Should I leave Wealthfront????

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Topic Author
Bbsgarcia
Posts: 7
Joined: Wed Jul 08, 2020 11:34 pm

Should I leave Wealthfront????

Post by Bbsgarcia »

Hello again Bogleheads,
About three weeks ago I moved my state retirement 401a to wealthfront. Roughly about $28000.00 to wealthfront. Since opening my wealthfront account my portfolio (75%stocks/25%bonds)has grown about $800.00. Do you recommend me rolling this over into Vanguard and starting the three fund portfolio? If yes? Which index funds do you recommend ?
What I like about wealthfront. Passive investing and automation. What I do not like about wealthfront, 0.25expense fee.
Would I get that vanguard index funds.

Thank you.
minimalistmarc
Posts: 1142
Joined: Fri Jul 24, 2015 4:38 pm

Re: Should I leave Wealthfront????

Post by minimalistmarc »

Your account is low value at the moment but as it grows these fees will add up. I would transfer now.
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Noobvestor
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Re: Should I leave Wealthfront????

Post by Noobvestor »

The fee bothers me less than the prospect of having to move funds out later and the potential tax and logistical headaches of doing so. Basically, they rebalance for you - yay, a Target Retirement does that for less. If they also tax loss harvest for you, well, when you move away, you either sell or carry all of the little lots with you. It's never been attractive to me personally, especially given that we don't know which of these companies will be around in 5, 10, 20, 50 years ... I prefer to manage my own and stick to funds I know will have staying power.
Passive investing and automation. Would I get that vanguard index funds.
You can with a Target Date or other balanced fund. Personally, I prefer to hold different individual funds. A lot depends on whether you're investing in taxable or tax-advantaged accounts, but either way, it's not hard to manage a three-fund portfolio and it's also pretty future-proof.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
whereskyle
Posts: 1293
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Re: Should I leave Wealthfront????

Post by whereskyle »

Bbsgarcia wrote: Fri Jul 10, 2020 12:35 am Hello again Bogleheads,
About three weeks ago I moved my state retirement 401a to wealthfront. Roughly about $28000.00 to wealthfront. Since opening my wealthfront account my portfolio (75%stocks/25%bonds)has grown about $800.00. Do you recommend me rolling this over into Vanguard and starting the three fund portfolio? If yes? Which index funds do you recommend ?
What I like about wealthfront. Passive investing and automation. What I do not like about wealthfront, 0.25expense fee.
Would I get that vanguard index funds.

Thank you.
Go to the wiki and read about the three-fund portfolio and rebalancing. If you are willing to place buy, sell, or exchange orders a couple times a year, you will have more control, flexibility, a deeper understanding of your investment, and you'll pay 1/4 of the fees Wealthfront charges. If you just want a target retirement fund that does the buying and selling for you, you'll pay 1/2 the fee Wealthfront charges.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
aristotelian
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Re: Should I leave Wealthfront????

Post by aristotelian »

Most of us prefer one of the major low cost brokerages including Vanguard and fortunately it is simple to move IRA's from one to the next. The problem is you shouldn't be switching brokerages every three weeks. Just do your research. Then make a long term plan and stick to it.
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jason2459
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Re: Should I leave Wealthfront????

Post by jason2459 »

This is still in a tax advantaged account right?IRA? Shouldn't be any tax event by doing any move or selling unless you withdraw from it.

I would definitely take control and remove the expenses. Vanguard would be fine. Fidelity would be another good choice. Schwab, E-Trade, and M1 finance are also used quite a bit here as are a few others.

My preferences are E-Trade for a pure brokerage stand point and can get Vanguard and other company mutual funds with no commissions. Like many of the Vanguard funds but also funds from places like Schwab which wouldn't have any minimum dollar amounts required on new investments.

Fidelity would be my second choice and now offers the ability to buy ETFs by a dollar amount and not just by the share. Has to be through the App though. Fidelity has some good cheap index mutual funds but also some not so cheap actively managed mutual funds so watch out there. Both Fidelity and E-Trade I have experience with and have had good customer experience with both.

With both of those you can get a balanced index fund, a life cycle fund, or a target date fund which all will keep your investments in balance with your target. The balanced funds will have a static allocation of stocks and bonds and will keep that allocation for you. The target date type funds will dynamically shift allocations of stocks and bonds for you as you get closer to that target date and keep the allocations in balance.

M1 I like a lot and is a new player in the past few years. They've hit some good milestones in bringing on customers and bringing in the investments. I don't know what their customer service is like. But I really love their concepts on investing. They do not support mutual funds and are not a traditional broker you can buy and trade all day long. They support full automation in buying stocks or ETFs and automatic rebalancing of your portfolio. You can set an allocation and if you keep contributing money they will keep putting that money in balance with your allocations. If you never add another penny you can rebalance your allocations with a click of a button if you want.
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
Living Free
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Re: Should I leave Wealthfront????

Post by Living Free »

I really don't see any benefit from using the robo advisors over just a target date fund if you're investing in only retirement accounts. A target retirement fund could be had more cheaply than the wealthfront fee.

They do like to boast about their tax loss harvesting skills for taxable accounts, though that does not apply to your situation. Also, if you have a taxable account and they do the tax loss harvesting you'll likely end up with very many holdings and it would be difficult to simplify at that point due to embedded gains. Also it's really not that hard to tax loss harvest on your own.

So in the end I just don't see the point of the robo advisors.
livesoft
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Re: Should I leave Wealthfront????

Post by livesoft »

Total automation, passive indexing, low-expense-ratio, and no fees can be had at Vanguard by using a Vanguard LifeStrategy or Target Retirement or Balanced Index fund . Also at Fidelity using a Freedom Index fund.

Yes, you should leave Wealthfront.
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wickywack
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Re: Should I leave Wealthfront????

Post by wickywack »

If this is a tax-advantaged account (e.g., an IRA now), then, as others have pointed out, there is no really benefit to WealthFront over a cheaper Vanguard Target or LifeStrategy fund or similar. (Perhaps a minor one if you really like WealthFront's allocations over Vanguard, but I think WealthFront has had a habit of changing those from underneath you in the past.)

If this is now a *taxable* account, then WealthFront in theory gives you tax-aware rebalancing and tax-loss harvesting. Those may offset or even outweigh the lower expense of an all-in-one Target/LifeStrategy fund. I haven't seen a good analysis of that.
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ruralavalon
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Location: Illinois

Re: Should I leave Wealthfront????

Post by ruralavalon »

We need to know what type of account you have at Wealthfront.

Bbsgarcia wrote: Fri Jul 10, 2020 12:35 am Hello again Bogleheads,
About three weeks ago I moved my state retirement 401a to wealthfront. Roughly about $28000.00 to wealthfront. Since opening my wealthfront account my portfolio (75%stocks/25%bonds)has grown about $800.00. Do you recommend me rolling this over into Vanguard and starting the three fund portfolio? If yes? Which index funds do you recommend ?
What I like about wealthfront. Passive investing and automation. What I do not like about wealthfront, 0.25expense fee.
Would I get that vanguard index funds.

Thank you.
Is this still a tax-advantaged account, a rollover IRA at Wealthfront from your old 401a?

Or did you take cash out of the 401a account an invest in a brokerage account at Wealthfront?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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tennisplyr
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Re: Should I leave Wealthfront????

Post by tennisplyr »

I would move it over to an equivalent AA index fund at Vanguard or Fidelity.
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Topic Author
Bbsgarcia
Posts: 7
Joined: Wed Jul 08, 2020 11:34 pm

Re: Should I leave Wealthfront????

Post by Bbsgarcia »

aristotelian wrote: Fri Jul 10, 2020 7:30 am Most of us prefer one of the major low cost brokerages including Vanguard and fortunately it is simple to move IRA's from one to the next. The problem is you shouldn't be switching brokerages every three weeks. Just do your research. Then make a long term plan and stick to it.
I want to move it because of what I’m learning with the three fund portfolio.
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ruralavalon
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Location: Illinois

Re: Should I leave Wealthfront????

Post by ruralavalon »

Bbsgarcia wrote: Sat Jul 11, 2020 10:49 am
aristotelian wrote: Fri Jul 10, 2020 7:30 am Most of us prefer one of the major low cost brokerages including Vanguard and fortunately it is simple to move IRA's from one to the next. The problem is you shouldn't be switching brokerages every three weeks. Just do your research. Then make a long term plan and stick to it.
I want to move it because of what I’m learning with the three fund portfolio.
Is this still a tax-advantaged account, a rollover IRA at Wealthfront from your old 401a?

Or did you take cash out of the 401a account an invest in a brokerage account at Wealthfront?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
Bbsgarcia
Posts: 7
Joined: Wed Jul 08, 2020 11:34 pm

Re: Should I leave Wealthfront????

Post by Bbsgarcia »

ruralavalon wrote: Fri Jul 10, 2020 8:57 am We need to know what type of account you have at Wealthfront.

Bbsgarcia wrote: Fri Jul 10, 2020 12:35 am Hello again Bogleheads,
About three weeks ago I moved my state retirement 401a to wealthfront. Roughly about $28000.00 to wealthfront. Since opening my wealthfront account my portfolio (75%stocks/25%bonds)has grown about $800.00. Do you recommend me rolling this over into Vanguard and starting the three fund portfolio? If yes? Which index funds do you recommend ?
What I like about wealthfront. Passive investing and automation. What I do not like about wealthfront, 0.25expense fee.
Would I get that vanguard index funds.

Thank you.
Is this still a tax-advantaged account, a rollover IRA at Wealthfront from your old 401a?

Or did you take cash out of the 401a account an invest in a brokerage account at Wealthfront?

It’s Traditional IRA account.
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ruralavalon
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Location: Illinois

Re: Should I leave Wealthfront????

Post by ruralavalon »

Bbsgarcia wrote: Sat Jul 11, 2020 10:55 am
ruralavalon wrote: Fri Jul 10, 2020 8:57 am We need to know what type of account you have at Wealthfront.

Bbsgarcia wrote: Fri Jul 10, 2020 12:35 am Hello again Bogleheads,
About three weeks ago I moved my state retirement 401a to wealthfront. Roughly about $28000.00 to wealthfront. Since opening my wealthfront account my portfolio (75%stocks/25%bonds)has grown about $800.00. Do you recommend me rolling this over into Vanguard and starting the three fund portfolio? If yes? Which index funds do you recommend ?
What I like about wealthfront. Passive investing and automation. What I do not like about wealthfront, 0.25expense fee.
Would I get that vanguard index funds.

Thank you.
Is this still a tax-advantaged account, a rollover IRA at Wealthfront from your old 401a?

Or did you take cash out of the 401a account an invest in a brokerage account at Wealthfront?

It’s Traditional IRA account.
Yes, you can rollover the IRA at Wrealthfront to an IRA at Vanguard and then invest in Vanguard funds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
Bbsgarcia
Posts: 7
Joined: Wed Jul 08, 2020 11:34 pm

Re: Should I leave Wealthfront????

Post by Bbsgarcia »

ruralavalon wrote: Fri Jul 10, 2020 8:57 am We need to know what type of account you have at Wealthfront.

Bbsgarcia wrote: Fri Jul 10, 2020 12:35 am Hello again Bogleheads,
About three weeks ago I moved my state retirement 401a to wealthfront. Roughly about $28000.00 to wealthfront. Since opening my wealthfront account my portfolio (75%stocks/25%bonds)has grown about $800.00. Do you recommend me rolling this over into Vanguard and starting the three fund portfolio? If yes? Which index funds do you recommend ?
What I like about wealthfront. Passive investing and automation. What I do not like about wealthfront, 0.25expense fee.
Would I get that vanguard index funds.

Thank you.
Is this still a tax-advantaged account, a rollover IRA at Wealthfront from your old 401a?

Or did you take cash out of the 401a account an invest in a brokerage account at Wealthfront?
This was a rollover from my old 401a account into wealthfront. My account at wealthfront in now a traditional IRA.
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