[jamaicabound]

Hey guys, just signed up for Wealthfront and Betterment, two of these relatively new robo investing advisors that have low fees compared to traditional advisors. Some people argue there's not much value for the fees.

Reason I decided to give it a try I'm sick of just trying to pick individual stocks and even when people say get a no load vanguard there's so many which to get. Sure you could go do the same thing yourself for free but I like that it's a very hands off approach and also really like the idea of tax harvesting and auto rebalancing. I think its worth it just for those two things. I probably would not use it for a 401k or IRA, only for taxable money.

I just funded my accounts a few days ago so can't really comment on returns but overall I like the platforms and sites.

Reason I'm posting this I often see people with similar questions as myself such as what stocks are good or what funds should I buy, things like that so these services among others kind of simplify it for newbies, people who want a hands off approach or people just getting started investing.

There's a lot of services like this popping up but these two seem to be the most popular and well reviewed. Some other options are Covestor or Personal Capital among others.

If anyone else has had good or bad experiences would be curious to hear.

[DirectDanger]

You should post updates on how these are doing. I would be interested in finding out what you think. Since these robo investors have come out we have had a strong bull market so we will have to see how they respond when the next crash comes.

Schwab has come out in the past few weeks with there own version and it has 0 fees.
https://intelligent.schwab.com/

[one-two]

relevant: http://www.reddit.com/r/financialindepen..._vanguard/

[jamaicabound]

(03-21-2015 10:36 PM)one-two Wrote:  

relevant: http://www.reddit.com/r/financialindepen..._vanguard/

Interesting discussion going on at that link, thanks for posting. One person in that reddit discussion linked to a couple variations on a "lazy portfolio."

If anyone doesn't find value in wealthfront or betterment and would prefer to buy Vanguard funds themself and cut out a little cost they listed a couple different variations of Vanguard funds to buy...

http://www.bogleheads.org/wiki/Lazy_portfolios

[MystikAL]

I've been using Betterment since 2012. $18k in. Currently at 6.6% earned, or 35.8% time weighted returns. That's $1,150. For the first 2.5 years I was only putting in $500 a month so it was just a small fund. Now I'm throwing in $3k a month.

As you said, you could get a Vanguard ETF fund and do pretty much the same thing. Betterment is a lot easier and it is now an automated habit for me.

[jamaicabound]

(03-22-2015 10:30 AM)MystikAL Wrote:  

I've been using Betterment since 2012. $18k in. Currently at 6.6% earned, or 35.8% time weighted returns. That's $1,150. For the first 2.5 years I was only putting in $500 a month so it was just a small fund. Now I'm throwing in $3k a month.

As you said, you could get a Vanguard ETF fund and do pretty much the same thing. Betterment is a lot easier and it is now an automated habit for me.

Yeah alot of people are picking on betterment saying you could do the same thing for free. I could mow my lawn and change my own oil too but for the minimal cost my time is better spent on other things so I agree with you, its worth it to me to have this all managed for me, totally hands off approach. From what I hear returns are pretty good and like the tax harvesting and auto rebalancing as well.

I just signed up for a lending club as well but only threw a small amount in there. Basically just trying to get my money working for me instead of sitting in an ally account getting .87%

[polar]

(03-21-2015 09:16 AM)DirectDanger Wrote:  

You should post updates on how these are doing. I would be interested in finding out what you think. Since these robo investors have come out we have had a strong bull market so we will have to see how they respond when the next crash comes.

Schwab has come out in the past few weeks with there own version and it has 0 fees.
https://intelligent.schwab.com/

Depending on your risk tolerance selection Schwab will keep from a minimum of 6% and up to 30% of your capital with them in cash. That's the catch, and that's huge, even if that cash is kept in money markets. The others will keep small cash balances because they can't do fractional shares, but I don't think they'd would ever be as high as even 6%.

Plus keep in mind that all these "robo" advisors pass along the underlying fees from the ETF's they hold - In other words, you'll still have fund expenses (generally under 0.15%) on top of their advertised fees. By no means deal breakers but keep it in mind.

Both Betterment and Wealthfront 's arguments is maximum diversification for all, almost like a cheaper target date portfolio. They both argue that their diversification should produce better risk-adjusted returns in the long run. Keep in mind that this means an investment with one of them might underperform a pure SP500 index.

The tax harvesting doesn't really start until you hit $100k balance for both. They have fairly similar allocations with minor differences. The biggest questions are what fee bracket you fall in between the two (depends on your nest egg size) and which one offers better tax harvesting (unclear). Betterment has better fees over 100k, and Wealthfront is free under 15k...I don't recall the details in between.

I'm going with Wealthfront as Betterment doesn't support SEP IRA's. Don't have any invested money yet but will soon.