Robo-Advisors

Hello fellow YNABers! I'm new to the forum, but not so new to YNAB...been using it for the past year and it has changed my life TREMENDOUSLY! Still not completely back on my feet but I'm so much closer. Anywho...I'm curious to know what favorites you all have if any, for Robo-Advisors for investing? Any feedback would be greatly appreciated. Happy budgeting! 

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  • I am not a fan of robo-advisors.  What they do for you is not difficult to learn to do for yourself, without the fee.  I expect there will be a Boglehead or two along shortly to elaborate on how to construct a simple portfolio similar to what a competent robo-advisor would have you do. 

    Disclosure:  I do not follow Boglehead methods or strategy, but I do believe that they are appropriate for investors who are new to investing and/or uninterested in learning a lot of details.

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  • I have tried Personal Capital and it's okay. My favorite is JLCollinsNH stock series, here: https://jlcollinsnh.com . In his stock series he recommends if you have more than 20 years to retirement to just put it all in VTI (ETF, if less than $10K to invest) or VTSAX (Mutual fund, if more than $10K to invest). I would also recommend reading the stock series on his site, along with the comments, there are many great stories and comments there. Maybe even his book, The Simple Path to Wealth, if you like what you see on his site.

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  • Betterment (recommended by Jesse) seems to do a fairly good job. It is showing a bit better than market, but perhaps needs to be adapted for the reality of the current bond market as an alternative to stocks.

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  • I just started reading up on these as a way to start investing at least a tiny bit. I've had so much debt to battle I haven't started) Acorns was one that many recommended for absolute beginners. They happen to have a referral special going - if you sign up 11 people who make at least a $5 investment by Nov 30 you get $1100! Plus you always get $5 per referral. If you decide to try it and would use my code I'd be grateful: https://www.acorns.com/invite/47YPSF

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  • I use Wealthfront and it’s been so easy! Love how low the fees are and how easy it is to set up everything. 

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  • +1 for betterment. I like the simplicity and I tend to be a hands-off / defensive investor. I have not compared the fees across many options this year however.

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  • I vote for DIY. I harvest over $2400 in losses last month with about 5 minutes of effort and didn't cost me anything in ongoing management fees. I use Vanguard, but any low-cost brokerage is good.

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  • I would recommend using either Fidelity, Vanguard, or Schwab and do simple two or three fund index investing. There are really no substantial advantages by paying robo-advisors; you can do them yourself. I've used Betterment and Wealthfront, and am currently using a combination of M1 Finance, Vanguard, and Schwab.

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  • Vanguard. Seriously. I have no idea what a Robo-Advisor even is, but I know Vanguard gives me and my wife our fair share of the market return without the headaches or the costly fees.

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  • I currently use 2 free ones:

    1.  I have a Wisebanyan account that I actively contribute to - I have a Rainy Day fund building there as well as a ROTH.  I do use their premium loss harvesting service, but none of the other premium features.

    2.  In December when the market was complete trash, I scrounged up the $100 needed to start an M1 finance account.  I'm not actively contributing to it at this time (not in the budget to do so currently), but so far I really like their system.  Their Investment system is somewhat of a hybrid between a robo adviser and a traditional brokerage.  You can build your investment pie using any combination of premade allocations and individually selected stocks/funds/etc.  Mine is a combination of several of their premades and a fund I thought would be interesting.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • Reported - view

      The problem with the robos is when you decide to simplify your portfolio from unnecessary complexity and have to unwind all the positions you end up in. It's no different than trying to move away from a human advisor that introduces complexity intentionally in order to make investing look hard.

      It's just really easy to do it yourself and keep it simple. Not to mention none of these robo advisors know what you have in your outside accounts, so they are not managing your overall portfolio optimally.

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      • TechieM2
      • IT Professional and General Geek
      • techiem2
      • 1 yr ago
      • 1
      • Reported - view

      nolesrule That's the thing I like about M1 when I was looking to start doing a little investing on my own other than a purely managed portfolio - it can basically be as managed or as unmanaged as you like.

      If you just want to use a prebuilt allocation - go ahead.

      If you want to explicitly decide on what stocks/bonds/funds to invest in and what percentage of your portfolio to put into each - go ahead.

      In my case I'm doing a mix of both.

      I think really it all comes down to personal preference and available funds and what your strategy and goals are.

      The one other big benefit that M1 has (and I believe some other places classified as robo-investors - I looked a bunch of robos and non managed brokers and such when I was looking to start doing a little self-investing that I could fully control) is that you can invest in fractional shares - that makes it possible for people with few resources to have at least some  investment in companies they would otherwise not be able to afford investing in.

      I'd love to have a high dollar Vanguard investment account, but have nowhere near the available funds to start one.  :)

      And on the topic of overlapping funds, yeah that's definitely something to consider for any investment provider if you want to make sure you aren't overlapping.  I'm pretty sure some of the funds my Wisebanyan investments use are also used by my 403b vendor.  I believe Wisebanyan has an option to exclude using funds you use elsewhere, but I haven't really looked into it much.  From the brief look I did the overlaps were good funds that I liked being invested in anyway, so I didn't bother to look deeper into the topic at the time.

       

      I think the best part is that we have so many choices now so there's likely a good match for just about anyone to suite their personal strategies, goals, financial situation, and direct involvement (or lack thereof) with what they invest in.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • Reported - view

      TechieM2 I have UTMA accounts for my kids, and somewhere between $50 and $125 goes in there a month. I purchase VT (Vanguard Total World ETF) with whatever amount number of shares I can based on the settlement account funds each month. VT is currently in the $73 range. I really don't care about the fractional shares because it's just not significant enough to matter in the long run at those small levels. The accounts are not high-dollar.

      Other brokerages than Vanguard have smaller minimums on their core index mutual funds, and mutual funds can be bought with partial shares. Once you hit the minimum amount (even at Vanguard) future purchases into a fund you already own require pennies as a minimum.

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      • TechieM2
      • IT Professional and General Geek
      • techiem2
      • 1 yr ago
      • Reported - view

      nolesrule Oh cool.  I'll have to look into those as well.

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  • I like a combination of Personal Capital and Vanguard.  I use the PC app to have a complete view of all my investments and other financial accounts.  It allows me to list all my assets including the house and car in one place for a complete Net Worth view.  The PC Investment account is managed by their advisor team with some Robo software analysis.  They charge a 1% fee on top of the funds but as I only put half of my investments there I am satisfied I get value for that fee.   If I have questions they are quick to answer or I can schedule a call to review my positions.  They also provided advice for my 401k held in Vanguard which I checked with my brother and decided to follow it.  Vanguard I manage myself with semi annual sessions with my brother, but basically leave it alone.  I need to start taking required minimum distributions in 2020 so I am just starting to get on YNAB so I can figure out how much to put into budget and excess will go to a brokerage account or High Interest Paying Savings account.   I am not motivated to get into the weeds with my investments.  The Vanguard accounts are in diversified Low fee funds/EFTs.   The PC accounts (before tax IRA and a Roth) are actively managed with low fees one of the criteria to their strategy so that the average fund fee is 0.10% with their management fee on top of that.   I get that some people would not be satisfied with that but I am ok with paying for the service of maximizing risk to reward in the market. 

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  • I like Betterment.  It's not really different from Wealthfront but as a way of handling consolidated rollovers from previous job 401ks and also keeping a modest down payment emergency fund, it's been great.  The folks who suggested Vanguard directly are also definitely onto something.  Through Betterment I have a basket of Vanguard funds, I just didn't have to buy, manage, rebalance or tax loss harvest them myself.  Which is all worth quite a bit to me in terms of peace of mind and time. 

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