October 25, 2021
As reported by betakit, Wealthsimple launched a new product that allows for crypto investments through its group retirement fund product. This new product is the first group retirement fund product in Canada to allow people to invest in crypto.
The launch of this cryptocurrency product is an initiative of Wealthsimple Work, a division of Wealthsimple that offers a Group Registered Retirement Savings Plan (GRSP) for companies. According to Tim Kalimov, the head of Wealthsimple Work, the company’s goal is to assist everyone, especially younger working Canadians to achieve financial freedom. Kalimov noted that being ready for retirement is a key factor in reaching financial freedom and “adding a crypto allocation option will get more young Canadians invested, because it’s an exciting thing, they believe in the transformational potential of the technology and they want to get exposure to it”.
To be able to access this product, employers that have a GRSP will need to opt into the offering which will then allow employees to invest between one to three percent of their portfolio in Bitcoin and Ethereum ETFs. The expectation is that this minimal allocation and investment in crypto ETFs will help mitigate the risk for employees, which is important because of the volatile nature of cryptocurrency.
Although crypto investments cannot be held in retirement saving plans, crypto ETFs can. They are also considered to be a more safe and reliable investment, as ETFs are a pool of securities that trade on an exchange and are considered qualified investments. In the event that crypto prices increase rapidly, the Company has assured its users that the retirement portfolios will automatically rebalance and reallocate the gains into more stable investments like stocks and bonds. On the other hand, if the entire crypto sector goes down, the Company will not use other retirement investments to buy more crypto.
Author: Bukola Adelusi