Wealthfront Review

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If you have been reading my blog, there is one thing you will notice. I am a big fan of passive investing using low cost market index tracking ETFs. Today, I am going to talk about Wealthfront, an automated investment advisory firm with nearly $3 billion in client assets under management.

 

Wealthfront

 

Wealthfront uses algorithms based on Modern Portfolio Theory (MPT) to customize the portfolio for each client and invests across asset classes listed below.

  • U.S. stocks
  • Foreign Developed Stocks
  • Emerging Market Stocks
  • Dividend Growth Stocks
  • U.S. Government Bonds
  • Corporate Bonds
  • Emerging Market Bonds
  • Municipal Bonds
  • Treasury Inflation Protected Securities (TIPS)
  • Real Estate
  • Natural Resources

These asset classes are represented in your portfolio by using a low cost passive ETFs. Asset allocation is made based on the input from  client on risk tolerance.

 

Who runs their investment management team?

Burton Malkiel, author of A Random Walk Down Wall Street, is the Chief Investment Officer. Charley Ellis, author of Winning the Loser’s Game, is also part of the investment management team.

 

How to get started?

#1 You start your sign up process with Wealthfront

#2 You provide your input for risk tolerance

#3 Based on your risk tolerance input, Wealthfront creates a unique investment plan across the asset classes

#4 Complete the sign up process and fund your account.

In a few simple steps you are completely set up and ready to go.

 

How much does it cost? What are the fees?

Wealthfront manages the first $10,000 of your investment 100% free. There is no cost to you.

The management fees is 0.25% for all investments above $10,000.

 

Is there an investment minimum? 

You need to invest a minimum of $500 to get started.

 

Important Note:

There is no provision to hold individual stocks  or choosing individual ETFs in your portfolio. However, you can personalize and tweak your asset allocation percentage across the different asset classes.

 

Stretch A Dime Opinion:

If are just beginning to start investing, Wealthfront is a great place to start at.

Your money gets invested across U.S. domestic, foreign developed stocks & bonds, emerging markets, real estate, and natural resources – all of these via passively managed low cost ETFs.

Your first $10,000 in investment is managed 100% free. You get all this diversification at zero management cost.

Honestly, why would you want to miss that?

 

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2 thoughts on “Wealthfront Review”

  1. Thanks for the review on Wealthfront. That was an interesting read.
    So, how does it compare with a similar tool like Betterment? Is it a good idea to invest in both, especially since it seems like Wealthfront doesnt charge on anything below 10K?

    1. Hi Anand,

      That is a great question. From an investment perspective, Betterment provides you exposure to stocks and bonds via ETFs. With Wealthfront, you diversify beyond stock / bond ETFs into REITs (real estate investment trusts) and natural resource ETFs. You get more diversification.

      If you plan to hold less than $10K at Wealthfront, then it would be a good choice for you.

      –Michael

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