Author Topic: Wealthfront - simple investing option  (Read 9407 times)

RobertBirnie

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Wealthfront - simple investing option
« on: October 08, 2013, 10:01:29 AM »
Hey folks,

I just wanted to share about Wealthfront. I didn't see any mention of this company on the forums. They are amazing! I have two Roth IRAs and a taxable account with them. Their goal is to follow the principals put for in "A Random Walk Down Wallstreet" by Burton Malkiel. Malkiel is their chief investment officer as well (he was also Director of Vanguard perviously). They split funds into 6-8 different low-fee ETFs based on account type (its different between taxable and non-taxable). You don't get to choose or customize your fund split much at all (can only change "risk tolerance"), but for me this was fine as it is the exact same as I was trying and failing to do on my own.

The huge benefit that I've found is that they have zero fees for investments, so for example I have a recurring $250 bi-monthly deposit into my Roth IRA. If I tried to do the same with an E*Trade account and split it into 7 ETFs, each deposit would cost $70 in commission. But its free with Wealthfront. This has really saved me a lot of money and made it simple to increase the spread of my dollar cost averaging in my IRAs.

Their annual fee is 0.25%, which is much cheaper than what I was paying in trade commissions. If you have over $50,000 it might be cheaper to go the brokerage route (only if you put money in as one or two large transactions, if not Wealthfront is cheaper). If you don't sign up for an account you can still go through their initial questionnaire without giving them any personal info. It will tell you which ETFs they would use and then you can mimic it in a normal brokerage.

Below is my referral link. Both of us get $5,000 managed for free if you do a referral (worth $12 a year). Below that is a straight link without referral. If you decide to signup for an account find a friend who has an account at least and do a referral with them, its a good deal.

http://wlth.fr/17dVWNE

http://www.wealthfront.com

FYI, Another trick with them (actually recommended by a support person) if you sign up a spouse for their IRA account, refer them with your main account so you both get the benefit of the referral. That'd $25 a year off in fees.

secondcor521

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Re: Wealthfront - simple investing option
« Reply #1 on: October 08, 2013, 08:23:41 PM »
Hmm.

I use Admiral Shares of Vanguard index funds, which have all of the benefits you describe, plus you can choose or customize your fund split with free advice from them.  The expense ratio on the funds I use are all 0.05%.

Vanguard doesn't do referral links, though, sorry :-)

grantmeaname

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Re: Wealthfront - simple investing option
« Reply #2 on: October 08, 2013, 08:33:04 PM »
This is a lot like Betterment. Like Betterment, the advantages seem small enough that it's not worth the extra cost (and the advantages are really disadvantages IMO - maybe the man should come out from behind the curtain).

RobertBirnie

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Re: Wealthfront - simple investing option
« Reply #3 on: October 09, 2013, 01:10:07 AM »
Hmm.

I use Admiral Shares of Vanguard index funds, which have all of the benefits you describe, plus you can choose or customize your fund split with free advice from them.  The expense ratio on the funds I use are all 0.05%.

Vanguard doesn't do referral links, though, sorry :-)

Correct me if I'm wrong. Doesn't Admiral Shares require a 5 to 10k minimum per fund you put money in? My wife's 403b uses Vanguard and has no minimums for any of the funds, but I don't think they'd work well with our IRAs as the minimums would make it hard to diversify.

This is a lot like Betterment. Like Betterment, the advantages seem small enough that it's not worth the extra cost (and the advantages are really disadvantages IMO - maybe the man should come out from behind the curtain).

It is a lot like Betterment. Same idea with similar fees. Although Wealthfront does first 10k free, plus the referral for my wife, I don't actually pay Wealthfront a penny currently. I've got a total of $30k free now.

Looking at Betterment's investment categories, Wealthfront seems much better though. Betterment has 65% in US stocks, split between VTI, S&P, Russell 2k and Russell Mid. Wealthfront has a more in international and also has REITs and corporate bonds. Here's the breakdown for my IRA.

INVESTMENT TARGET
US Stocks Vanguard VTI ETF 20%
Foreign Stocks Vanguard VEA ETF 18%
Emerging Markets Vanguard VWO ETF 31%
Dividend Stocks Vanguard VIG ETF 5%
Real Estate Vanguard VNQ ETF 16%
Corporate Bonds iShares LQD ETF 5%
Emerging Market Bonds iShares EMB ETF 5%

secondcor521

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Re: Wealthfront - simple investing option
« Reply #4 on: October 09, 2013, 12:09:47 PM »
Hmm.

I use Admiral Shares of Vanguard index funds, which have all of the benefits you describe, plus you can choose or customize your fund split with free advice from them.  The expense ratio on the funds I use are all 0.05%.

Vanguard doesn't do referral links, though, sorry :-)

Correct me if I'm wrong. Doesn't Admiral Shares require a 5 to 10k minimum per fund you put money in? My wife's 403b uses Vanguard and has no minimums for any of the funds, but I don't think they'd work well with our IRAs as the minimums would make it hard to diversify.

I dunno.  I used the standard share classes before I had enough to where everything converted to Admiral shares.  The expense ratios on the standard shares for VTSMX are, for example, 0.17% -- still cheaper.

If you're successful, there are many more years where you'll have a lot of money than when you'll just be starting out.  I chose to pay some very small fees to Vanguard when my accounts were small (like a $10 per year IRA custodial fee) and used that as incentive to contribute enough to get out of those fees.  Haven't paid fees in years and don't plan to for the forseeable future.

I don't diversify as much as most people do, so, for example, I consider a couch potato VTSMX/VBMFX fund sufficient diversification for my needs.

tj

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Re: Wealthfront - simple investing option
« Reply #5 on: February 08, 2015, 09:15:15 PM »
I'm giving Wealthfront a shot with my taxable account since it is less than the $$ amount needed for them to actually charge a fee. And even if my account grows to 50k, it's less than $8.00/month to let them take care of rebalancing and reinvesting dividends and such.

I don't see any reason to use, for example, Betterment, until my balance grows much higher. I also like Wealthfront's investment mix better in that it sticks to broad markets rather than tilting (I already do some tilting in my 401(k).

if anyone wants to sign up under me, my link is http://wlth.fr/1IxtlKX - I used Robert's link above, which should save him his $12.50/year in management fees. ;-)

Joshmoneybeard

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Re: Wealthfront - simple investing option
« Reply #6 on: January 02, 2016, 02:44:27 PM »
I used the link above. Share the love with me if your looking to sign up an account. http://wlth.fr/1IKacq5
Thanks much happy investing!

Polish_Hammer

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Re: Wealthfront - simple investing option
« Reply #7 on: January 28, 2016, 12:20:27 PM »
I have my IRA in Vanguard utilizing admiral shares as well and it takes little effort to research your risk tolerance and balance between index funds. I have a relatively conservative break out between , S&P index fund, global stock fund, emerging market, and REIT funds. Set it and forget it. re-balance 1 or twice per year. done.   

If you are starting out without the investment money for admiral shares and don't want to use the higher load alternate funds, which I still think are worth it to have that control, then I too have heard good things about wealthfront

MandalayVA

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Re: Wealthfront - simple investing option
« Reply #8 on: January 28, 2016, 12:22:32 PM »
I have a Roth IRA with Wealthfront.  No complaints here!

 

Wow, a phone plan for fifteen bucks!