Wealthsimple has launched margin trading for qualified Canadian stock traders.
The Canada-based stock broker – which is currently only available to residents of the country – has introduced three tiers of prime rates for margin accounts, depending on how much in assets they hold.
Margin trading at Wealthsimple involves borrowing money, with the value of an investor’s portfolio used as collateral, with interest charged on the amount borrowed. It can boost the returns of profitable trades, and also magnifies losses.
Wealthsimple’s new margin account carries different prime interest rates depending on the currency held in the account. Its website claims they are “lower than at any Canadian bank”.
For Canadian Dollars (CAD), these are currently 5.7% for amounts between $1 and $100,000, 5.2% for amounts between $100,000 and $500,000, and 4.75% above $500,00.
For US Dollars (USD), the rates are 8% between $1 and $100,000, 7.5% between $100,000 and $500,000 and 7% above $500,000.
Wealthsimple also has an additional charge or discount on these prime rate depending on their plan with the firm.
For “Core” customers hold between CAD $1 and $100,000 with the platform, it charges 0.5% on top of the prime rates above.
For Premium customers which have between $100,000 and $500,000 in assets, there is no extra charge.
For Generation customers who have more than $500,000 in assets with the platform, there is a discount of 0.5% on the prime rates.
The firm is currently offering 1% cash bonus or match, on transfers to its margin account between $15,000 and $5,000,000 in value.
As of November last year, Wealthsimple had more than three million users across Canada and hosted more than CAD $50 billion in assets.
Last year, rival Robinhood made margin trading available for users in the UK. The popular US investment app currently charges margin rates of between 4.7% and 5.75%, tiered according to account balance.
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
