Launched in 2011, Wealthfront is a robo-advisor with $75+ billion in property beneath administration as of January 2025. A robo-advisor is an funding advisory service that makes use of an algorithm as an alternative of individuals that can assist you make investments.
Wealthfront is a tax-efficient and low-cost method to make investments. Its providing is compelling. For simply 0.25%, they do all of the heavy lifting utilizing a pc algorithm.
I feel robo-advisors are nice as a result of they provide skilled advisory companies, a minimum of a vanilla model (or cosmopolitan, to maintain the ice cream analogy as correct as potential), to the plenty by counting on algorithms slightly than an advisor-heavy method.
Many funding advisers received’t meet somebody with out a minimum of six figures to take a position since they receives a commission as a share of property beneath administration. Robo-advisors can do that as a result of robots don’t want something however hugs.
Their funding workforce is spectacular, that includes names like their Chief Funding Officer, Dr. Burton Malkiel (A Random Stroll Down Wall Avenue), and Charles Ellis (Successful the Loser’s Recreation), founding father of Greenwich Associates.
At a Look
- $500 minimal beginning steadiness
- 0.25% annual price
- Customizable premade portfolios
- Tax loss harvesting
- AI-powered monetary recommendation
Who Ought to Use Wealthfront
Wealthfront is sweet for individuals who need a robo-advisor with tax loss harvesting and don’t care about receiving personalised monetary recommendation. It has three premade portfolios that may be custom-made with a wide range of different investments.
If you would like to have the ability to communicate to a human advisor, Wealthfront is probably not for you.
Wealthfront Options
Desk of Contents
- At a Look
- Who Ought to Use Wealthfront
- Wealthfront Options
- What Wealthfront Affords
- In regards to the “Robots”
- How Wealthfront Invests
- Danger Tolerance & Asset Allocation Software
- Wealthfront Money Account
- Wealthfront Free Monetary Planning
- Portfolio Line of Credit score
- How a lot does Wealthfront value?
- Wealthfront Options
- Wealthfront Evaluation: Remaining Ideas
What Wealthfront Affords
Simplicity and optimization.
All robo-advisors promise funding returns with out as a lot upkeep. With an account minimal of simply $500, Wealthfront affords an funding advisory service to the plenty.
It took me a few years to amass $5,000 in investable property, and it sat in an index fund at Vanguard whereas it grew. I didn’t pay a lot in charges, however I additionally didn’t get tax loss harvest both (heck, I didn’t even study it till a few years later!).
I noticed my job as an investor as being two main duties:
- Decide and set up an asset allocation and,
- Rebalance their portfolio periodically.
Wealthfront does the primary activity by having you reply a questionnaire about your threat tolerance to ascertain your asset allocation. Then, its robots do their magic to build up the precise property to get the allocation that most closely fits your threat tolerance.
As an ongoing service, they deal with rebalancing, tax loss harvesting, dividend reinvestment, and all the opposite smaller duties that may add to your returns however that we frequently neglect to do. That’s the place the optimization is available in.
In regards to the “Robots”
Computer systems are solely pretty much as good because the individuals who design and program them, so whereas I say “robots” so much on this publish (it’s a “robo-advisor”), the oldsters who constructed the robots and provides them the perception to do their automated magic – they’re not robots.
They’re PhDs led by Dr. Burton Malkiel. They rent solely PhDs to work on the funding workforce.
How Wealthfront Invests
Wealthfront has three premade portfolios to select from, however every could be simply custom-made. In complete, it affords 239 investments, 17 asset lessons, and two cryptocurrency trusts.
The three premade portfolios are:
Traditional: This can be a portfolio of index funds that’s globally diversified. Its essential holdings as of January 2025 are 45% in US inventory through Vanguard’s Whole Inventory Market Fund, 18% international shares through Vanguard’s FTSE Developed Markets ETF, and 16% rising market shares through Vanguard’s FTSE Rising Markets ETF.
Socially Accountable: This portfolio focuses on sustainability, range, and fairness. Its essential holdings as of January 2025 are 60% US shares through iShares ESG Conscious MSCI USA ETF, 12% international developed shares through iShares ESG Conscious MSCI EAFE ETF, and 11% company bonds through iShares ESG Conscious USD Company Bond ETF
Direct indexing: This portfolio invests in particular person shares and is designed for portfolios over $100K. Your portfolio allocation will probably be decided by your threat tolerance.
Along with the premade portfolios, there are a number of funding classes you possibly can spend money on. They’re:
- US inventory ETFs
- Bond ETFs
- International/ rising markets ETFs
- International inventory ETFs
- Socially accountable ETFs
- Tech/ innovation ETFs
- Cryptocurrency trusts
- Wealthfront unique choices
- Investing technique ETFs
- Sector ETFs Commodity ETFs
Tax Loss Harvesting
To economize on taxes, Wealthfront makes use of tax loss harvesting. If an asset drops in worth, Wealthfront will promote it and purchase a distinct, but comparable, inventory. You may then use that loss to offset any funding beneficial properties you could have.
Your threat tolerance performs a big half in your asset allocation. Wealthfront helps you establish your threat tolerance via a quiz on the web site.
It’s fairly easy. It takes just a few seconds to via the questionnaire and get your beneficial funding plan: (you are able to do this your self with out placing any private data, they don’t ask for or require an electronic mail to play with this instrument)
Scroll all the way down to see the breakdown:
Beneath every class, they checklist the three main ETFs. In concept, you could possibly go and purchase these allocations straight. Should you click on on every of the bars, you’ll see a breakdown.
You may mess around with the Danger Tolerance slider to see how the allocations change (the portfolio is 7.5, the max is 10), plus see the distinction between a Taxable Funding Combine and a Retirement Funding Combine. I like that the Projected Efficiency is an expansion versus a single line because it’s usually depicted as a result of it extra precisely displays the info.
As you possibly can see, the funding choices for the taxable account include the Vanguard Whole Inventory Market Fund and Schwab US Broad Market ETF. If you wish to spend money on a socially accountable fund, it suggestsiShares ESG Conscious MSCI USA ETF.
Wealthfront Money Account
Lastly, typically you’ll have money not invested within the markets, and Wealthfront has a money account that at present pays 4.00% with FDIC insurance coverage as much as $8,000,000.
There aren’t any month-to-month charges and no minimal steadiness necessities.
Wealthfront Free Monetary Planning
Wealthfront affords a free automated monetary planning expertise that’s out there to everybody.
It’s an automatic monetary recommendation engine that takes your particular person knowledge, like revenue, spending, and investing, to guard your monetary property and skill to satisfy future targets.
It considers life occasions, like shopping for a home and having kids, and adjusts your plan accordingly. And it does this recurrently, slightly than annually or as soon as 1 / 4, as you’d with a human advisor.
You’ll hyperlink all your accounts so the software program can see your present standings. It should calculate your networth and offer you a plan to satisfy your targets. You will get a snapshot of your funds, discover numerous situations, after which take a look at totally different tradeoffs. Should you’ve by no means constructed a plan, they’ve an interactive Monetary Well being Information that helps you get began.
Portfolio Line of Credit score
In case you have a person or joint account with a steadiness of a minimum of $25,000, a Portfolio Line of Credit score helps you to request money as much as 30% of the present worth of your account, and so they’ll ship it over as shortly as one enterprise day.
Your portfolio turns into a line of credit score. (therefore the title!)
The rate of interest is variable and will depend on the efficient funds fee, plus 1.08% (fee schedule & definitions):
Their rate of interest may beat a house fairness line of credit score (because it’s technically a margin lending product and never a standard mortgage), and since there aren’t any charges, it’s even cheaper. And in contrast to a daily mortgage product, there isn’t a credit score verify, no minimal month-to-month funds, and the mortgage is secured by the property in your portfolio.
How a lot does Wealthfront value?
Wealthfront doesn’t cost a fee or account upkeep charges; as an alternative, it depends on an account administration price. The account administration price is 0.25% of property. That is on high of the charges charged by the underlying ETFs, which common 0.12%.
Wealthfront Options
There’s so much to love about Wealthfront, but it surely’s all the time a good suggestion to comparability store earlier than signing on to any funding account. It’s your hard-earned cash, in any case. Listed below are just a few Wealthfront alternate options to think about.
Betterment
Betterment is one other robo-advisor that provides tax loss harvesting. You will get began for $10, and it costs both $4 a month or 0.25%. You’ll be charged the 0.25% in case you arrange recurring month-to-month deposits of a minimum of $250 or you could have a steadiness of a minimum of $20,000.
It additionally has a money reserve account that earns 4.00% APY and has a $0 minimal steadiness requirement. FDIC insurance coverage goes as much as $2 million.
In case you have a steadiness of a minimum of $100,000, you may get personalised one-on-one recommendation from a CFP®. There’s an annual administration price of 0.65% for this service.
Right here’s our full Betterment evaluation for extra data.
SoFi® Investing
Mortgage large SoFi additionally affords robo-advisor companies. You can begin with $50 and it costs 0.25%, the identical as Wealthfront. It doesn’t have a money reserve account precisely, but it surely does supply financial institution accounts, together with a high-yield financial savings account that earns as much as 3.80% APY (unlocked with direct deposit or by depositing $5,000+ each 30 days, in any other case 1.00% APY).
One large advantage of SoFi Investing is that it affords human monetary advisors to all purchasers at no extra prices. But it surely doesn’t present tax loss harvesting.
Right here’s our full evaluation of SoFi Investing for extra data.
M1 Finance
With M1 Finance, your portfolio is known as a “pie,” and inside this pie, you possibly can add as many “slices” as you would like. These slices could be particular person shares, ETFs, or knowledgeable pies. It doesn’t present tax loss harvesting.
You will get began for $100 and the primary 90 days are free. After that, the price is $3 a month, except you could have a steadiness of a minimum of $10,000 or an energetic private mortgage.
It has a high-yield financial savings account to function your money reserve account that earns 4.00% APY.
Right here’s our full evaluation of M1 Finance for extra data.
Wealthfront Evaluation: Remaining Ideas
Wealthfront has top-notch software program and automation, a surprising Ph.D. funding workforce led by one of many greats, and is low-cost. You’ll pay 0.25% it doesn’t matter what your steadiness is, which is a deal when your steadiness is small however may get dear as your steadiness grows.
In addition they supply tax loss harvesting, which not each robo-advisor does. So, if that’s one thing you might be in search of, Wealthfront is price contemplating.
Relating to recommendation, they solely supply automated recommendation, and there’s no choice to talk to a human advisor.
Should you’re utilizing Wealthfront, I’d love to listen to about your expertise!