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Wealthfront is a low-fee robo advisor and one of the best solutions for taxable accounts. Although there are several benefits to using Wealthfront, a key disadvantage is that it is not for fractional shares.
Nonetheless, Wealthfront is one of the major players in the world of robo advisors because it considers your unique financial profile in developing strategies to help you reach your long-term goals. Millennials are one of the fastest-growing clients for the company.
Since its founding in 2011, Wealthfront has accumulated $11.5 billion worth of assets under its management. Getting started requires a $500 investment through a tax-deferred IRA account held by the Royal Bank of Canada.
Wealthfront distributes your investment across various exchange-traded funds, using Modern Portfolio Theory to help you attain your investment objectives.
Wealthfront deploys automatic rebalancing to ensure that fund distribution remains correct.
Wealthfront is powered by a proprietary algorithm called Path, which guides recommendations based on your transaction history and financial goals. Path enables Wealthfront to recommend the quickest, most efficient strategy to help you achieve your goals such as financing a home purchase, paying for college and retirement, and more.
Path will assess your financial profile to determine if you are on the road to financial success. If there are issues with your financial profile, then Path will offer advice on how to remedy the problem.
Path is an innovative software-based financial advisor that can answer over 10,000 finance-related questions. It also has a low fee.
There is also a service that allows tax-loss harvesting to make your investments more tax-efficient. Finally, investors will be pleased to know that Wealthfront charges an extremely low management fee for its portfolios.
Besides its extra-low commissions, E*TRADE excels on many fronts. With E*TRADE, you will have access to an extensive mutual fund selection, portfolio tools, and valuable educational resources to increase your investment knowledge.
There are several benefits to using this top-rated platform for your investments. The portfolio tools are easy to use, customer service is efficient, and you will have a wide range of investments to choose from.
You will also have access to advanced research to help you make the best investment choices. ETF, options, and stock trades are commission-free, which minimizes your operating costs.
E*TRADE is one of the best options for hands-off investors who would like an efficient algorithm to take care of their savings. The robo advisor will calculate your risk tolerance via a brief, comprehensive questionnaire. After answering nine simple questions (you don’t have to log in or create an account), you can take a look at the recommended portfolio. The platform will not show specific investments but will reveal its recommended asset allocation.
E*TRADE then displays a 15-year historical record that shows returns in the worst and best scenarios. You can go for the recommended portfolio or a suitable alternative.
With expense ratios ranging from 0.11% to 0.5%, the ETFs carry a very low cost. This ratio may vary according to the portfolio.
E*TRADE offers investors several exciting alternative portfolio options. You can personalize the equity portion of your portfolio by switching towards socially-responsible ETFs.
Therefore, you can choose to invest in companies that match your social and environmental values.
Another option is to opt for smart beta ETFs. These funds don’t just follow a benchmark, they strive to outperform it.
E*TRADE’s comprehensive educational resource will tell you everything from how to create an emergency fund to how to conduct intricate options trades.
Many investors will find TD Ameritrade appealing due to its low cost and fully automated portfolio management service. Socially-responsible portfolio selections and a vast array of account types are some of the standout features of this platform.
At TD Ameritrade, you will invest in non-proprietary funds as the company does not have its own funds. The renowned investment advisory and research firm, Morningstar Investment Management, recommends the TD Ameritrade platform’s active funds.
Funds are mainly derived from Vanguard and iShares. Since TD Ameritrade takes Morningstar’s guidance, you can feel reassured that these selections will be a good match for your risk tolerance level and portfolio goals.
The expense ratios are also very low. Across five core portfolios the expense ratio may range from 0.07% and 0.08%. You will not find low expense ratios like this anywhere else.
TD Ameritrade charges a highly competitive fee of 0.3%, which puts it at par with Fidelity Go and Vanguard.
You will not find a longer list of account types under management on the market.
Socially-aware portfolios are another attractive feature of TD Ameritrade that will attract investors.
You can choose your investments based on ESG–environmental, social, and governance principles. The investment allocation will be a reflection of risk tolerance and investment goals of the client.
The expense ratios for these portfolios may range from 0.11% to 0.18%. This is slightly higher than the expense ratios for the core portfolios mentioned above.
When signing up for TD Ameritrade, you will have to fill out a questionnaire. The questionnaire is designed to assess your risk tolerance based on your investment objectives and exit strategy.
Like leading robo advisors, Acorns takes the administrative hassle out of investment selection and management.
Acorns offers many advantages, such as a tool for saving spare change and a rewards program for easy investment. However, a major disadvantage of this platform is that the management fees incurred on small accounts are high.
Acorns is an attractive choice for retail investors because it merges robo advisory tools with automated savings software. The confluence of these two fundamental savings approaches can help you to achieve your retirement savings target.
Also, the flat management fee for your Acorns account can run into a few dollars a month, which is extremely economical. One of the biggest pros of this automated investment service is the lack of management fees for college students.
Acorns’ monthly fee is extremely low. It is just $1 per month for taxable investment accounts and $2 per month, if you include a retirement account. If you add a checking account the fee is $3 per month.
You can link your credit and debit cards to your Acorns account so that the savings software can stash away the change on transactions to your investment portfolio. In a few words, the old-school way of saving money is now automated thanks to Acorns.
Although anyone can use Acorns, it is ideal for young people, college students, people struggling to save more and hands-off investors. In fact, you can start investing with as little as $5.
Even the cost of investment is extremely low. The expense ratio for exchange-traded funds is just 0.1%.
Acorns offers a complete financial solution for just $3 per month.
Stash Invest is an investment app that makes it simple for new investors to start saving for retirement.
When you sign up for Stash, you’ll answer several questions that will gauge your level of risk tolerance as well as your long-term financial goals. From there, you’ll get recommendations on over 60 ETFs, tailored to your situation.
One of the things we love about Stash is the ability to invest in fractional shares. This means if you want to buy a portion of Apple stock, you can. You don’t have to buy a full share.
Stash requires only $5 to get started, and you’re able to set up an automatic transfer into your account to be immediately invested for you.
If you’re a budgeter, Stash can also analyze spending patterns to find areas of improvement in your budget, as well as find extra money for you to invest.
There are several different levels of Stash–Beginner, Growth, and Plus, all with different features added. Read our full review to determine which is best for you. Monthly fees range from $1 to $9 – depending on your account type.
The service offering of Robinhood is unbeatable. It provides commission-free ETF and stock trades. However, the platform has some drawbacks, such as the absence of trading tools and research material.
Robinhood’s account minimum is only $0. There is also a zero-fee on cryptocurrency and options trade.
Bonds and mutual funds are not supported. You have just one account option at Robinhood. There is also no option for retirement accounts.
Despite these drawbacks, if limiting costs is your primary concern and you would like to focus exclusively on stocks, ETFs, cryptocurrency, and options, then Robinhood is the right choice.
The innovative service helps minimize expenses associated with investing. You can also gain access to mobile and web trading via Robinhood, although the tools are relatively basic. Some investors may feel that its range of account options and tradable securities is limited.
Although the minimum amount required to open a basic Robinhood account is zero, you need to invest at least $2,000 for the Gold margin account. This amount is the regulatory minimum.
There are also no ACH transfers, inactivity, or annual fees. However, Robinhood charges $75 on outgoing transfers.
If you prefer trading in ETFs, then you are in luck because there is a selection of over 2,000 ETFs to choose from.
The mobile app has several key trading features like candlestick charts, a news feed, customizable alerts, and access to live earnings calls. Although research and data are free, it is limited.
Robinhood is committed to keeping its service costs as low as possible. Last year, it launched Clearing by Robinhood. Since the platform is now operating with a clearance system of its own, it has been able to reduce other fees further.
Bank reversal fees now stand at $9 rather than $30, and the $10 broker-assisted phone trades are now entirely free. In addition to the broker-assisted phone trades, Robinhood now offers several other services for free. This is something that you cannot expect even from top investment platforms.
Using an automatic investing app is a huge bonus for investors – new or experienced. They help you find money in different places, or merely move money out of your way before you notice it’s gone, and invest it for you.
Using AI-powered algorithms, these automatic investment apps will tailor a portfolio that suits your financial needs, and they’ll continue to work behind the scenes while you go about your daily business.
Being that the barrier to entry is incredibly low, I’d test out a few of these apps before deciding which one you’ll keep long-term.
Related: Best Robo Advisors