Millenials Opting for Index Fund Investing at High Rates

[Rpesek6904]

http://www.huffingtonpost.com/adam-hanft/the-stunning-evolution-of_b_6108412.html

[infogoon]

I could see this. Despite the stereotypes, the other GenX-ers on my team at work are all living paycheck to paycheck and in hock up to their necks. The only Millenial was asking me about Vanguard investment options.

[arebelspy]

And that Wealthfront's business model - a monumentally minimal .25 percent (on assets over $10,000) - does not a business make.

Bahaha.  That's minimal?  Seems like a waste of money to me.

Don't get me wrong, this is a good start, but the next step is for them to do it themselves.  Why pay someone else to invest in Vanguard for you?

I'm glad they're over the actively managed funds though.

[firebeard]

Bahaha.  That's minimal?  Seems like a waste of money to me.

It might be, but it's also possible it might not be.  Wealthfront claims that tax-loss harvesting and their "direct indexing" (buy all 500 stocks in the S&P 500 and a completion ETF for the rest of the market to potentially create more tax-loss harvesting opportunities) adds more return than the .25% fee.  While I agree with you that a buy, hold, rebalance (even tax efficiently) plan could be easily done by any of us manually at Vanguard, tax loss harvesting by swapping the Vanguard ETF with the Schwab ETF would incur transaction fees, and Wealthfront never has transaction fees.

For a tax-sheltered account, I think Wealthfront has much less value-add.

[arebelspy]

It's interesting how much more I've heard about Bettermint (here and around the personal finance blogosphere) than Wealthfront. 

Bettermint must pay a lot better referral fees.

Thanks for the info firebeard!

[firebeard]

I've heard a lot more about Betterment around here as well, probably because they turn on their tax-loss harvesting at 50k, and at 100k the fee goes down to .15%.  Wealthfront turns on tax-loss harvesting at 100k, but they have "direct indexing" at 500k and another flavor of it (buys 1000 individual stocks instead of 500) at 1M; I've heard Wealthfront is going to introduce a flavor of direct indexing later this year for 100k accounts.

[acanthurus]

Schwab is coming out with a robo-advisor to compete with the likes of Betterment and Wealthfront.

http://www.wallstreetdaily.com/2014/11/14/schwab-robo-advisor/

Should be coming very soon, I for one will be interested in how it compares.

[firebeard]

According to the article, Schwab's robo-advisor will do TLH at 50k, and it sounded like Vanguard may have a robo-advisor offering in the works.  I'm curious to see how they'll implement TLH, and especially if they'll charge transaction fees on ETFs that aren't their own.

Edit:  sounds like they won't charge any transaction fees.