Are you a do-it-yourself (DIY) investor who wants to make rebalancing your portfolio easier? Some investors prefer a more hands-on approach to investing instead of relying on robo-advisors.
I came across Passiv as a tool that can help investors rebalance their portfolios with greater convenience.
In my Passiv review, I will discuss the key features and benefits of Passiv that make it stand out as a useful tool for DIY investors.
Use: DIY Investor Tool
Wealthawesome Score: 4.7/5
- Facilitates easier DIY investing
- Makes rebalancing your portfolio a breeze
- One-click trades for elite users
- Compatible with Questrade
- Provides target allocation drift notification
- Elite users can control currency costs easier
- Currently, it can only integrate with Questrade
- Does not provide recommendations like robo-advisors
Summary: A tool that integrates with your trading platform to help rebalance your portfolio and make trading in different currencies easier
Free to sign up
What is Passiv
Passiv is a financial product that was created by Brendan Lee and Brendan Wood to relieve consumers from high Management Expense Ratios (MERs) and fees for self-directed investing. It is a software that allows investors to become entirely passive with their investments since you will no longer need to perform manual calculations or asset allocation.
Passiv is not a robo-advisor that makes suggestions or rebalances your portfolio for you. It helps you stick to the desired target allocation for your portfolio. Fully compatible with Questrade, it has helped hundreds of Canadians manage more than $100 million in investable assets through Questrade.
Questrade topped my list of the best trading platforms in Canada, so it’s no surprise that Passiv chose the company to be their partner.
While it can only integrate with Questrade at writing, the platform’s creators plan to expand, allowing it to sync with other brokerage accounts to automate several tasks you would otherwise perform manually while self-directed investing.
Passiv is not a robo-advisor, but it helps Canadians manage over $350 million through the platform.
Features and Benefits of Passiv
Passiv synchronizes with your brokerage account. Currently, it works with Questrade, and it connects with your Questrade account directly using Questrade’s API. It means you do not have to provide your brokerage account’s login details to Passiv to link it with your brokerage account.
In this section of my Passiv review, I will discuss the platform’s key features and the benefits you stand to gain from them.
If you are an Elite user with Passiv, you get access to one-click trades. This feature allows users to make Passive directly place trades in their brokerage accounts. Using this feature relieves you from the hassle of logging into your brokerage account and placing the trade yourself. The feature is compatible with both limits and market orders.
Portfolio drift notifications
While Passiv is not a robo-advisor, it does not leave you to fend for yourself entirely. If your portfolio is ever drifting away from the target allocation and you need to rebalance it, Passiv will notify you by sending you an email. Getting the email can help you rebalance your portfolio on time and bring it back to your preferred target allocation.
Multiple account portfolios
If you have several accounts you use to trade, Passiv can help you consolidate your efforts into a single portfolio. This feature is available to Elite users and also allows you to connect several accounts. You can use this feature to create various portfolios that have different risk tolerance levels or time horizons.
For instance, you can have a portfolio stored in your Registered Retirement Savings Plan (RRSP) that has a long-term and risk-averse strategy. You can simultaneously have another portfolio in your margin accounts for a more speculative portfolio.
Many DIY investors are increasingly using index investing. Instead of buying individual stocks, purchasing index funds. It is a useful practice to diversify your portfolio across various asset classes and global industries. Even index investors like to invest in a few individual stocks. That is where the Asset-exclusion feature comes in.
A feature available to Elite users, Asset-exclusion lets you purchase assets in your brokerage account that might not be a part of your target portfolio in Passiv. Since having an individual stock that does not align with the rest of the portfolio can throw off the accuracy of your target allocation, you can exclude the stock to maintain the accuracy of your portfolio.
Advanced currency handling
Passiv also allows users to keep different currencies separate from each other. The feature can come in handy if, for instance, you are buying both US and Canadian stocks. You might want to use US dollars for US stocks and Canadian dollars for Canadian assets. Passiv’s advanced currency handling system makes the process easier.
The platform’s standard calculations try to get you as close to your target as possible, regardless of the currencies you hold in your account. If you hold several currencies, it can result in you having to pay currency conversion charges to your brokerage.
This Elite feature prevents that from happening by altering Passiv’s calculations to retain cash and perform a manual exchange or Norbert’s Gambit, keep your currencies separate, or allocate excess currencies to assets in the corresponding currency.
Passiv allows you to keep track of how your portfolio performs and the amount of dividends you have received through your investments. While most platforms provide you with a graph of the portfolio performance, Passiv provides you with more comprehensive details. It is Passiv’s latest feature that helps you keep track of other important details like your consistency of contributions and actual portfolio returns vs. deposits.
Tracking the aspects, you can control can help you better calculate your target allocation decisions using the platform.
The default setting with Passiv is that you will want to allocate 100% of your funds into assets. However, if you want to do something like dollar-cost averaging, the platform has a Cash management feature. You can apply for two kinds of cash rules to your portfolio groups with Passiv:
Allocate at most
If you want to do dollar-cost averaging, this cash management rule effectively spaces out your purchases. Setting this rule to your portfolio means the amount you specify will be the most that it will allocate in a single set of trades.
Retain at least
This cash management rule helps you retain a fixed amount of cash in your account. Setting this rule ensures that Passiv’s calculations will leave out a cash amount you specify in the account. The feature can be useful for you if you prefer having some cash sitting on the sidelines while you research your options.
Passiv is generally a simple platform to use once you figure out how to integrate it with your brokerage account. As attractive as its services may seem, it can charge you to provide its premium services.
The platform offers two tiers of service: A free user service and an Elite user service.
There are plenty of useful features for free users. The free account with Passiv provides you with free performance tracking of your portfolio, rebalancing calculations, and it sends you email notifications when you have dividends or cash available to invest.
An Elite user can get access to several valuable features. You get access to one-click trades, multiple account portfolios, the ability to connect several accounts, advanced currency handling, and much more.
If you are a Questrade user who is using Passiv, you get access to the Elite account with no additional cost. If you are with a brokerage other than Questrade, you will have to pay an annual fee of $99.
Is Passiv Safe and Legit?
Security should always be a primary concern when you are considering financial products of any kind. Luckily, Passiv can give you the peace of mind about being a legitimate platform. To use Passiv, you will have to enable the platform to interact with your investment account with your brokerage. If you want to use Passiv, it sends you to your brokerage’s website where you can log in. The platform does not request or store your brokerage account credentials at any stage.
When you link the account, you can allow Passiv to either read-only or give it trade-enabled access (essential for one-click trades through Passiv).
As far as security measures are concerned, Passiv utilizes industry-standard firewalls and SSH keys, the platform frequently makes data backups after strong encryptions, and all the data has SSL encryption during rest and transit. Beyond that, the safety and security of your brokerage take over to protect the credentials. Passiv does not have access to the information at any stage.
I found Passiv to be most useful as a tool to make DIY investing a breeze. Using this platform means that you no longer have to maintain those comprehensive spreadsheets or perform manual calculations for your asset allocations. However, if you are good with Excel and prefer rebalancing yourself, Passiv might not be useful.
It also becomes irrelevant for DIY investors who prefer to invest in all-in-one ETFs since they perform the rebalancing for you. You can learn more about Canadian all-in-one ETFs here.
Passiv is a straightforward platform that helps Canadian DIY investors in their efforts for self-directed investing. While it does not offer comprehensive advice or a wealth of features, it can be a cost-effective tool for investors who like to contribute to and rebalance their portfolios actively.
Passiv certainly gets a Wealth Awesome thumbs up. You can check out the platform on its website here.