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Tag: online broker

  • Wealthsimple reveals that it’s now profitable, after 10 years in operation – MoneySense

    Wealthsimple reveals that it’s now profitable, after 10 years in operation – MoneySense

    It also ditched U.S. expansion efforts after selling its U.S. book of business to Betterment in 2021, and sold its Wealthsimple for Advisors to Purpose Advisor Solutions as it focused in on Canadian consumers. 

    The company’s valuation is also down from its peak. Power Corp., which across several divisions together held a 55.1% undiluted equity interest as of June 30, said the fair value of its holding was $1.5 billion. That’s down from $2.1 billion in 2021. 

    But the company has still managed a steep climb in assets from growth across the board, whether it’s wealth management, trading and brokerage or its banking business, said Katchen. 

    It comes as Wealthsimple increasingly positions itself as a full-suite alternative to the big banks, including boosting its banking services last year, that has helped lead to a $20 billion boost to the bank’s net deposits. 

    “We’ve been pretty excited about a more complete product offering,” said Katchen.

    Product expansion to include mortgages, credit and insurance

    Wealthsimple, which also offers tax services after buying Simpletax in 2019, launched a mortgage offering earlier this year and plans more credit products ahead along with an expansion into insurance, he said.

    It’s all part of the company’s effort to rival the big banks, by having more than a trillion dollars in assets under administration. 

    While Katchen had originally said he’d want to reach that goal within the first 15 years, he’s now aiming for a slightly less ambitious timeline of within 20 years of co-founding Wealthsimple. 

    The Canadian Press

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  • What happens when you can’t manage your investments anymore? – MoneySense

    What happens when you can’t manage your investments anymore? – MoneySense

    I try to picture 84-year-old me being told by my kids that it is time to hire a financial planner. I may not be so keen myself when the time comes. Maybe I should bookmark this column.

    I took over the management of my mother’s finances toward the end of her life. She seemed reluctant, but she knew it was time. I think she still saw me as her little boy even though thousands of clients and readers looked to me for advice that she was hesitant to take.

    Managing your own investments to save on fees

    If you expect to pay $35,000 a year on fees to invest in mutual funds, Laasya, I am speculating here, but you probably have somewhere between $1.5 million and $2 million of investments. Mutual fund management expense ratios (MERs) are embedded fees that are paid from the fund’s returns each year. They are about 2% on average but can range from under 0.5% for low-cost, passive index funds to 3% or more for segregated funds from insurance companies.

    If you have $1 million or more to invest, there are discretionary portfolio managers who use stocks and bonds or proprietary pooled funds who may charge 1% or less of your portfolio value. (Discretionary means the portfolio manager makes buy and sell decisions on your behalf.)

    You could certainly invest in exchange-traded funds (ETFs), and now there are plenty of simple asset-allocation ETFs (also known as all-in-one ETFs) that can be a one-stop shop for investors. Fees are in the 0.25% range.

    Why self-directed investing may not be the answer

    The problem with buying an ETF, Laasya, is that your kids are concerned about you investing on your own. And if they wanted to be self-directed investors, they probably would have offered to help you manage your investments. They did not. So, if you pull your investments to manage them yourself again, you may be putting your kids in an uncomfortable position, as they may potentially have to become DIY investors at some point if you’re unable to manage your own investments.

    Self-directed investing may seem easy to people who are comfortable doing it. But I remain convinced that some people will never be able to manage their own investments, no matter how simple it becomes.

    Have you considered a robo-advisor?

    I often joke with my wife that I am very good at a short list of things in the financial planning realm, but not much else. There are plenty of things that I could probably learn to do around my house or in other aspects of life that I have no interest in learning. I would rather pay an expert.

    Jason Heath, CFP

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  • Can you save on taxes by owning an investment account with your child? – MoneySense

    Can you save on taxes by owning an investment account with your child? – MoneySense


    When you give cash or assets to a family member to invest, there may be attribution of that income back to you. Attribution causes income to be taxed on the original taxpayer’s income tax return. Attribution applies:

    • Between spouses. So, if a high-income spouse gives money to their low-income spouse to invest, with the goal of reducing their tax payable, the attribution rules apply.
    • To some income between a parent and a minor child. Interest and dividends are taxable back to the parent, but capital gains are taxable to the child. So, you can accomplish some income splitting with a minor child.

    Attribution does not apply between a parent and an adult child, unless the funds are loaned to the adult child at a low interest rate or at no interest rate. In the case of a low- or no-interest loan, where it seems the intention is not to truly gift the money, but to reduce tax payable on the income for a period of time, there is attribution. As with a minor child, it applies to interest and dividends, but not capital gains.

    Can you avoid capital gains tax by gifting an asset?

    When an asset is outright gifted to a child, there’s a deemed disposition. The asset is considered to be sold to the child at the fair market value, and any accrued capital gains become taxable. So, you cannot avoid tax by gifting an asset, like a cottage, for one dollar, for example.

    It does not appear you have made a gift to your son, Jing. You intend to continue to report the income. So, there is no capital gain and there is no attribution. You should just continue to report the income on your tax return.

    Legal ownership vs beneficial ownership

    This is a case where legal ownership—whose name is on an asset—does not match the beneficial ownership—who technically owns the asset. Legally, the account is joint. Beneficially, the account belongs to you.

    This creates tax consequences for you that may be unintended. Trust rules have changed for 2023 and future tax years. If you have an account, like your brokerage account, Jing, where the legal and beneficial ownership are different, you need to file a special tax return.

    New trust reporting rules for 2023

    A T3 Trust Income Tax and Information Return is used by trusts to report trust income as well as information about the settlor, trustees and beneficiaries of the trust. Although you may not have established a trust with a lawyer, or even consider this joint account to be a trust, the Canada Revenue Agency (CRA) considers it a trust.

    The CRA makes an exception for “trusts that hold less than $50,000 in assets throughout the taxation year (provided that the holdings are confined to deposits, government debt obligations and listed securities).”



    Jason Heath, CFP

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