Passiv is a company that I’ve been aware of for some time and have been wanting to partner with us for years. Basically, Passiv looked at the challenges that people face trying to DIY manage a passive, index-based ETF portfolio like the one we teach in our Investment Workshop and said “let’s make an app for that!”
Taking all the repetitive tasks of tracking multiple accounts and rebalancing and wrapping it all up into a cool visual GUI, Passiv always intrigued me as something that would help our readers, but what always irked me was their price. To unlock all the useful features that would really make this tool a must-have, it cost $99 a year, and that didn’t jive with our philosophy of teaching people how to invest for free. Especially since I had already built tools for our readers to help with rebalancing and was giving it away for free.
But this time when one of their marketing people reached out to me and I decided to take it for a test spin, some really interesting developments had happened that really turned me around on Passiv.
So without further ado, let’s see what this thing is!
Linking Your Accounts – Is it Secure?
Like every other financial aggregator, the first thing you need to do is link your bank account, and right here is usually where I get nervous. If I have to give my password to a third party company, what’s preventing them from just stealing all my shit?
In this regard, the USA has a leg up on us. They have fintech companies that have built up financial aggregation systems that allow them to securely access people’s financial data in a way that doesn’t require storing your password. Yodlee, for example, is one of these companies and that’s how Personal Capital is able to securely access their customer’s bank accounts without exposing them to the risk of having their password stolen.
We don’t have any of that here. Furthermore, our banking regulations state that if we give away our password to any bank accounts to a third party company and our money gets stolen, we are shit out of luck. That’s why I’ve never recommended financial aggregators to our Canadian readers (even though we could have been making so much money doing so). Because it would expose our Canadian audience to the risk of having their money stolen and I can’t in good conscience do that.
So how is Passiv different?
Passiv doesn’t store your password. Instead, they access your account via an API.
Without getting into the technicalities, accessing your account via an API means that rather than give Passiv your password so they have complete control over your Questrade account, you grant access from your Questrade account to Passiv, and you can control exactly what access you give Passiv. You can grant read-only access, for example, so that Passiv can see what money you have, but not make trades with it. Because the linking is done using API’s, you don’t have to worry about some unscrupulous summer intern stealing your password and stealing your money, because Passiv never had your password to begin with.
Here’s what linking an account is like.
First go to “Settings” and click “Add Another Connection.”
Then, you pick your brokerage firm (in this case, Questrade).
Then you provide your login credentials. Note that in the address bar, the URL is login.questrade.com, which indicates that you are actually accessing Questrade’s website, not Passiv’s. So even though you’re typing your password into a form, that form is going to Questrade, not Passiv.
Finally, you confirm that you want to authorize Passiv to have (limited) access to your account and you’re done.
Setting Up Your Portfolio
So now that we’ve connected our accounts, what do we do?
Well, first of all, I love this feature of Passiv, which is the ability to group your accounts into separate portfolios. While our investment workshop only shows us building a portfolio with a single non-registered account, the reality is that most people have multiple accounts, like an RRSP or a TFSA. We are no exception. In fact, with all of the LIRA and Spousal RRSP accounts we have, our main retirement portfolio (which we call Portfolio A) is a combination of 7 different accounts, while the investment account I use to store the money we’ve made post-retirement is in it’s own non-registered account which we call Portfolio B.
In the past, I have to manually add up all the right account balances to figure out what my “Portfolio A,” but now I don’t have to anymore! I can just go into the Settings and drag all the accounts into its own grouping, rather conveniently already named Portfolio A while I can leave Portfolio B in its own group.
I didn’t even know I wanted this feature, but now that I have it, I can’t go back. This is how the hedonic treadmill happens!
Next, we need to set up each portfolio’s target allocation. There are two ways of doing this. The first is that you can enter each ETF ticker symbol and its target percentage manually, or you can import your portfolio’s current weighting and tweak it from there. I’m lazy, so that’s what we’ll do.
And finally, we update our percentages back to our targets…
Passiv Rebalances for you
Once you’ve set up your portfolio’s target allocation, here’s where Passiv really shines. You know how in the Investment Workshop, every time we added money into our accounts I had to do all that manual calculation to figure out how much of each ETF to buy to maintain our target allocations? Passiv does all that for you.
Not only does it give you an overall “Accuracy” score on your portfolio to tell you how far you’re drifting off target, it also calculates all the trades you need to do to bring your portfolio back on track.
You can really tell that this is a tool the people at the company use themselves, based on the attention to detail shown when generating these trades. They, for example, know that on Questrade, buys of ETFs are free while sells cost money, so you can set a setting to only generate “buy-only” recommendations. Very impressive.
Once you have these recommendations, you can log into Questrade’s trading platform and type them in yourself, or if you’re comfortable with granting Passiv trading access, you can just press a button in Passiv and they’ll perform the trades for you. It’s up to you if you want this level of convenience, but either way it’s still a really slick system.
Next I headed over the or Reporting tab and see even more cool stuff.
All that annoying Excel work I had to do in the past to see my portfolio’s performance over time is now just done for me.
And even better, they have a panel dedicated to just dividends!
At a glance, I can see how many dividends I’ve collected over the year, when they came in, and which ETFs they came from. As a dividend-obsessed early retiree that funds their living expenses via their portfolio’s yield, I can’t tell you how useful this is to me.
This year, I’ve been watching our yield come in like a hawk because I was worried about dividends being cut, but now I can tell at a glance that of the $35k we’re expecting by the end of the year, $24k has already come in so it looks like our Yield Shield is doing its job with no significant cuts experienced.
As I use it, I’m still discovering cool, thoughtful features. For example, if you go to each portfolio’s dashboard, at the bottom-right of the window there’s a button called “Portfolio Visualizer,” which loads up your holdings into the free tool www.portfoliovisualizer.com, which I’ve been using forever to design portfolios, so that’s pretty neat!
But finally, the big $99 question: Are all these bells and whistles worth the price tag?
Well, it turns out, it’s not a $99 question, it’s a $0 question. Because for Questrade users, Passiv is FREE to use!
How is this possible? Apparently, Passiv recently inked a deal with Questrade so that for every user that signs up to Passiv, Questrade pays the subscription fee rather than the user.
Why would they do this? Because it makes Questrade’s platform way, way, easier to use.
As much as I love Questrade, if you’ve used their trading platform (and especially their advanced platform IQ Edge), you’ve probably noticed that it’s really set up with individual day traders in mind. You can pull up all sorts of fancy-looking graphs and implement options strategies from their software, but it’s not easy to, say, figure out how much money your family has.
If some of the accounts are in your name and some are in your spouse’s name (like us), you have to jump through all these hoops to see your total family’s holdings. And if you want to figure out how your total portfolio’s price history, there’s just no way to do it. I had to pull up old statements and generate the charts myself in Excel.
So from Questrade’s perspective, Passiv just did all their work in making their UI way more accessible for them, so they’re treating Passiv as an outsourced UI development house. Passiv maintain the code, Questrade pays them a subscription fee, and that way Questrade doesn’t need to hire developers in-house to do it themselves.
So there you have it. Tons of cool features, you don’t have to give up any security, and on top of it all, it’s absolutely FREE for Questrade users.
So should you sign up with Passiv? Absolutely yes. Hell, at that price point, you can’t afford NOT to!
And if you do, please use this link to support our blog so we can keep the FIRE burning!
Also, note that Passiv only works for Canadians using Questrade and not our American readers, but hey you guys have had Personal Capital for forever, so keep using that!
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Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.