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Wealthfrontis a low-cost robo investment platform with features that appeal to new and experienced investors alike.
Launched in 2008, Wealthfront remains a leader in the industry.
you’ve got the option to also tweak individual investments inside your portfolio.
If you’re new to investing, check out ourInvesting for Beginners guideto learn about the building blocks of growing wealth.5 Companies That Send People Money When They’re Asked NicelyWhen you log into your bank account, how do your savings look? Probably not as good as you’d like.It always seems like an uphill battle to build (and keep) a decent amount in savings. But what if your car breaks down, or you have a sudden medical bill?Ask one of these companies to help…
Our Wealthfront review breaks down everything you’re gonna wanna know.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help…
What Is Wealthfront?
Wealthfront is an investment, banking and financial planning system best known for its automated investment options.
Wealthfront was founded in 2008 by Andy Rachleff and Dan Carroll as kaChing, a mutual fund analysis company.
Did you know?
Wealthfront says its goal is to bring transparency and accessibility to everyday investors.
Wealthfront had roughly 440,000 users and approximately $25 billion in assets under management in 2021.
How Does Wealthfront Work?
4 Steps to Start Investing With Wealthfront
Choose an account punch in.
Answer a short questionnaire.
View your investment plan page.
Next, youll tell Wealthfront about your financial goals.
Wealthfront uses this information to create your personalized investment portfolio.
you might make a one-time deposit or set up recurring deposits from your bank.
Recurring deposits can be scheduled weekly, twice a month or monthly.
While Wealthfront shares some similarities with micro investing apps likeStashandAcorns Wealthfront features better benefits for high-balance accounts.
Its well-known for its tax loss harvesting strategies that maximize gains for investors with six-figure accounts.
The app takes a buy-and-hold strategy meant to minimize trading and maximize long-term gains.
The typical portfolio includes six to eight asset classes.
Low-costexchange traded funds, or ETFs, form the backbone of most Wealthfront portfolios.
ETFs provide instant diversification by bundling numerous stocks or bonds into a single fund.
Daily automatic rebalancing makes sure your portfolio doesnt drift toward a riskier or more conservative asset allocation.
Hands-On Approach
Users can take a hands-on approach to investing, too.
Wealthfront clients can customize their portfolio by adding or deleting certain ETFs.
you might also tweak the allocation percentages within your investment mix.
This is a nice perk since not all robo-advisors offer this level of customization.
you might customize the following automated portfolios:
529 college savings plans arent eligible for customization.
At that point, the Risk Parity Fund replaces these ETFs.
Experts are mixed about the effectiveness of this actively managed fund, which charges a 0.11% expense ratio.
However, Wealthfront isnt one of them.
When you deposit money into your Wealthfront investment account, it wont all necessarily be invested right away.
Wealthfront also makes you maintain a small cash balance in your investment account to cover annual management fees.
Wealthfront doesnt offer access to human financial advisors either.
That means you cant get one-on-one investment advice about your portfolio from a human investment advisor.
How Much Does Wealthfront Cost?
Wealthfront is one of the lowest-cost online investment platforms.
For context, thats $2.50 a year for a $1,000 account balance.
Wealthfront doesnt charge monthly account fees, unlike Stash and Acorns.
The only account fees youll have to watch out for are ETF expense ratios.
Youll pay those with any broker and the cost is very low.
(ETF expense ratios range between 0.06% and 0.13%).
you could open a Wealthfront investment account with a minimum $500 deposit.
You dont need to invest with Wealthfront to use the Path feature.
More Wealthfront Features
Wealthfront offers a wider range of investment accounts and benefits than many other robo-advisors.
A Wealthfront cash account combines checking and savings features into a single account.
You even get the option to open accounts for multiple beneficiaries in multiple states.
Its a unique option, since many other robo-advisors dont offer 529 plans.
A 529 plan is a tax-advantaged way to save and invest for higher education expenses.
You wont pay any annual fees on the first $5,000 invested in a Wealthfront 529 plan.
After $5,000, fees range from 0.42% to 0.46%, plus expense ratios.
Retirement Planning
you might open a traditional, Roth or SEP IRA with Wealthfront.
The platform also accepts IRA and 401(k) rollovers from existing retirement accounts.
Wealthfronts free Path financial planning tool lets you create a retirement savings plan.
The Path tool also incorporates long-term Social Security and inflation assumptions into its retirement calculations.
Its free to use.
You dont need a Wealthfront investment or banking account to access Path.
you might also customize any other Wealthfront account by adding individual socially responsible investments.
The company currently offers 18 different environmentally-focused ETFs.
Its a budgeting tool that aims to fully automate your savings plan according to your financial goals.
With Self-Driving Money, you set target balances and monthly budgets for each of your accounts.
Wealthfronts software lets you route money to multiple goals, such as anemergency fundor adown payment for a house.
The line of credit also comes with no fees.
Interest rates are between 2.40% and 3.65% lower than typical rates for personal loans or credit cards.
Wealthfront allows you to have multiple lines of credit.
you might have one portfolio line of credit for each eligible account key in.
Pros and Cons
Every robo-advisor has its pros and cons.
Here are some of the advantages and drawbacks of Wealthfront.
Wealthfront also offers $1 million FDIC insurance on your cash account, four times what most banks offer.
Wealthfront is a great robo-advisor for beginners.
Its user-friendly interface makes it easy to set up your account, identify your goals and start investing.
Its cash account and checking account features can help you consolidate your finances to a single app.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
