Wealthfront is one of the best robo-advisors in the industry, and they provide options for investors who like a hands-off approach. In my Wealthfront review, I am going to get you to understand why Wealthfront is able to grow your money in less time.
Before we start exploring Wealthfront together, there are two things I want to tell you:
- I am not referring you to try Wealthfront for another $5,000 free of managed fee, and this is not the main intent of writing this review. What I like to share is to reveal all my findings to evaluate whether this platform suits my risk tolerance or not. You are able to make your decision once you read it to the end.
- You are doing your researches online to avoid being scammed, which is awesome! Doing your homework before signing up with any services/platforms/programs is the key to protect our hard-earned money from the bad hands. So, you are on the right track.
Let’s get to know more about Wealthfront further down.
What is Wealthfront?
-Summary of Wealthfront –
Product Name: Wealthfront
Founders: Founded by Andy Rachleff and Dan Carroll in 2012
Product Type: Automated investment service(similar to Betterment)
Price: 0.25% managed fee after the first $5,000
Rating: 9 / 10
Recommend: It depends on your purposes. To invest, YES! To generate a passive income, maybe NO…
Wealthfront was founded by Andy Rachleff and Dan Carroll in 2012. Similar to Betterment, which is another robo-advisor investment platform, Wealthfront also works with Burt Malkiel, the Professor of Economics, Emeritus, and Senior Economist at Princeton University to develop investing strategies.
In 2013, they introduced “Direct Indexing”, a service that purchases the individual securities of an investment portfolio. In 2016, Wealthfront partnered with the state of Nevada to launch a 529 tax-advantaged college savings plan.
In 2018, an investment planning tool called Path was launched. Currently, Wealthfront has over $24 billion in assets under management with more than 400,000 accounts.
What’s inside Wealthfront?
Wealthfront Save(Cash account)
Don’t leave your money on the table, transfer your money to Wealthfront cash account with a higher interest rate than the traditional banks. Wealthfront provides a 0.26% annual percentage yield while the traditional financial institutions offer 0.01%-0.09% on checking and savings accounts.
To open a cash account with Wealthfront, the easiest way is through its mobile apps, both iOS & Android. It only takes about 5 mins to finish the process straight from your smartphones, and it needs at least $1 to open a cash account. Besides, there are no fees if you use the Wealthfront cash account to manage your money, includes advisory fees and management fees.
Wealthfront’s next new project is to develop a debit card that pays your bills, deposits your paycheck, gets cash from the ATM through your Wealthfront account.
You will need to answer some questions when you set up your account, so Wealthfront will advise the best portfolios to match your risk tolerance. The minimum to open a Wealthfront invest account starts from $500.
Your portfolios they provided is a mix of low-cost investments from 11 global asset classes, so your money won’t get impacted by ONE country. Those 11 global asset classes include the below:
- U.S. Stock
- Foreign Stocks
- Emerging Markets Stocks
- Dividend Stock
- Real Estate
- Treasury Inflation-Protected Securities
- Municipal Bonds
- Corporate Bonds
- U.S. Government Bonds
- Emerging Market Bonds
- Natural Resources
You could also use Path, an investment planning tool launched in 2018, to guide you with personalized advice and insights. Check the below video to know more about Wealthfront Path planning tool!
Wealthfront invests your money by computing algorithms and develops “PassivePlus”, a suite of investment strategies grounded in academic research and brought to life by software.
What’s inside PassivePlus?
- Tax-Loss Harvesting: It takes advantage of movements in the markets to capture investment losses, which can reduce your tax bill, leaving more money to invest.
- Stock-level Tax-Loss Harvesting: This is designed to further reduce your tax bill by capturing losses on individual stocks within an index, not just the index itself.
- Risk Parity: It aims to increase your risk-adjusted returns in a wide range of market environments through an enhanced asset allocation strategy.
- Smart Beta: increase your expected return by weighting the stocks in your portfolio more intelligently.
To invest your money on Wealthfront, they will charge you a 0.25% annual advisory fee on your account balance. Let’s do a quick calculation here. If you have $10,000 in your account, the annual advisory fee will be $10,000*0.25% = $25, $2.08 per month. To be honest, a 0.25% annual advisory fee is less than a quarter of the industry average.
For the fund fee, it ranges from 0.06-0.13%. Except for the above, there is nothing to worry about trading commissions, withdrawal fees, minimum fees, or transfer fees, which Wealthfront covers all for you.
You can use the Path feature to know your path to retirement, and it’s simple and intuitive. Once you link your accounts to Wealthfront, they will analyze your habits of expenses and tell you how much you need to save for retirement.
With more or fewer savings, Wealthfront will also let you know the difference if you cannot stick to the saving plan, so you get the results and other options to proceed.
Wealthfront Referral Program
If you refer your friends, family, or anyone you know, Wealthfront will waive the advisory fee on $5,000 of account assets for both the referring client and the referred client for each referral.
Other Minor Features
FDIC Insurance: Your cash account got FDIC(Federal Deposit Insurance Corporation) insured for up to $1 million.
Borrow: You can borrow money from Wealthfront with simple taps on your phones. Do it all without selling off your portfolio and disrupting your investment strategy. The current rates are 2.35% – 3.60%.
Plan for College: Same as retirement, you could use Path to know how much you should save to meet your plan for your kids’ college fees. Wealthfront partnered with the state of Nevada and offers the 529 plan, which is an account specifically designed to save for college.
Plan for Homeownership/Travel: Using Path to guide you with these two purposes, it will let you know the mortgage estimation for your house or the saving plans for travel.
How Much Do I Need To Open An Account?
Here are two types of accounts that you could work with Wealthfront to manage your money, the minimums are:
- $1 to open a Wealthfront cash account
- $500 to open a Wealthfront invest account
How Do I Withdraw Money From Wealthfront?
You can withdraw a minimum of $250 as often as possible if you maintain a minimum balance of $500 in your account.
When you request a withdrawal, Wealthfront will send you a confirmation email within one business day for validation. Once you validate, Wealthfront will place the trades to raise the required cash in your account. Generally speaking, most withdrawals take 3 or 4 business days before the requested money are back in your checking account.
Please note that your new deposit will be held on 5 business days for security purposes before your funds can be transferred out of your account.
Who’s Wealthfront For?
- People who want a low-cost robo-advisor for saving plans or investing.
- People who like hands-off experience to manage investments.
- People who like to save for some specific purposes, such as retirement, travel, homeownership, and kids’ college fee.
For me, I am not looking for investments or save for other purposes at the moment. What I am finding is a platform that could help me generate passive income streams online, and I will tell you mine in ONE minute.
Ugly Truth About Wealthfront
TOP#1 A Minimum Deposit
Compared to Betterment, you need to have at least $500 to open an account of investment. For people who don’t have that amount of saving, they will go directly to other platforms to do investments. This is 100% for sure.
For me, I think $500 is not that high compared to some traditional trading platforms. For this concern, people should find a way to save $500 at first then invest the $500 on Wealthfront. If you cannot save $500, maybe you could try Wealthfront Path to know the shortcut with insights and advice, which is FREE to use.
TOP#2 No Fractional Share
Wealthfront doesn’t trade fractional shares of ETFs, so they won’t invest your entire balance. This is where people think Betterment is superior to Wealthfront, and you might be left with excess cash.
TOP#3 No Live Chat Available
Sometimes, I have the situation that I need to use LIVE chat with customer service for technical issues. But, on Wealthfront, there is no LIVE chat service. For people that require face-to-face support like my parents, this might push them off when they consider which platform to do investments.
What I Liked About Wealthfront
TOP#1 First $5,000 Free of Managed Fee
When you do investments, there is one thing that people usually ignore, the cost! Lower the cost, the more you earn from your investments. Keep this in mind, the cost does play an important role in your investing.
Wealthfront won’t charge the management fee for your first $5,000, but they will charge you a 0.25% annual fee on your account balance once you exceed $5,000.
TOP#2 Free Financial Tools
Before you have one account with Wealthfront, you have access to the financial planning tool, Path! How wonderful it is! You can use Path to track the progress of your saving plan in the long term, and you are able to manage your money for the college fees of your kids.
Is Wealthfront A Scam?
No, Wealthfront is not a scam at all. It’s a robo-advisor that helps your investments or other saving plans since 2012. The experienced investors can trade a mix of U.S. stocks, foreign stocks, emerging markets, dividend stocks, real estate, and natural resources. The beginners may also use this platform to learn the knowledge of investments.
Just like what I mentioned in the previous paragraphs, I am looking for ways to generate passive income streams online. Here is my way to make money online if you are highly interested:
My Alternative Way to Make Money Online
My alternative way to make money online is through Affiliate Marketing because it has the below advantages that I LOVE:
- You don’t even need to buy any physical or digital products and sell to someone face to face.
- You also don’t need to convince people to join you as you downlines to build a team.
- You are not restricted to only promote the products from a specific company. You can promote anything you like!
What you need to do is to create a website, YouTube channel, or Facebook/Instagram with quality content that makes your target audience trust you then purchase through your affiliate links. If they do purchase, you earn commissions. Simple as that!
The platform I am using is Wealthy Affiliate. The reasons for “Why Wealthy Affiliate?” are for all the WA training courses, LIVE training sessions every Friday night, 24/7 SiteSupport, and the world-famous/awards winning WA community!
For more details or top secrets about Wealthy Affiliate, you could check my full review below.
Wealthy Affiliate Income Proof
Here are some of the most active members from Wealthy Affiliate. Each of them did succeed in generating a sustainable income to replace their 9-5 jobs. You are more than welcome to check their stories HERE.
- I Made Over $1 Million With Affiliate Marketing.
- Can someone make a full time income promoting WA? You bet they can!
- What Does $1000 Per Day Look Like?$
- 40,000 In One Weekend
- A Very Humbling $12,803.26 Month – August Progress Report
- It’s Getting Better: $500+ in 2 Days
- Newbies Pay Attention! $5,195.20 Affiliate Check for June: Thanks WA!
- Joined the 10K Per Month Club. January Earnings $13,481.39
- New Record: $1,300+ Per DAY! Affiliate Marketing Works & Rocks!
- Made $7,395 in a WEEK: First Black Friday Results!
I hope you enjoy this review and you are more than welcome to share ideas or leave your comments below. I will reply as soon as I can, thanks.