[n72]

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.

[toephu2]

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=I...

[2] https://about.vanguard.com/what-sets-vanguard-apart/why-owne...

[n72]

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.

[tedmiston]

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]

What if you get a computer to do it?

[0xCMP]

Still has fees. Unless you use something like Robinhood through a partner.

[tedmiston]

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-commiss...

[tanderson92]

This clearly only applies to actual Vanguard accounts, not Vanguard ETFs held in other brokerage accounts.

[tedmiston]

You're definitely correct, but also Wealthfront recommends Vanguard ETFs disproportionately for their value [1]. A glance at my personal portfolio tuned to the higher end on their risk scale shows ~30% Vanguard ETFs.

[1]: https://support.wealthfront.com/hc/en-us/articles/209353626-...

[nemo44x]

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]

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]

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]

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]

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

[n72]

Yup, I've written a brief primer to accompany my will: https://github.com/nickgieschen/investingguidelines

[toephu2]

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/

[n72]

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

[shostack]

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

[n72]

I don't know for sure, but I'm pretty sure Schwab and Vanguard don't tax loss harvest.

[astrange]

Schwab does, but they achieve zero fees by keeping a lot of your portfolio in cash and keeping the interest on it for themselves.