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TD Ameritrade Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

TD Ameritrade is one of the leading U.S. brokerages in today’s market. It offers a comprehensive range of accounts — education, retirement, standard investment and robo-advisor portfolios — and there is no minimum investment requirement.

With over 350 brick-and-mortar branches, and a choice of online and mobile trading platforms, TD Ameritrade bridges the gap between a traditional and online brokerage for investors who may want the option for in-person consultations.

TD Ameritrade offers a full range of investment products, including stocks, bonds, ETFs, IRAs and IPOs, as well as a robo-advisor option. Users do need to watch out for certain fees that are higher than other competitors for some ETFs and mutual funds.

TD Ameritrade
VISIT TD AMERITRADESecuredon TD Ameritrade’s secure site
The bottom line: TD Ameritrade appeals to investors of any skill level, but watch out for trading fees for short-term ETF holdings and no-load mutual funds.  
  • Over 350 brick-and-mortar branches for in-person customer support as well as phone, text and chat support
  • Robust web, mobile and desktop apps integrated with financial news and a proprietary social signal tracker that interfaces with Twitter to assess consumer sentiment
  • More than 2,300 commission-free ETFs.

Who should consider a TD Ameritrade brokerage account?

With an extensive range of services and investment products, TD Ameritrade aims to reach investors of all levels, from beginners to experienced traders.

The fact that there’s no account minimum to open a TD Ameritrade brokerage account is attractive for new investors. Beginners and other hands-off investors will also appreciate the opportunity to invest in thousands of commission-free ETFs, which can make building a diversified portfolio easy. Active ETF traders, however, may wish to look elsewhere because TD Ameritrade charges a hefty $13.90 fee on commission-free ETFs held for less than 30 days.

Investors who want face-to-face interaction and customer support will appreciate the fact that there are brick-and-mortar branches of TD Ameritrade throughout the country. Educational seminars offered at local branches will also appear to beginning and experienced investors alike.

More seasoned investors will like TD Ameritrade’s robust resources, including pro-grade trading platform, thinkorswim, plus a comprehensive suite of investment research tools. These tools include Social Signals, which pulls Twitter insights on particular investments into one place as well as a trading simulator that allows you to track investment performance without putting real money at risk.

All investors have the option to set up a free consultation with an independent registered financial advisor through TD Ameritrade’s AdvisorDirect referral program.

TD Ameritrade fees and features

Current promotions

Get up to $600 when you open and fund an account within 60 calendar days of account opening, depending on deposited amount.

Stock trading fees
  • $0.00 per trade
Amount minimum to open account
  • $0
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures / commodities
  • Forex
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $75 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
Mobile appiOS, Android, Windows phone
Customer supportPhone, 24/7 live support, Chat, Email, 364 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases
  • Earnings call transcripts
  • Earnings call recordings

TD Ameritrade offers numerous features that set it apart from other online brokers, including an extensive library of educational materials as well as investor education seminars held periodically throughout the year.

While its resource materials and trading platforms are a cut above competitors, many of its costs and fees are in-line with industry averages:

  • There are no commissions charged for online stock or ETF trades
  • There are no commissions, assignment fees, or exercise fees for option trades, and contract fees are just $0.65 per contract
  • Online trades of stocks not listed on U.S. stock exchanges incur a $6.95 commission
  • A $25 fee is charged for broker-assisted trades
  • There is a $5 fee for using the interactive voice response phone system

TD Ameritrade trading fees for certain ETFs and mutual funds

Although TD Ameritrade offers thousands of commission-free ETFs, any funds participating in the ETF Market Center and sold for no commission must be held for at least 30 calendar days. If you sell before this time is up, you’ll be assessed a $13.90 short-term trading fee.

The day the ETF is purchased counts as calendar day zero, so the clock doesn’t start on your 30 days until the next business day following the purchase. Because of this fee, the actual cost of a commission-free ETF could exceed the expenses associated with buying and selling ETFs that aren’t commission-free.

TD Ameritrade lets users trade over 13,000 mutual funds on its platform, including hundreds of funds that carry no transaction fee. However, TD Ameritrade charges a $49.99 trading commission to trade no-load mutual funds. Users looking to minimize costs should carefully review potential trading fees involved in buying and selling many funds.

TD Ameritrade investment options

TD Ameritrade offers investors the opportunity to invest in a wide range of different asset classes including:

  • Stocks
  • Options
  • ETFs
  • Mutual funds
  • Futures
  • Forex
  • Bonds and CDs
  • Annuities

It’s possible to buy stocks on U.S. exchanges and on overseas exchanges. Investors also have a choice of more than 2,300 commission-free ETFs as well as more than 13,000 mutual funds total including hundreds of funds with no transaction fees.

Investors benefit from the fact they’ll pay no commissions when trading most stocks, options and ETFs — but should be aware that there are still trading costs associated with some investments.

Trading stocks not listed on U.S. exchanges will result in a charge of $6.95 for buying and selling, while there is a fee of $2.25 per futures contract and a fee of $0.65 per options contract. No load mutual funds also come at a cost of $49.99, although investors can avoid this fee by choosing from one of the many no transaction fee funds.

No commissions also doesn’t mean no trading expenses. Investors who purchase certain commission-free ETFs still have to pay fund management expense ratios, which are charged by the fund itself and entirely separate from trading commissions charged by brokers. However, TD Ameritrade‘s ETF screener can help you to find ETFs with 0% expense ratios, as well as other low-cost exchange-traded funds to keep fees to a minimum.

Trading platforms and tools

TD Ameritrade has a desktop trading app, a mobile app, and a web app, letting you buy and sell assets whenever and wherever you like. Some of the features you can expect from these platforms include:

  • Integrated research and data, including third-party research as well as financial news and social insights from Twitter
  • Real-time streaming quotes
  • Advanced charting tools including the ability to incorporate data from the Federal Reserve including more than 400,000 economic indicators
  • Access to current and historical market data

Unfortunately, not all tools are available on all TD Ameritrade platforms. Portfolio Planner, which assists you in building a portfolio that exposes you to an appropriate level of risk depending on your investment goals, is available only on TD Ameritrade‘s online platform.

Beginning investors may also find ThinkorSwim, TD Ameritrade‘s free desktop trading platform, to be too complex to navigate even with in-app support.

Research resources and trading simulator

TD Ameritrade truly sets itself apart from other brokers because of the quality and quantity of research and educational materials the brokerage provides. Some of these tools include:

  • Immersive online courses taught by investment coaches that provide education for all levels of investors. Courses include an introduction to retirement planning; lessons on fundamental analysis to help you learn to identify value stocks or technical analysis to help you learn to read the market; introductions to options trading or futures trading; and much more.
  • More than 200 instructional videos for investors at all experience levels, including an introduction to trading stocks.
  • Access to market news, including from third party sources such as Yahoo Finance as well as briefings on market events prepared by TD Ameritrade strategists.
  • Webcasts on a wide range of subjects including long-term investing, active trading, and portfolio management.

TD Ameritrade also offers paperMoney, a virtual stock market simulator so you can test trading strategies and track performance. With paperMoney, you can virtually trade stocks, options, futures and forex. You’ll have access to the same charting data and market indicators available to those trading actual money, but won’t put assets at risk.

TD Ameritrade Essential Portfolios

For those looking for a truly hands-off trading experience, TD Ameritrade offers Essential Portfolios, the company’s robo-advisor product.

Unlike other TD Ameritrade accounts, Essential Portfolios requires a $5,000 minimum investment. You’ll also have to pay an annual management fee of 0.30% of your account balance. For this fee, you’ll be provided with a diversified portfolio of ETFs that’s designed for you based on your responses to a short questionnaire.

The fee and minimum required investment are a bit higher than some competitor offerings in the robo-advisor game, but existing TD Ameritrade customers may appreciate the chance to invest with a brokerage they know. In-person customer support and 24/7 email and phone support can also set your mind at ease because you’ll know help is always available if you need it.

Strengths of TD Ameritrade

  • No account minimums for TD Ameritrade brokerage accounts and no account value thresholds for site access: The fact that there are no account minimums is a huge draw for beginning investors, who should know that all online tools are available to them regardless of account balance.
  • Robust research tools and analysis: TD Ameritrade offers live CNBC streaming and access to third-party research tools to help investors come up with a customized strategy.
  • Robust mobile experience: In addition to being able to buy, sell and trade via the app, the app also allows access to more than 20 educational videos as well as research from leading financial analysts.

Drawbacks of TD Ameritrade

  • Short-term ETF trading fees: TD Ameritrade offers over 2,300 commission-free ETFs. You must own them for at least 30 days before selling, or you may be charged a $13.90 short-term trading fee — something to be aware of if you’re an investor who regularly trades ETFs and you’re focused on keeping costs as low as possible.
  • Higher costs and a higher account minimum for robo-advisory services: While competitors allow you to get started with just $500 — and some don’t even have minimum investment requirements — TD Ameritrade‘s robo-advisor requires a $5,000 minimum
  • Some trading platforms are complicated: Beginning investors will likely find thinkorswim to be overwhelming.

Is TD Ameritrade safe?

TD Ameritrade has a history of 40-plus years in investing. The online and mobile platforms have strong security requirements, including two-factor authentication, and shut down account access at the first sign of suspicious activity. TD Ameritrade also offers an asset protection guarantee that promises reimbursement for any securities or cash lost as a result of unauthorized account activity.

TD Ameritrade manages $1 trillion in client assets and has over 11 million funded client accounts. TD Ameritrade is a member of the Securities Investor Protection Corporation (SIPC), and securities in your account are protected up to $500,000. Certificates of deposit (CDs) purchased by TD Ameritrade are issued by banks insured by the Federal Deposit Insurance Corporation (FDIC). Cash in your investment account can be held in an FDIC-insured deposit account, where it is insured by the FDIC up to the legal limit per depositor, per bank.

Final thoughts on TD Ameritrade

Investors who have a range of investment needs may find TD Ameritrade to be a good all-in-one option. The robust online tools, accessible customer service and lack of account minimums make TD Ameritrade appealing to investors of all levels. Those looking for an affordable robo-advisor or who wish to actively trade ETFs, however, may wish to look elsewhere as their costs with TD Ameritrade will likely be higher than with many competitor offerings.

The rates and fees mentioned in this article are accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Investing

Understanding Binary Options

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Binary options are a simplified form of options trading. Options trading can be a little difficult to understand, but essentially when you trade options, you are buying or selling contracts that give you the right, or the obligation, to make certain asset trades in the future. Binary options remove much of this complexity, allowing you to bet on whether the value of an asset will be higher or lower than a target price by a given deadline. Simple, right? Let’s take a closer look at how binary options work and whether they make sense for your trading strategy.

What are binary options?

Binary options — like all options — are a financial instrument based on the value of an underlying asset. This underlying asset can be a stock, a bond, a currency exchange rate or the price of gold. When you buy or sell binary options, you’re making a bet about the future price of the underlying asset.

Let’s say the price of gold right now is $1,450 an ounce, and you think it will be higher than $1,500 by the end of the week. You could buy a binary option with a strike price of $1,500 and a deadline of Friday at 5:00 p.m. If the price ends up higher than $1,500 on Friday at 5:00 p.m., you would make money. If the price ends up at $1,500 or lower, you lose money.

How are binary options priced?

Binary options are priced between $0 and $100. Their value is based on how likely the underlying asset will be above the strike price by the option deadline. If the actual value of the asset is above the strike price at the deadline, then the option is worth $100. If it’s below the price, then the option is worth $0.

Before the deadline, the value of the option will fluctuate between $0 and $100, depending on how likely the final result looks. If it looks very likely that the final price will be above the strike price, then the option price will be closer to $100. If it looks unlikely, the price will fall closer to zero. If you own a binary option and want to get out before the expiration date, you can sell the contract to another investor at the current market price.

How do you buy and sell binary options?

When it comes to trading binary options, you can be either a buyer or a seller. Let’s go back to the example of gold going up to a value of $1,500. Imagine that the option currently trades at $45 — that means you’d pay $45 to bet that the price will end up higher than $1,500 by the deadline. If the price ends up higher, you’ll receive $100, giving you a profit of $55 (100 – 45 = 55.) If the price ends up at or below $1,500, your option value falls to $0, meaning that you’d lose your $45 investment.

On the other hand, if you think the price of gold will not be above $1,500, you could take the opposite position by selling the $45 option to another investor. This person would give you the money upfront, and if the price ends up below $1,500, you keep the $45 profit. If the price ends up above $1,500, you need to pay the option buyer $100, so your loss is $55.

Where can you trade binary options?

Since binary options are a newer, more specialized type of investment, you won’t find them with just any online stock broker. One way to make these investments is through the North American Derivatives Exchange (Nadex). This exchange is supervised by the Commodity Futures Trading Commission, a government regulatory agency.

There are other online websites that allow binary option trading, such as Binary.com and IQ Option. But Braden Perry, a former enforcement attorney at the Commodity Futures Trading Commission (CFTC), warns you have to be careful.

“Many internet-based platforms have surged into the market, and with that surge, the opportunity for fraudulent promotional schemes, overstatement of returns, and the failure to pay out for the wins have increased,” said Perry. “Furthermore, some actors are using manipulative software to rig the system, so winning bids end up losing.”

As he recommends, before opening an account with a website, you should check their registration and disciplinary history through BrokerCheck or the Background Affiliation Status Information Center, two databases run by regulatory agencies. You could also perform web searches to determine if your potential broker has been accused of wrongdoing.

What are the fees for trading binary options?

The fees for trading binary options depend on the broker or trading platform. They may charge a flat transaction cost, like $1 for each contract that you buy or sell. They might also charge a fee when they pay out the $100 earnings at a contract’s expiration deadline, known as a settlement fee. Once again this could be $1 per contract, charged to the investor who made the correct bet on the option.

Another way brokers can make money is by using a bid-ask spread, which means the price to buy an option is higher than the price to sell an option. For example, it costs $45 to buy but you would only receive $43 by selling. The $2 difference goes to the broker or the trading platform.

Finally, the broker/platform could charge additional miscellaneous fees for other actions, such as setting up your account or processing withdrawals.

Advantages of binary options

  • Simple to understand: Binary options are pretty straightforward compared to other options trading strategies — either your price prediction comes true and you make money, or it doesn’t and you lose money.
  • Fixed risk: Going into each trade, you can calculate exactly what your loss would be in the event that your prediction was wrong. With some other trading strategies, like short selling a stock, your possible loss is potentially unlimited; with binary options, it’s a fixed risk.
  • Higher potential returns: Investing is generally a tradeoff between risk and return, where higher risk investments tend to have a higher potential return. Since binary options can be relatively risky, they are also potentially lucrative. Due to the higher risk the typical returns on investments are much higher than foreign exchange trading — typically 60% to 90%, compared to 10% for forex.

Downsides of binary options

  • High risk: With the “all-or-nothing” payout system, you can lose money very quickly when trading binary options if your predictions turn out badly. This simplicity may be a downside for new investors, who could lose a lot of money through inexperience.
  • Bad market actors: You need to be careful about which trading platform you use. Binary options are a relatively new investment and still not regulated as closely as more established markets, so the opportunity for fraud can be higher.
  • Broker limitations: There could be limits on how much you can invest per trade. Only some brokers allow big investments, restricting them to clients with large balances. If you want to make larger investments, you may need to sign up with multiple platforms as you could go over the maximum limit on just one.

Who should trade binary options?

Binary options are a better fit for investors with a high-risk tolerance, those more willing to lose money in the short-term in exchange for making a larger profit in the future. If you’re scared about the idea of short-term losses, binary options are likely not a good fit.

In addition, you need to be willing to put in lots of research for your binary option trading decisions. You are competing against other investors, including Wall Street professionals, who are only accepting your buy/sell moves because they bet the opposite will happen and they’ll make money off you. It’s a tough market and takes hard work to make a profit.

Even if binary options sound like a good fit for your personality, Nicholas Hofer, a CFP® and President of Boston Family Advisors, still believes you should think twice before getting started: “I wouldn’t recommend this strategy for traditional investors as it’s more like gambling.”

He thinks binary options are a misuse of what options should be used for, as a hedge against risk and losses. “Unfortunately,” he noted, “‘hedging’ is now often viewed as a way to generate alpha [above market returns] rather than a way to reduce risk.”

Learn more about binary options

If you’d like more help to learn about binary options, there are online courses and bootcamps that can give you trading strategies and tips. You could also hire a financial advisor to help set up your options trading account and give you recommendations for trades.

The complicated part is not understanding how binary options work, but rather how to make good predictions. That means studying up on market trends, closely following financial news and learning everything you can about potential trades so you can make better predictions than the average investor.

If you do decide to move forward with trading binary options, make sure to do so responsibly — only invest money you can afford to lose. With research and some luck, you can make money quickly through binary options. But if you aren’t careful, you can lose it just as fast.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Investing

Wealthfront Review 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Wealthfront is a robo-advisor for beginner investors who don’t have the time or money to devote to hands-on investing but who still want to save for the future. Wealthfront’s automated platform designs a portfolio of low-cost, exchange-traded funds (ETFs) that maximizes your returns while honoring your own level of risk tolerance. And with a minimum investment requirement of only $500, there’s a low threshold for entry.

Wealthfront also guides your financial planning. It examines where you are now, helps you set goals and ensures you stay on track to hit your investing objectives. Additional key features include automatic rebalancing and tax-loss harvesting, plus college savings plans.

Wealthfront
Visit WealthfrontSecuredon Wealthfront’s secure site
The bottom line: Wealthfront is an easy-to-use robo-advisor for novice investors.

  • Low fees, automatic portfolio rebalancing and tax-loss harvesting.
  • Save for retirement and college in one place.
  • Free financial planning.

Who should consider Wealthfront?

Wealthfront doesn’t allow its clients to choose the assets that make up their portfolio until they reach an account balance of $100,000. This makes the robo-advisor a good option for beginners who know they should be investing for the long term but aren’t looking for in-depth portfolio customization. It’s also a good choice for investors looking for a robust tax-loss harvesting strategy, and anyone looking to save for education expenses, since it offers a 529 plan.

The site is also a good checkpoint for anyone seeking basic financial planning, since Wealthfront offers free financial guidance on retirement, college savings, home purchases and the decision to take time off to travel. This is not, however, the robo-advisor for someone who wants access to a human advisor or anyone who’s interested in a socially responsible investing portfolio.

Wealthfront fees and features

Amount minimum to open account
  • $500
Management fees
  • 0.25% annual advisory fee on investments
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
Portfolio
  • Wealthfront offers 12 asset classes
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detailWealthfront offers daily tax loss harvesting for taxable accounts for no additional charge.
Offers fractional shares
Ease of use
Mobile appiOS, Android
Customer supportPhone , 24/7 live support, Email

How does Wealthfront invest your money?

Wealthfront uses Modern Portfolio Theory (MPT) to choose a portfolio for you with the maximum expected return for your chosen level of risk. The site uses software to design a diversified mix of investments across “relatively uncorrelated asset classes,” based on your risk selection. The strategy seeks to maximize long-term returns. Each of Wealthfront’s asset classes is represented by a low-cost, passive ETF.

Wealthfront’s investment team currently utilizes the following asset classes:

  • U.S. stocks
  • Foreign developed market stocks
  • Emerging market stocks
  • Dividend growth stocks
  • U.S. government bonds
  • Corporate bonds
  • Emerging market bonds
  • Municipal bonds
  • Treasury inflation-protected securities (TIPS)
  • Real estate
  • Natural resources

Wealthfront builds your portfolio from ETFs that minimize cost and tracking error, offer enough market liquidity and minimize the lending of their underlying securities. To ensure adequate diversification, no asset class can contain more than 35% of your total allocation. Based on your risk score, Wealthfront assigns portfolios with target annualized volatility ranging from 5.5% to 15.0%.

The platform uses software to monitor and periodically rebalance your investments, while also taking care to minimize any tax impact. Its rules-based strategies aim to deliver more value than buying and holding an index fund:

  • Tax-loss harvesting: Designed to reduce your tax bill by capturing investment losses after market movements.
  • Stock-level tax-loss harvesting: Once your account reaches $100,000, Wealthfront captures losses on individual stocks within an index.
  • Risk parity: Aims to increase your risk-adjusted returns through an enhanced asset allocation strategy. Customers must have $100,000 to activate this strategy.
  • Smart beta: designed to boost your expected return by weighting the stocks in your portfolio more intelligently. Available to clients with $500,000 or more in their account.

Note that Wealthfront’s risk parity strategy comprises a separate investing methodology than its standard model, and clients must opt in. It allocates capital across multiple asset classes, also known as mean-variance optimization. Applying the Risk Parity model complicates tax-loss harvesting and limits the ability to borrow against the portfolio value for other purposes, so Wealthfront limits participation to 20% of larger accounts.

Financial planning features

Wealthfront offers free, automated financial planning features. There’s no phone call — customers link their other financial accounts to Wealthfront, which then analyses them for you and offers advice. The more you link, the better view the automated platform has of your financial life, and the better the advice it can provide. You can explore various scenarios to see how they might affect your end goals, and update your plans accordingly. Bonus: You don’t have to have a Wealthfront account to use this feature.

This mobile and desktop tool — the Path — offers advice about retirement, buying a home, covering college costs and even the equation of whether you can take time off to travel:

  • Retirement: Wealthfront will show you how your retirement picture changes depending on your savings level, choosing a different retirement age or adjusting other near-term goals.
  • Buying a home: Wealthfront uses your location, net worth, credit score and debt-to-income ratio to estimate the mortgage you’d qualify for and suggest what you can afford to purchase. By changing variables like your timing, location and home size, you can see how the advice adjusts.
  • Covering college costs: Once you choose a college for your child (Harvard aspirations?), Wealthfront uses Postsecondary Education Data System data to project the total cost you can expect to pay, even factoring in estimated financial aid. Then the system will suggest a realistic monthly savings goal.
  • Time off to travel: Wealthfront’s engine will help you determine how you can comfortably take time off to travel while staying on track for financial goals by doing things like working remotely, subletting your home or varying the details of your trip to affect the cost.

Wealthfront Cash Account

The Wealthfront Cash Account is a high-yield savings account that earns 1.78% APY. It’s a competitive interest rate in the field of online savings accounts, but it’s not as accessible as many competing cash management accounts. There is no option to withdraw funds or make payments from the account via check or ATM card (although the site states that debit cards are coming soon) — you can only get money into and out of the account via ACH transfer to and from a separate checking account. Transfers take one to three business days.

Funds saved in the Wealthfront Cash Account are swept into multiple accounts at partner banks. The partner banks provide FDIC insurance coverage up to $1 million on the funds (or $2 million if you have a joint account).

Despite the strong interest rate, other robo-advisor cash management accounts offer more perks. The Betterment Everyday Cash Reserve account offers a two-way sweep feature that automatically optimizes your account balance based on your spending patterns. SoFi Money pays slightly less interest, but the account comes with debit card access so you can use it to make purchases and withdraw money from ATMs.

Strengths of Wealthfront

  • Low fees: Wealthfront charges just 0.25% for digital portfolio management, which is competitive. That means if you have $10,000 invested, you’ll pay about $25 per year in fees. Wealthfront’s underlying investments are also low-cost ETFs with expense ratios ranging from 0.03% to 0.13%. That said, Betterment also charges 0.25% for portfolio management, and SoFi offers the service for free.
  • Low-cost 529 plan: Wealthfront offers a 529 college savings account with fees ranging from 0.42% to 0.46% per year, making it one of the lowest cost advisor-sold 529 plans.
  • Continuous rebalancing. Wealthfront has no schedule for rebalancing, it monitors your portfolio and rebalances as your allocations drift from their original target mix.
  • Free financial planning help. You can link your other financial accounts to Wealthfront, giving you an overall picture of your finances in one spot. The platform offers targeted automated advice on retirement, college savings, buying a home or taking time off to travel, based on your financial info, which may be just enough help for the novice saver.
  • Robust tax-loss harvesting: Wealthfront offers tax-loss harvesting for all clients — and stock-level tax-loss harvesting for larger accounts — using losses to offset ordinary income or investment gains to minimize your overall tax bill. In a taxable account, this can make a big difference. Not all competing robo-advisors offer this service for no additional charge.

Drawbacks of Wealthfront

  • No human advisors: While you can talk to a professional about your investment account, and Wealthfront offers only automated advice on life goals like retirement and college savings. If you would prefer a human to talk you through your options, Wealthfront may not be your first choice. For slightly higher fees, you can get access to digital portfolio management and human advisors, such as with Vanguard Personal Advisor Services (charging 0.30%) or Betterment’s Premium plan ( 0.40%).
  • No fractional shares. The ability to purchase fractional shares minimizes the amount of uninvested cash is sitting in your account, optimizing your long-term returns. Wealthfront doesn’t offer fractional shares, while Betterment and SoFi both do.
  • Minimum investment: Wealthfront’s minimum of $500 isn’t steep, but it’s not $0, which is the minimum investment for Betterment , SoFi and Ellevest. If you don’t yet have $500 to throw at your investing future, you may want to start with another platform.
  • No socially responsible investing portfolio. Many robo-advisors offer the option to invest in a socially conscious portfolio. Wealthfront only offers the ability to exclude companies you don’t wish to invest in once your account is large enough for Stock-Level Tax-Loss Harvesting ($100,000) or Smart Beta ($500,000). Investors interested in SRI should look toward Betterment or Wealthsimple, which offer SRI portfolio options.

Is Wealthfront safe?

Though no investment is guaranteed as “safe,” Wealthfront focuses on investing in ETFs, index funds that are widely considered to be low risk, even for the most conservative investors.

Wealthfront is also a member of SIPC, insuring your securities up to $500,000 for each account, and Wealthfront’s cash account is protected with FDIC insurance. They don’t have any complaints under the Consumer Financial Protection Bureau and have $20 billion in assets under management. View Wealthfront on FINRA BrokerCheck.

Wealthfront review: Final thoughts

Starting out in investing can be overwhelming, and it can be hard to know where to begin. If you have $500 to invest, Wealthfront will jump-start the process for you, diversifying your portfolio and minimizing expenses and taxes. The robo offers robust tax-loss harvesting and rebalancing features. There is no SRI portfolio for socially-conscious investors, but there are college savings options, so you’ll have to decide what’s important to you.

The lack of a human advisor isn’t for everyone, but you still get easy-to-manage tools, including financial planning advice on big life goals. You can trust that your money will be secure, and this robo-advisor will do all the work for you.

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