
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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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 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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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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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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I really like Wealthfront, it does the tax-loss harvesting for me, which is always a plus, keeps my portfolio balanced and low risk, and I can borrow against my own investments instead of having to sell (for house renovations, big one-off business expenses, etc).
I know YNAB discourages debt, but being able to borrow against yourself is great. There's no tax event to pay cap gains on, and if you pay it off over a year then it's about a 1-2% interest (3.6% APR currently) which I will likely get in returns from stocks and bonds I didn't have to sell.
I also keep a Wealthfront checking account and make it so when there's over a certain amount in the account (from all those true expense and savings budgets), the excess gets auto-invested it in my portfolio. As long as a bunch of things doesn't go wrong at once, then I shouldn't have to sell any of it and it can build over time (and get those juicy tax-loss harvesting and be able to be borrowed against if needed). It makes me vulnerable to multiple True Expenses popping at once during a market crash, but since you can decide the cash buffer I feel comfortable doing it. I also make sure <50% of my budget contains my investment account, to make sure I'm very safe from market fluctuations. Of course, I'm talking about just investing to get some return on your savings, not for retirement, as that shouldn't be in your budget at all.
The intention of this post wasn't to pimp Wealthfront, I've just been really pleased with it. I think you can get 7500 or something managed free with a referral link and sign up bonus (feel free to message me for one, but I'm not going to put it on here as that's trashy).