I think it’s incredibly important for women to talk about finances and how best to handle money. I’ll be running a regular series focused on money to help break down the wall surrounding the taboo topic of money. This week’s focus is investing, highlighting the Wealthfront investment app.
One my favorite investing and savings platforms is Wealthfront. This is a robo-adviser which is great for a set-it-automate-it-and-forget-it option. There is a minimum balance of $500 to open an account and they charge an advisor fee for all investments. There are affiliate codes that you can use to receive your first $5,000 invested for free. I recommend Googling it to find one. The fees are relatively low compared to traditional brokerages and there’s a savings since you don’t have to put the legwork in to research ETFs, stocks, bonds, or index funds. If the thought of all that work is off-putting, a robo-advisor is a great option for you!
A nice feature in their UI is that you can pull in different sources to track your net-worth. You can sync your employer’s 401k, your mortgage and house price, any other brokerage accounts you have, your bank accounts and your liabilities including loans. This feature is something many people use Personal Capital for, but I personally prefer to have everything in a system I’m already using.
In the app, you can set-up goals, set your retirement age and include expected windfalls. The goals is helpful feature if you’re saving to buy a house, plan a wedding, have a baby or other future goals. You can see how manageable your goals are and what you need to do to reach them. I have set-up goals for a future wedding and my retirement age so I can keep both in mind in relation to other ways to spend my money.
Their cash account has one of the highest APRs (2.32% as of 8/20/2019) and an FDIC insured balance up to $1M – four times the limit of other banks! The cash app also helps act as a true savings account as your money is away from your primary checking account and takes more effort to access. Transfers can take a few days in and out, which is great if you’re someone that sees your savings and thinks $pend instead of save.
It’s incredibly important for all women to learn the basics of investing and to start as early as possible! Women are living longer and making less, so it’s vital to plan for the future. A Kiplinger article explains that women perform better than men in investing because they can balance risk with reward. With Wealthfront, it’s even easier. You answer a few questions, it assesses your risk tolerance and then it allocates your investment accordingly.
Additionally, with Wealthfront you’ll get access to a feature not found in most brokerage accounts or something that’s easy to manage on your own –tax loss harvesting. Since Wealthfront uses an algorithm it can look daily for capital loss opportunities. Tax loss harvesting can offset capital gains with losses and provide up to a $3,000 tax credit.
There are several other great features for portfolios over the $100,000 mark, but my goal with my account was to start small. I’ve really enjoyed seeing my portfolio increase monthly and know that I’m continuing to work towards financial independence.
What is a robo-advisor?
A robo-advisor is a digital platform that provides automated, algorithm driven financial planning with little to no human interaction (source). Since robo-advisors don’t require traditional financial advisors, the costs are lower.
The TLDR recap:
- Wealthfront is a robo-advisor platform that invests based on your risk levels.
- Minimum investment is $500 and there is an option for a cash account without a minimum balance.
- You can sync external accounts to see all of your balances.
- You can save advisor fees with a promo code.
- Investing is incredibly important to secure your future.
- Wealthfront includes tax loss harvesting which can keep your taxes low.