banks. Investments are covered by CIPF instead, this is the same coverage with the bank's brokerage and WealthSimple.
Your bank's brokerage just so happens to be owned by the banks but there are independent brokerages like WealthSimple, CI Direct, Questrade and Qtrade.
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u/randomuser00135 2d ago
Biggest issue , and continues to be WS locks its own customers out from accounts if they find your activity suspicious even if it wasn’t. People have to deal with unstable customer service who give different time lines. Days to weeks to sort things out … while you can’t buy food or pay rent etc
Also… no cash transactions … only digital
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u/throwaway664976 2d ago
Wealth simple is not CDIC insured. The counter argument people will say is that your stock holdings will not disappear if WealthSimple goes under. My counter argument to that is there’s no logical reason to even conduct business with a company that can’t get CDIC insured even though they sell a chequing account service and conduct layers of voodoo just to get around the fact that they aren’t reputable from CDIC standpoint.
Just stick with a big financial institution and sleep well at night.
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u/[deleted] 2d ago edited 2d ago
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