13 ms·

I recommend Weathfront and Betterment to all my less mathematically inclined friends. However, if you spend only a few hours getting acquainted with asset alloc

by n72 10y ago

I recommend Weathfront and Betterment to all my less mathematically inclined friends. However, if you spend only a few hours getting acquainted with asset allocation and rebalancing principles, you can do pretty everything that these services do without their fees.

nemo44x 10y ago
With enough money invested I find Betterments fees very reasonable. Especially when you consider features such as tax loss harvesting. Is that something that requires little to no time if you actively manage your index funds? Maybe there are tools which aid you with that?
- n72 10y ago
  Really the only thing you have to do is rebalance. I do it every half year, but some people even do it every two years. And it takes all of, maybe, 20 minutes. Of course, you need to grasp the principles, which takes reading a book or two, so that's, say, 10 more hours. With compounding over the next forty of fifty years, saving those 25 basis points or whatever it is that betterment charges over Vanguard's fees is not insignificant. It's not a ton, but totally worth an hour a year to me.
  - n72 10y ago
    Oh, and I tax loss harvest at the end of the year if any funds are down for the year by the end of December. Again, this is maybe 10 minutes per fund. 5 minutes for selling a fund, 5 minutes for buying a similar fund (and making sure I don't get into a wash sale situation.) So, that's at most, say, 20 minutes a year.
    - astrange 10y ago
      The end of the year isn't the best time to capture tax losses. And where do you go to get trades with fractional shares for less than 0.25% in trade fees?
mrwinalot 10y ago
And what do you recommend for your mathematically inclined friends? Any books you recommend for asset allocation and rebalancing principles?
- n72 10y ago
  Yup, I've written a brief primer to accompany my will: https://github.com/nickgieschen/investingguidelines https://github.com/nickgieschen/investingguidelines
- toephu2 10y ago
  None, just put your money in an S&P 500 fund. I doubt you will be able to beat that in the long run anywhere else (Even though there are flaws w/ how the S&P 500 is run now [1]). [1] http://www.joshuakennon.com/sp-500s-dirty-little-secret/ http://www.joshuakennon.com/sp-500s-dirty-little-secret/
  - n72 10y ago
    You can do better by diversifying more. By picking asset classes with a low correlation, you can reduce risk while increasing return. Hence, you can eek our more from a simple mix of say: 60% US 30% Int'l 6% REITs 4% Gold All of this can be bought with low cost mutual funds. http://thismatter.com/money/investments/portfolios.htm http://thismatter.com/money/investments/portfolios.htm
tedmiston 10y ago
One of the two companies actually says in their FAQ (paraphrasing): "Couldn't I just invest a small amount of money with you, then manage a second much larger account myself by hand, mirroring each trade? Yes, but we think our fees are cheaper than the time you'd spend doing that."
- Applejinx 10y ago
  What if you get a computer to do it?
  - 0xCMP 10y ago
    Still has fees. Unless you use something like Robinhood through a partner.
    - tedmiston 10y ago
      There's some gray area with Vanguard ETFs fees [1] for example: > Vanguard mutual funds & ETFs (exchange-traded funds) > There are no commissions when you buy and sell low-cost Vanguard mutual funds and ETFs. > If you buy and sell the same Vanguard ETF® in a Vanguard Brokerage Account more than 25 times in a 12-month period, you may be restricted from purchasing that Vanguard ETF through your Vanguard Brokerage Account for 60 days. That said, mimicking could entail more than 25 transactions per ETF per year. I don't know that we really have the ability to predict the number of trades that the robo-advisor will do from the outside though. [1]: https://investor.vanguard.com/investing/trading-fees-commissions https://investor.vanguard.com/investing/trading-fees-commiss...
      - tanderson92 10y ago
        This clearly only applies to actual Vanguard accounts, not Vanguard ETFs held in other brokerage accounts.
        tedmiston 10y ago
shostack 10y ago
Do they offer anything over zero fee robos like Schwab? What about vanguard's robo offering?
- n72 10y ago
  I don't know for sure, but I'm pretty sure Schwab and Vanguard don't tax loss harvest.
  - astrange 10y ago
    Schwab does, but they achieve zero fees by keeping a lot of your portfolio in cash and keeping the interest on it for themselves.
toephu2 10y ago
Wealthfront is 3x (.25% vs .05%) more expensive than a lot of great Vanguard funds [1]. And with Wealthfront you might be investing in major index funds anyway except you end up paying more. Why not go with any of Vanguard's S&P 500 funds (mutual fund or ETF) or any other index fund of your choice under Vanguard? I doubt Wealthfront can beat their returns after you factor in cost in the long run (20+ years). Also Vanguard is owned and run by the shareholders, their entire structure is setup so that there is no conflict of interest and they really are on your side, since basically you are part of them when you invest [2]. Wealthfront is a corporation whose sole purpose is to turn a profit. [1] https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0968 https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... [2] https://about.vanguard.com/what-sets-vanguard-apart/why-ownership-matters/ https://about.vanguard.com/what-sets-vanguard-apart/why-owne...
- n72 10y ago
  Right, which is why for people who are comfortable working out asset allocation, rebalancing, and TLH for themselves I recommend they do it themselves with low cost index funds.

by n72 10y ago

nemo44x 10y ago

With enough money invested I find Betterments fees very reasonable. Especially when you consider features such as tax loss harvesting. Is that something that requires little to no time if you actively manage your index funds? Maybe there are tools which aid you with that?

n72 10y ago
Really the only thing you have to do is rebalance. I do it every half year, but some people even do it every two years. And it takes all of, maybe, 20 minutes. Of course, you need to grasp the principles, which takes reading a book or two, so that's, say, 10 more hours. With compounding over the next forty of fifty years, saving those 25 basis points or whatever it is that betterment charges over Vanguard's fees is not insignificant. It's not a ton, but totally worth an hour a year to me.
- n72 10y ago
  Oh, and I tax loss harvest at the end of the year if any funds are down for the year by the end of December. Again, this is maybe 10 minutes per fund. 5 minutes for selling a fund, 5 minutes for buying a similar fund (and making sure I don't get into a wash sale situation.) So, that's at most, say, 20 minutes a year.
  - astrange 10y ago
    The end of the year isn't the best time to capture tax losses. And where do you go to get trades with fractional shares for less than 0.25% in trade fees?

mrwinalot 10y ago

And what do you recommend for your mathematically inclined friends? Any books you recommend for asset allocation and rebalancing principles?

n72 10y ago
Yup, I've written a brief primer to accompany my will: https://github.com/nickgieschen/investingguidelines https://github.com/nickgieschen/investingguidelines
toephu2 10y ago
None, just put your money in an S&P 500 fund. I doubt you will be able to beat that in the long run anywhere else (Even though there are flaws w/ how the S&P 500 is run now [1]). [1] http://www.joshuakennon.com/sp-500s-dirty-little-secret/ http://www.joshuakennon.com/sp-500s-dirty-little-secret/
- n72 10y ago
  You can do better by diversifying more. By picking asset classes with a low correlation, you can reduce risk while increasing return. Hence, you can eek our more from a simple mix of say: 60% US 30% Int'l 6% REITs 4% Gold All of this can be bought with low cost mutual funds. http://thismatter.com/money/investments/portfolios.htm http://thismatter.com/money/investments/portfolios.htm

tedmiston 10y ago

One of the two companies actually says in their FAQ (paraphrasing): "Couldn't I just invest a small amount of money with you, then manage a second much larger account myself by hand, mirroring each trade? Yes, but we think our fees are cheaper than the time you'd spend doing that."

Applejinx 10y ago
What if you get a computer to do it?
- 0xCMP 10y ago
  Still has fees. Unless you use something like Robinhood through a partner.
  - tedmiston 10y ago
    There's some gray area with Vanguard ETFs fees [1] for example: > Vanguard mutual funds & ETFs (exchange-traded funds) > There are no commissions when you buy and sell low-cost Vanguard mutual funds and ETFs. > If you buy and sell the same Vanguard ETF® in a Vanguard Brokerage Account more than 25 times in a 12-month period, you may be restricted from purchasing that Vanguard ETF through your Vanguard Brokerage Account for 60 days. That said, mimicking could entail more than 25 transactions per ETF per year. I don't know that we really have the ability to predict the number of trades that the robo-advisor will do from the outside though. [1]: https://investor.vanguard.com/investing/trading-fees-commissions https://investor.vanguard.com/investing/trading-fees-commiss...
    - tanderson92 10y ago
      This clearly only applies to actual Vanguard accounts, not Vanguard ETFs held in other brokerage accounts.
      - tedmiston 10y ago

shostack 10y ago

Do they offer anything over zero fee robos like Schwab? What about vanguard's robo offering?

n72 10y ago
I don't know for sure, but I'm pretty sure Schwab and Vanguard don't tax loss harvest.
- astrange 10y ago
  Schwab does, but they achieve zero fees by keeping a lot of your portfolio in cash and keeping the interest on it for themselves.

toephu2 10y ago

Wealthfront is 3x (.25% vs .05%) more expensive than a lot of great Vanguard funds [1]. And with Wealthfront you might be investing in major index funds anyway except you end up paying more. Why not go with any of Vanguard's S&P 500 funds (mutual fund or ETF) or any other index fund of your choice under Vanguard? I doubt Wealthfront can beat their returns after you factor in cost in the long run (20+ years). Also Vanguard is owned and run by the shareholders, their entire structure is setup so that there is no conflict of interest and they really are on your side, since basically you are part of them when you invest [2]. Wealthfront is a corporation whose sole purpose is to turn a profit. [1] https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0968 https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... [2] https://about.vanguard.com/what-sets-vanguard-apart/why-ownership-matters/ https://about.vanguard.com/what-sets-vanguard-apart/why-owne...

n72 10y ago
Right, which is why for people who are comfortable working out asset allocation, rebalancing, and TLH for themselves I recommend they do it themselves with low cost index funds.