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Wealthfront

1,318 106 February 3, 2018 at 12:43 PM
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Last Edited by graphixv February 3, 2018 at 12:59 PM
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I just opened an account with Wealthfront. I do not have 401K or other options so I am on my own. After being satisfied with the money in my savings accounts I was going to open this account as a Roth IRA.

Then I read the prospectus. Apparently Wealthfront uses a third party for the IRA custodian. This custodian charges $30 for opening the account and $100 a year maintenance. Obviously there would be other fees associated with things like withdraws.

These fees didn't make sense to me as I was going to be opening the account with a small amount. I decided to open it as a normal taxable account and view it as an additional savings account, hopefully it will at least have gains better than the savings and be managed for free. I'd rather have taxes on any gain than pay Fees no matter what on a small account.

I'll probably open the (free) Roth with Vanguard and the majority of money will go there. If I have gains from Wealthfront, I figure I can always shovel gains into the Roth while maintaining more liquidity. I don't plan on having more than $5000 in Wealthfront.

Anyone have thoughts? I haven't open the Roth yet but plan to in the next month. I think I have until April? To make a contribution counted for 2017?

Thanks

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I would just dump the money into Vanguard, buy funds, and forget about Wealthfront. What does it offer that Vanguard wouldn't for you? Cheap trades? Active management?
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#3
Second that. Why bother with a middleman and the unnecessary fees? Fidelity would be another place to open an account you might consider. They offer good low cost funds as well.
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Quote from madcowdisease
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I would just dump the money into Vanguard, buy funds, and forget about Wealthfront. What does it offer that Vanguard wouldn't for you? Cheap trades? Active management?
Wealthfront has active management as far as roboviser that does trades and tax harvesting. I was under the impression that vanguard had an account like this but fees were involved, You can put up to 15.000 in wealthfront without management fees.

That wouldn't matter in an Ira, but I suppose it does for a taxable account. I was going with vanguard for the IRA account.

I wanted something else smaller for easy access to the funds without locking them up in an IRA, I wasn't planning on moving the money through wealthfront to the Ira account, just using it to park more money in a "saving account" in addition to separate Ira contributions.
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Last edited by graphixv February 3, 2018 at 04:46 PM.
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Quote from graphixv
:
Wealthfront has active management as far as roboviser that does trades and tax harvesting. I was under the impression that vanguard had an account like this but fees were involved, You can put up to 15.000 in wealthfront without management fees.

That wouldn't matter in an Ira, but I suppose it does for a taxable account. I was going with vanguard for the IRA account.

I wanted something else smaller for easy access to the funds without locking them up in an IRA, I wasn't planning on moving the money through wealthfront to the Ira account, just using it to park more money in a "saving account" in addition to separate Ira contributions.
What are the transaction fees? There are rewards checking accounts that give a guaranteed ~3-5%. I would look into those if you are parking ~$15,000 or less. A bit more work, but if you are going to just sit on the money I think there is less risk. Especially if you need access to the funds quickly if something comes up.

Edit: looks to be 0.25% on accounts of >$10,000 annually. Not crazy, but not cheap either. Dunno how they do compared to just plunking it in a target-day fund at Vanguard for 1/2 the fees.
https://support.wealthfront.com/h...s-service-
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Last edited by madcowdisease February 3, 2018 at 05:02 PM.
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Quote from madcowdisease
:
What are the transaction fees? There are rewards checking accounts that give a guaranteed ~3-5%. I would look into those if you are parking ~$15,000 or less. A bit more work, but if you are going to just sit on the money I think there is less risk. Especially if you need access to the funds quickly if something comes up.

Edit: looks to be 0.25% on accounts of >$10,000 annually. Not crazy, but not cheap either. Dunno how they do compared to just plunking it in a target-day fund at Vanguard for 1/2 the fees.
https://support.wealthfront.com/h...s-service-
Thanks, I think you get what I am getting at. I have a decent amount in savings but I'd like to put away more, just not at the 1.6 % I am getting. But, if there are savings accounts out there at 3%, I'd like to know about them. I got the invite from wealthfront so I can get 15.000 managed free, I would probably only park around 5000 though.
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