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What's The End Goal for Wealthfront and Betterment? (2016)

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Re: What's The End Goal for Wealthfront and Betterment? (2016)

#91

Post by MarkPNeyer »

beisner wrote: post #84
mattzito wrote: post #80

Earlier quoted context omitted.

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.

Adding to this:

Not a lawyer etc but I don't think a 401k prevents you from making IRa contributions either. Never heard of that.

As for income limits, you can still contribute to your IRA if your income is above the limit (I think that's 125k or so) but the contributions will no longer be tax deductible.

Once you're past that limit, you may as well convert from regular to Roth IRA (this is called a backdoor conversion) so that your money grows tax free.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#92

Post by nhorob67 »

frgtpsswrdlame wrote: post #76
_wgnp wrote: post #53

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…

I'd just like to quote an old comment here: >One thing I see every once in a while on HN is people with the belief that they can spend a week or two knocking out an algorithmic trader and start raking it in. In order to break this illusion I would recommend: http://financial-math.org/ http://www.quantresearch.info/

Thank you for this. My thoughts exactly

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#93

Post by nhorob67 »

frgtpsswrdlame wrote: post #76
_wgnp wrote: post #53

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…

I'd just like to quote an old comment here: >One thing I see every once in a while on HN is people with the belief that they can spend a week or two knocking out an algorithmic trader and start raking it in. In order to break this illusion I would recommend: http://financial-math.org/ http://www.quantresearch.info/

Thank you for this. My thoughts exactly

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#94

Post by icedchai »

beisner wrote: post #84
mattzito wrote: post #80

Earlier quoted context omitted.

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.

You can contribute, but you won't be able to deduct the contribution if you have a 401K.

This is for a traditional IRA. Roth IRAs aren't deductible, and also have income limitations.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#95

Post by eximius »

_wgnp wrote: post #53

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…

This is terribly dangerous advice and I highly recommend against it for any sum of money you are not prepared to lose.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#96

Post by sigstoat »

mattzito wrote: post #80
frgtpsswrdlame wrote: post #75

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.

if you have an employer sponsored retirement plan available to you, then making over a certain amount means that your traditional ira contributions aren't tax deductible. at that point you should make roth ira contributions instead. (until you make so much you can't contribute to a roth at all, at which point you can go back to making non-deductible contributions to a traditional ira.)

https://www.irs.gov/retirement-plans/2017-ira-deduction-limi...

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#97

Post by bwood »

prdonahue wrote: post #89
bwood wrote: post #68

Earlier quoted context omitted.

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? Also, would encourage Questrade to fix this: Mixed Content: The page at ' https://www.questrade.com/' was loaded over HTTPS, but requested an insecure image ' http://ads.yahoo.com/pixel?id=2459149&t=2' . This content should also be served over HTTPS. (index):1 Mixed…

Thanks for the feedback! Yeah, I don't expect much mass appeal from supporting only Questrade, it's just the brokerage that I use myself. Good idea on getting them to fix those HTTPS issues, really no excuse for it these days.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#98

Post by sigstoat »

prdonahue wrote: post #88
dragontamer wrote: post #42

Earlier quoted context omitted.

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.

to reiterate what dragontamer is saying, if all of your investments are in IRAs (where there are no taxes, at all!), then TLH is meaningless.

only if you're maxing out your tax advantaged accounts, and still have additional funds to invest is TLH even relevant.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#99

Post by sigstoat »

hendzen wrote: post #49
sigstoat wrote: post #16

Earlier quoted context omitted.

if you're willing to handle the allocation yourself, you can just see what vanguard is putting into their 20xx fund, and buy the corresponding funds as ETFs (or their admiral shares funds if you've got enough money in there) and get even lower expense ratios. as a general note, anyone interested in this should take a look at the bogleheads site, starting with their wiki: https://www.bogleheads.org/wiki/Main_Page

You can do even better by going directly through Vanguard and getting Admiral Shares of the corresponding mutual fund, which have much lower fees than the ETFs.

> You can do even better by going directly through Vanguard

yes, definitely go straight to vanguard for any of their products! i should've said as much, thanks for doing so.

they're so easy to deal with there's hardly any point in purchasing any of their products elsewhere.

> and getting Admiral Shares of the corresponding mutual fund, which have much lower fees than the ETFs.

once you've saved up enough to buy into the admiral shares, that's certainly the easiest thing to do. but their ETFs are just shares of the admiral-level funds. so their expense ratios are identical.

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... https://personal.vanguard.com/us/funds/snapshot?FundId=0928&...

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... https://personal.vanguard.com/us/funds/snapshot?FundId=0970&...

that's apparently some sort of magic that vanguard has patented.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#100

Post by narrator »

sulam wrote: post #64
narrator wrote: post #44

Why can't I buy VTI and dividend reinvest? I compared that to Betterment since 2004 and it wins handily. What am I missing? Tax loss harvesting sounds fancy but what's the actual bottom line benefit after fees?

I don't use a robo-advisor, but TLH saves me 6 figures in taxes every year. Sadly I'm not comfortable disclosing the size of my portfolio. It's big enough to have an account with most bankers, but not big enough to require dedicated staff. :)

So you have big capital gains somewhere else in your portfolio that lets you take big deductions from TLH?
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