Wealthfront Review: How Does It Stack Up?
investing

Wealthfront review: how does it stack up?

Investing can be risky at times, especially if you’re a beginner. It’s vital to understand how everything works—dividends, companies, competition, strategies, everything! However, one of the most significant steps of investing as a beginner is finding the right platform. Sure, it can be challenging to see how everything works, but it’s almost impossible to start without the right platform. 

There are hundreds of services that can help you get started with investing. Most require at least one thousand dollars to open an account, and others are straight-up confusing. Fortunately, there’s a robo advisor that stands out from the rest: Wealthfront. 

Wealthfront users thrive in the environment of investing because of the service’s low fees, minimalistic and interactive design, free financial planning tools, and even money-making strategies!

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What’s Wealthfront, Anyway?

Wealthfront is a professional investing tool that can help you find the best funds. It’s also capable of managing and keeping your accounts intact. Because of its ease of use, Wealthfront is perfect for beginner investors. Wealthfront is such an advanced platform, yet such a magnificent tool for newcomers—it’s almost like working with a real person! 

Wealthfront offers a diversity of possibilities. You can use Wealthfront to open a personal investment account to save up for the long term, or manage your retirement accounts. Wealthfront offers almost any account type, some of which include:

  • Joint Taxable
  • Individual Taxable
  • Trust
  • Traditional IRA
  • SEP IRA
  • Roth IRA
  • 401(k) Rollovers
  • 529 College Savings Plan

Wealthfront can also help you manage accounts as simple as general cash accounts, which tend to be quite similar to savings accounts. 

The Pros of Using Wealthfront

Sure, Wealthfront may seem fabulous, but what are the real benefits of using the tool? All investing tools have benefits, but Wealthfront stands out from the crowd. Here are some of the most considerable benefits of using Wealthfront:

Low Fees

Wealthfront typically charges two annual fees: 

  • College 529 Fee: 0.42%-0.46% per year
  • Advisory Fee: 0.25% per year

These fees are remarkably low compared to other robo advisor services. Other financial-planning services can charge fees that are as high as 0.6% per year. 

Tax-Loss Harvesting

Personally, this is one of my favorite features of Wealthfront. When an ETF you bought drops in price, Wealthfront automatically sells it and buys a similar ETF. This way, you won’t have to waste your time or money. 

Free Financial Planning Tools

Wealthfront offers its users a set of free financial planning tools. It may not seem like much, but having some statistics by your side can go a long way. The tools Wealthfront includes are:

  • Net worth
  • Possible net worth at retirement 
  • Savings rate
  • Financial account balance
  • The likelihood of achieving specific goals set by yourself

Portfolio Rebalancing

Another tedious task many investors have to deal with is balancing their portfolios. You can use Wealthfront to set specific target percentages for each of the EFTs you own. Over time, your account can become unbalanced due to your EFTs rising or dropping in price.

Luckily, Wealthfront has a way to deal with this: it will track the target percentages you set and see which EFTs to sell or buy to maintain balance in your portfolio.

The Cons of Using Wealthfront

Wealthfront sure does have a lot of pros. Unfortunately, it does have a few cons. Of course, there can’t be a perfect financial planning tool out there. To open a Wealthfront account, you’ll have to deposit at least $500.  This amount isn’t too bad, though. Some other robo advisors require a minimum deposit of $1000. 

Another con you’ll find in Wealthfront is that it can’t replace a human advisor. Wealthfront can be professional to the point where it may seem better than an actual human. Robo advisors will remain less reliable than human advisors (at least for the near future) because humans are conscious and can understand on a deeper level.

While it is always best to find a human advisor, a little help from a robo advisor can be a great gift. Both robo advisors and human advisors may seem too perfect, but they’re not. It’s your responsibility to manage your money, and financial advisors can only help as much as you allow them to.

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