Since this is a community of programmers, you might be interested in doings things like this yourself instead. There are a couple of options: - Quantopian ( http://quantopian.com/ ): Python based, kinda a little bit open source (backtesting only), live trades on Interactive Brokers or Robinhood. Has a big community for stocks. - QuantConnect ( http://quantconnect.com/ ): .NET based, more open source (includes live tr…
Gambling is not a replacement for investment, this is off topic to an article about consolidation of low cost funds.
I looked into these companies but couldn't find a reason to invest through them. I don't understand what value these guys bring. If I am already paying a commission for each fund I don't know why I shypay these guys a cut again.
Eventually I think these guys will and must come up with their own funds. Else it does not make sense for them.
Gurley's post [1] (from 2014) gives one possible end goal: "Learning about Yu’e Bao gave us an epiphany that Jack Ma likely had years ago. If you want to truly disrupt the financial services industry, perhaps you need to stop attacking the transactional experience and launch a competitive product on the asset gathering side. Once you have the assets, all the disruptive things that Silicon Valley types want to do will…
why don't Silicon Valley firms partner with existing smaller banks looking to do more with their balance sheets? seems like if their ideas are truly disruptive it would be a win-win for both parties.
we are starting to see that, A16Z made an investment last year into a smaller bank
I think that he's definitely right about consolidation and then acquisition. I work in HNW wealth management and I think that there needs to be better education on what for example a young person's IRA should look like. An ideal robo-advisor would make buy recommendations, ask you to never sell, and use education along the way to help prevent you from making the same mistakes most people fall trap to. I also think th…
Sorry for the naive question - but if you're contributing to a 401k, aren't you ineligible for tax-deductible contributions to an IRA? If so, it would seem like an even better business would be getting into administering 401k plans cheaply with employers and then keeping people on the platform post-employment.
I'm pretty sure that contributing to a 401k doesn't make you ineligible to contribute to an IRA, but making over a certain amount of money annually does.
Neither option is better than a Vanguard account with one of their target date funds (or funds targeted by level of aggressiveness). Vanguard is a mutual company; they exist for the benefit of their users. Hard to compete against that. Disclaimer: moved from Betterment to Vanguard
The one advantage with these robo advisors, or any broker for that matter, compared to a mutual fund is tax loss harvesting. By having a separately managed account of ETFs or stocks, you can sell and exchange similar stocks when they lose value and harvest the tax losses to use at a later date.
I thought Hedgeable's perspective on not doing tax loss harvesting was interesting[1] I have been looking at these robo advisers since the start of the year.
In the article, it states that Chase is offering 0% funds, yet Betterment claims that their "All-in Actual Cost" for a 100k fund is better than Chase's due to cash drag and a lower expense ratio. (Found here: https://www.betterment.com/comparison/schwab-intelligent-por... ) This is confusing and hard to fact check. Who do I believe?
For a different perspective, here's Schwab's response to critics on its decision to keep a mandatory cash component in its robo-advisor offering: https://www.aboutschwab.com/ceo-statement#anchor-copy-ceo-st... I think their reasoning is sound in theory, but it strikes me as suspect that they would not allow even the option to stay fully invested for clients who would prefer to manage the cash component of their portf…
I used to work with a lot of these custodians. They typically make ~40+% of their revenue from cash products.
They'll keep you in some fund paying 1 bps and turn around and invest it elsewhere. Yes, you want some cash (esp. to the extent it's part of your asset allocation), but no you don't want to use the awful sweep vehicles they default you to.
In the article, it states that Chase is offering 0% funds, yet Betterment claims that their "All-in Actual Cost" for a 100k fund is better than Chase's due to cash drag and a lower expense ratio. (Found here: https://www.betterment.com/comparison/schwab-intelligent-por... ) This is confusing and hard to fact check. Who do I believe?
Neither option is better than a Vanguard account with one of their target date funds (or funds targeted by level of aggressiveness). Vanguard is a mutual company; they exist for the benefit of their users. Hard to compete against that. Disclaimer: moved from Betterment to Vanguard
You'll get more fine grained tax management, e.g., tax-loss harvesting if using something like Wealthfront. You can't pass along these individual losses (and net against other gains/carry over to future years) with a target date fund.
I actually use Vanguard target date for my tax-advantaged accounts, but I use Wealthfront for taxable account.
The one advantage with these robo advisors, or any broker for that matter, compared to a mutual fund is tax loss harvesting. By having a separately managed account of ETFs or stocks, you can sell and exchange similar stocks when they lose value and harvest the tax losses to use at a later date.
Tax loss harvesting only works in an account that generates capital losses AND is taxed on capital gains. IE: IRAs and Roth accounts instantly don't give a care, because they're not taxed. Soooo, no benefit to tax-loss harvesting. IE#2: Any security that actually makes money will be unable to be tax loss harvested. (You need a LOSS to benefit from the tax loophole)
Huh? If you're buying a diverse portfolio of equities then you're guaranteed to have some losers and some winners. You let the winners ride, sell the loses/bank the loss, and replace them with companies that have as similar risk profile to the one you sold as possible.
While we're on the topic of robo-advisors, I'd love to see a robo-advisor that lets clients customize a portfolio allocation and just advises them on when and what to trade to keep their portfolio balanced on a regular schedule, for a fixed fee. That is, instead of these so-called robo-advisors that are actually robo- managers , in the sense that they manage your portfolio and trade on your behalf, and are compensate…
Shameless plug, but I'm actually working on a product that does exactly that. It started as a personal tool that integrated with my brokerage account to take the hassle out of rebalancing and knowing which trades to make with my monthly contributions. It currently only works with Questrade, but I'm looking at adding support for more brokerages. https://rebalancr.com/
Interesting.
Btw, suspect you'll have trouble getting people to sign-up using such a flight-by-night custodian. Maybe take a look at Interactive Brokers?
Neither option is better than a Vanguard account with one of their target date funds (or funds targeted by level of aggressiveness). Vanguard is a mutual company; they exist for the benefit of their users. Hard to compete against that. Disclaimer: moved from Betterment to Vanguard
You'll get more fine grained tax management, e.g., tax-loss harvesting if using something like Wealthfront. You can't pass along these individual losses (and net against other gains/carry over to future years) with a target date fund. I actually use Vanguard target date for my tax-advantaged accounts, but I use Wealthfront for taxable account.
Tax loss harvesting only makes sense if you keep on buying and selling multiple funds/products.
Hold only one index fund, hold it long-term and the problem vanishes: all the gains are not taxed until you sell the fund and they are always net of losses.
Not to mention the massive benefit of deferring taxes in a compounding context.