Barclays Arrival Premier World Elite Mastercard Review

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The Barclays Arrival® Premier World Elite Mastercard® is no longer available.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Northern Bank Direct Money Market Review – 2.26% APY Guaranteed Through June 2019

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Update: As of 6/20/18, the rate is now down to 1.50% APY. I hope everyone who was interested got the 2.26% APY rate, you definitely had time and they did give roughly a 24-hour notice.

Here comes another new “Direct” bank leapfrogging the current competition for some attention. The Northern Bank Direct Money Market account is offering 2.26% APY on average daily balances up to $250,000, and the rate is guaranteed through June 30, 2019. Of course, another bank could take the throne tomorrow, but at least this one comes with a rate guarantee. Other highlights:

  • $5,000 minimum to open.
  • Includes limited checkwriting and ATM debit card access.
  • No minimum balance requirements or monthly service charges.
  • Interest is compounded monthly and credited monthly. If you close your account before the interest is credited, you will not receive the accrued interest.
  • Read full review for notable quirks.

Northern Bank Direct is the online division of Northern Bank, a community bank in the New England area. You must open accounts online, but you can do transactions in their branches and use the NBTC Mobile Banking apps. They also offer various certificates of deposit, including currently a 30-month CD at 3.01% APY ($500 minimum to open, 12-month early withdrawal penalty). Their routing number is 011303097. You can contact them at 844-348-8996 EST Monday-Friday: 9a-6p, or via email to nbdirect@nbtc.com.

Money Market features. This is a money market account, which is similar to a savings account but adds limited checkwriting and an ATM debit card. You are still limited to 6 withdrawals per month, whether via online electronic funds transfer, check, wire, or ATM machine.

ACH limitations. Northern Bank Direct has a somewhat weird rule that if you initiate a electronic transfer from your Northern Bank Direct account, there is a maximum daily limit of $5,000.00 (or the available balance in your account, whichever is less) for Interbank (external) transfers per transaction; $5,000 in aggregate per day; and $25,000 in aggregate per calendar month. If you initiate the electronic transfer from an external financial institution, Northern Bank Direct does not impose a limit on the amount of the transfer.

Notable fees. According to their full Deposit Account Agreement, there are a few other fees that caught my eye:

  • Account closure (by mail): $10
  • Dormant Accounts fee (per month– starting in the 13th month for account balances less than $500.00): $4.00
  • External Transfer Fee (per transfer): $3
  • New account closure within 120 days: $25

It appears that not only do they limit your transactions to $5,000 per day ($25,000 per month), they will also charge you $3 if you initiate the transfer from your Northern Bank Direct account. There are some reports that they are removing the $3 fee, but I still see it on their online fee schedule. Hopefully, you already have a favorite “hub” bank account with free, fast transfers and high dollar limits (mine is Ally Bank).

These fees are notable as other online savings accounts have all of the following: no minimum opening balance, no minimum balance requirement, no early closure fee, and/or no inactivity fee.

Smartphone app. It’s amazing how much I bank from my phone these days, from checking balances to mobile check deposit. Based on the app store screenshots, it looks like Northern Bank also outsourced their back-end software to Fidelity National Information Services (subdomain ibanking-services.com). In my experience, the app is basic but functional. Mobile check deposit and Touch ID are supported.

Bottom line. The Northern Bank Direct Money Market account is offering 2.26% APY on average daily balances up to $250,000, with the rate guaranteed through June 30, 2019 ($5,000 minimum to open). In terms of liquid savings accounts, this is the highest rate currently available (with a few quirks noted above). There are a few short-term CDs with higher rates (and withdrawal penalties), but this is more like a no-penalty CD plus you can also add funds at any time. If you have a large cash balance and you want to preserve your liquidity options, this is something to consider. Act fast though, as previous similar accounts have closed to new applications after a few weeks.

Check out my Ultimate Rate-Chaser Calculator to estimate how much additional interest you’d earn if you switched over and make an informed decision.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Personal Capital Review 2018: Automatically Track Net Worth and Portfolio Asset Allocation

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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Updated 2018. Personal Capital is free financial website and app that links all of your accounts to track your spending via bank and credit cards, investments, and net worth. You provide your login information, and they pull in the information for you automatically so you don’t have to type in your passwords every day on 7 different websites. Personal Capital’s strength is in investments, including portfolio tracking, performance benchmarking, and asset allocation analysis.

Net worth. You can add your home value, mortgage, checking/savings accounts, CDs, credit cards, brokerage, 401(k), and even stock options to build your customized Net Worth chart. You can also add investments manually if you’d prefer. I have a habit of accumulating bank and credit union accounts, so I find account aggregation quite helpful.

Cash flow. The Cash Flow section tracks your income and expenses by pulling in data from your bank accounts and credit cards. This chart compares where you are this month against the same time last month. If you hate budgeting, you may find it easier to view a real-time snapshot of your spending behavior. Their expense categorization tool is pretty accurate, and if it isn’t you can change it manually. However, it isn’t quite as advanced as Mint.com, where you for example you can make a rule to always classify “Time Warner Cable” as “Utilities” and not “Online Services”.

Portfolio. This is where Personal Capital is better than many competing services, by analyzing my overall asset allocation, holdings, and performance relative to benchmarks. If you’re like me, you have investments spread across multiple custodians. I now have investments at Vanguard, Fidelity (401k), Schwab, TransAmerica (401k), and Merrill Edge. It’s nice to be able to see everything together in one picture. They can also analyze your retirement accounts fees to see if you are quietly getting charged too much.

For comparison, Mint did not allow manual input of investments and it did not break down my asset allocation correctly based on my linked accounts. In fact, all it shows is a big orange pie chart with “99.9% Not Sure” and “0.00 Other”.

Personal Capital considers the major asset classes to be US stocks, International stocks, US Bonds, International Bonds, and Cash. The “Alternatives” classification includes Real Estate, Gold, Energy, and Commodities.

If you have one bank account, one credit card, and a 401(k), you may not need this type of account aggregation service. Life tends to get messy though, and this helps me maintain a high-level “big picture” view of things.

Security. As with most similar services, Personal Capital claims bank-level, military-grade security like AES 256-bit encryption. The background account data retrieval is run by Envestnet/Yodlee, which partners with other major financial institutions like Bank of America, Vanguard, and Morgan Stanley. Before you can access your account on any new device, you’ll receive an automated phone call, email, or SMS asking to confirm your identity. Their smartphone apps are compatible with Touch ID/Face ID on Apple and mobile PINs on Android devices.

In terms of the big picture, my opinion is that by making it more convenient, I am able to keep a closer eye on all my account and thus actually make myself less likely to be affected by a security issue.

How is this free? How does Personal Capital make money? Notice the lack of ads. Personal Capital makes money via an optional paid financial advisory service, and they are using this as a way to introduce themselves. (People who sign up for portfolio trackers tend to have money to manage…) They are a hybrid advisor, combining their online tools with real human access. Their management fees are 0.89% annually for the first $1 million, with slightly lowered pricing as you go past $1 million in assets. As an SEC-registered RIA fiduciary that now manages over $7 billion, I think this improves their credibility as a company built to handle sensitive information.

Note that if you give them your phone number, they will call you to offer a free financial consultation. If you answer the phone or e-mail them that you don’t want to be contacted anymore, they will honor that request. Or you could ask them your hardest financial question and see how they respond. However, if you simply ignore the phone calls, they will keep calling. Now, you can keep using the portfolio software for free no matter what happens. But, if you aren’t interested, I would highly recommend simply being upfront with them. A simple “no thank you” and you’re good.

If you’re upfront with them, they’ll be upfront with you. I’m still a DIY guy when it comes to my money, and they have been happy to keep monitoring my accounts for free, without any additional phone calls over the last 5 years.

Bottom line. It’s not what you make, it’s what you keep that counts. The free financial dashboard software by Personal Capital helps you track your net worth, cash flow, and investments. I recommend it for tracking stock and mutual fund investments spread across different accounts. I’d link your accounts on the desktop site, but interact daily through their Android/iPhone/iPad apps for optimal convenience (log in with Touch ID or mobile-only PIN).

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Republic Wireless Review: New Phone + 3 Months Service $89 or Free SIM + Free 1st Month

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

rw2018freesimUpdated 2018. Republic Wireless is a T-Mobile MVNO that reduces costs by using WiFi for calls and texts whenever possible. They have settled into the simple pricing structure below, with no contracts.

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The best value plans allow a single user to pay $20/month for unlimited talk/text/1 GB LTE and $25/month for unlimited talk/text/2 GB LTE. The nice thing about these pay-for-what-you-use plans is that you save money on the months where you use very little data, as opposed to always buying the plan where you know you won’t pay for overages.

Buy new phone, get 3 free months of service (phones start at $89). Get 3 free months of service if you buy a new phone and activate a new line. This is with the Unlimited Talk/Text + 1 GB Data plan, so that’s $20 x 3 = $60 value for free. New phones start at only $89 for the Alcatel A30 Android phone. Moto E is $129.

Bring your own phone + Free SIM card + 1 free month of service. Right now, they are offering a Free SIM card + Free Shipping + Free 1st Month of Service. This is with the Unlimited Talk/Text + 1 GB Data plan ($20 value). If you use more data, you pay the difference. Taxes and telecom fees are not included. The idea is that you can swap out the SIM card in your phone and try them out with no obligation. You must activate by 6/30/18.

Phone options. You can either buy a phone from them or bring your GSM unlocked phone and use their SIM card. There are still no Apple phones on the list. Below is a partial list of eligible phones. The best thing to do is use their phone checker.

  • Google Pixel
  • Google Pixel XL
  • Google Pixel 2
  • Google Pixel 2 XL
  • Samsung Galaxy S8
  • Samsung Galaxy S9
  • Samsung Galaxy J7
  • Samsung Galaxy S7 Edge
  • Samsung Galaxy S7
  • Samsung Galaxy J3
  • Samsung Galaxy S6
  • Nexus 6P by Huawei
  • Nexus 6 by Motorola
  • Nexus 5X by LG
  • Moto X Pure Edition
  • Moto X4
  • Moto G5S Plus
  • Moto G5 Plus
  • Moto E4
  • Moto E4 Plus
  • Moto G4
  • Moto G4 Plus
  • Moto G4 Play
  • Moto Z
  • Moto Z Play

Bottom line. Republic Wireless now allows you to bring your own unlocked GSM phone for use on WiFi and T-Mobile LTE networks. Right now, they are offering a free SIM + free month of service to try them out for free. Apple phones are not eligible. The cost is straightforward: $15 for unlimited talk/text and $5 per GB of data used, making it best for modest data users.

If you are willing to buy several months of service at once (or have an Apple phone), also check out Mint Mobile (formerly MintSIM).

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Chase Ink Business Unlimited Card Review: $500 Cash Bonus, 1.5% Flat Cash Back, No Annual Fee

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

inkunlimited2018Chase has freshened up their line-up of small business credit cards. The new Ink Business Unlimited Card is offering a $500 cash bonus for new cardholders and the simplicity of a flat, unlimited 1.5% cash back on all purchases. Here are the details:

  • $500 bonus cash back after you spend $3,000 on purchases in the first 3 months.
  • Unlimited, flat 1.5% cash back on all purchases with no limit. Simple.
  • 0% introductory APR for 12 months on purchases.
  • Free additional cards for employees.
  • No annual fee.

Ultimate Rewards points. The cash sign-up bonus actually comes in the form of Ultimate Rewards points at 1 point = 1 cent in cash. 50,000 points = $500 cash. If you have one of the other annual fee cards that offer a boost in value like the Ink Business Preferred, Sapphire Preferred, or Sapphire Reserve, you can transfer your points between Ultimate Rewards accounts and redeem using that other card’s 25% travel bonus. This can increase the value of your points.

You could think of this card as the small business version of the Chase Freedom Unlimited card.

Prefer airline and/or hotel points? You can’t transfer points to miles directly with this card, but if you transfer over your Ultimate Rewards points to the Chase Sapphire Preferred Card (or Ink Business Preferred card), then you can use that card to transfer into hotel and/or airline miles. If you value those miles/points at more than 1 cent per point, then your 1.5X rewards from this card can be significantly higher. Examples:

– You could earn 1.5 United miles per dollar spent.
– You could earn 1.5 Hyatt points per dollar spent.
– You could earn 1.5 British Airways Avios per dollar spent.
– You could earn 1.5 Southwest Rapid Rewards points per dollar spent.

For example, if you placed a perceived value of 1.5 cents on each United mile or Southwest Rapid Rewards point, then you’d receive 2.25 cents of perceived value per dollar spent with this card. Your actual numbers will depend on your own specific redemption choices.

Many people aren’t aware of the fact that they can apply for business credit cards, even if they are not a corporation or LLC. The business type is called a sole proprietorship, and these days many people are full-time or part-time consultants, freelancers, eBay/Amazon/Etsy sellers, or other one-person business owners. This is the simplest business entity, but it is fully legit and recognized by the IRS. On a business credit card application, you should use your own legal name as the business name, and your Social Security Number as the Tax ID.

Note that Chase has an unofficial rule that they will automatically deny approval on new credit cards if you have 5 or more new credit cards from any issuer on your credit report within the past 2 years (aka the 5/24 rule). This rule is designed to discourage folks that apply for high numbers of sign-up bonuses. This rule applies on a per-person basis, so in our household one applies to Chase while the other applies at other card issuers.

Bottom line. The Ink Business Unlimited Card has a large sign-up bonus and flat 1.5% cash back with no annual fee. This card is best for people who want simple and straightforward rewards. If you have certain other Chase credit cards, you can transfer Ultimate Rewards points over to those cards and increase your value. Be sure to compare with other Chase small business cards – Ink Business Preferred and Ink Business Cash.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Chase Ink Business Cash Card Review: $500 Cash Bonus, 5% Back Categories, No Annual Fee

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

inkcash2018Chase has freshened up their line-up of small business credit cards. The Ink Business Cash Card is offering a $500 cash bonus for new cardholders, along with 5% cash back and 2% cash back on select small business categories. Here are the details:

  • $500 cash bonus after you spend $3,000 on purchases in the first 3 months.
  • 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year.
  • 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year.
  • 1% cash back on all other card purchases with no limit to the amount you can earn.
  • 0% introductory APR for 12 months on purchases.
  • Free additional cards for employees.
  • No annual fee.

Ultimate Rewards points. The cash sign-up bonus actually comes in the form of Ultimate Rewards points at 1 point = 1 cent in cash. 50,000 points = $500 cash. If you have one of the other annual fee cards that offer a boost in value like the Ink Business Preferred, Sapphire Preferred, or Sapphire Reserve, you can transfer your points between Ultimate Rewards accounts and redeem using that other card’s 25% travel bonus. This can increase the value of your points.

You could think of this card as the small business version of the Chase Freedom card.

Leveraging the 5% back bonus categories. Putting all of your small business cell phone, landline, and internet bills on the card and getting 5% back is pretty handy. For example, even just $200 a month x 12 months x 5% back is $120 back a year without changing your spending habits. Now let’s take the office supply store category and the fact that you can buy gifts cards to Amazon.com and other retailers at such office supply stores like Staples and OfficeMax… now you can effectively discount many of your other purchasing needs by 5% as well. Putting those purchases on such gift cards upfront can also help you meet the spending requirement for the bonus.

Many people aren’t aware of the fact that they can apply for business credit cards, even if they are not a corporation or LLC. The business type is called a sole proprietorship, and these days many people are full-time or part-time consultants, freelancers, eBay/Amazon/Etsy sellers, or other one-person business owners. This is the simplest business entity, but it is fully legit and recognized by the IRS. On a business credit card application, you should use your own legal name as the business name, and your Social Security Number as the Tax ID.

Note that Chase has an unofficial rule that they will automatically deny approval on new credit cards if you have 5 or more new credit cards from any issuer on your credit report within the past 2 years (aka the 5/24 rule). This rule is designed to discourage folks that apply for high numbers of sign-up bonuses. This rule applies on a per-person basis, so in our household one applies to Chase while the other applies at other card issuers.

Bottom line. The Ink Business Cash Card has a large sign-up bonus and ongoing features of 5X/2X categories with no annual fee. This card is best if you have significant expenses in the special 5% and 2% categories above. If you have certain other Chase credit cards, you can transfer Ultimate Rewards points over to those cards and increase your value. Be sure to compare with other Chase small business cards – Ink Business Preferred and Ink Business Unlimited.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Betterment Review 2018: Customized Asset Allocation, Human Financial Advisors

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

bment1707_0Updated April 2018 with custom ETF allocations. Betterment is an independent hybrid digital/human advisor that will manage a diversified mix of low-cost index funds and help you decide how much you’ll need to save for retirement. (By independent, I mean that they are not tied to a specific brand of funds like Vanguard or Schwab). Betterment is also an RIA, which means they have a legal fiduciary duty to keep client interests first. They frequently announce new features and improvements, so I will work to keep this feature list updated.

Diversified portfolio of high-quality, low-cost ETFs. Their portfolios are a diversified mix of several asset classes including: US Total, US Large Value, US Mid Value, US Small Value, International Developed, Emerging Markets, US Corporate Bonds, US Total Bond, Inflation-Protected Treasuries, Muni Bonds, International Bonds, and Emerging Market Bonds. For the most part, Vanguard and iShares ETFs are used.

The traditional Betterment portfolio has a more pronounced tilt towards the size premium and value premium than the cap-weighted indexes. You could argue the finer points of whether this will really create higher risk-adjusted returns, but overall it is backed by academic research. Betterment has also added a Socially Responsible Investing (SRI) portfolio option.

In April 2018, Betterment added Flexible Portfolios which lets you manually adjust the percentages of each asset class. As a DIY investor with assets spread across multiple accounts, this customization has been something I’ve been waiting for. This option is currently available only to clients with $100,000+ in assets.

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Both the SRI and Flexible Portfolio options will work with Tax Loss Harvesting and Tax Coordination features (see below).

Free access to human advice for everyone. In July 2017, Betterment announced that all of their customers can message a licensed financial experts. Digital members (0.25% annual fee) can ask questions any time via their mobile app. Digital members should expect an answer in approximately one business day. Betterment Premium members (0.40% annual fee) have unlimited e-mail and direct phone access to “Certified Financial Planner professionals”. From their press release:

Our experts can assist with deciding which funds to move to Betterment, setting goals (like saving for college, a house, or retirement), and identifying which Betterment tax features may be right. They can also help you make important investment decisions, like choosing risk levels, amounts to invest, and types of accounts.

Reading between the lines, Digital members get “licensed financial experts” while Premium members get “Certified Financial Planner professionals”. This suggests that while Digital members will still get fiduciary (client-first) advice, Premium members will get priority access to the more-experienced advisors in exchange for paying their higher fee.

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Retirement planning software with external account balances. RetireGuide is Betterment’s retirement planning software, first launched in April 2015. This service links your external accounts from other banks, brokerages, and 401k plans (similar to Mint and Personal Capital) in order to see your balances without having to manually input them. According to their methodology guide [pdf], they don’t analyze your transactions to estimate savings rate, they are just pulling in balances.

Example questions: How much do I have invested elsewhere? Am I saving enough money? How much estimated income will I have in retirement? Your future Social Security income is estimated for your based on your chosen retirement age and birthdate. You can change many of the variables as you like.

Account types. Betterment now supports taxable joint accounts, trust accounts, 401k rollovers, Traditional IRAs, Roth IRAs, SEP IRAs, and Inherited IRAs.

Tax-efficent asset location. Tax-Coordinated Portfolio will place different asset classes in your taxable accounts vs. tax-deferred accounts (IRAs, 401ks) for a higher after-tax return. In addition, if you have multiple types of accounts at Betterment (i.e. both IRA and taxable), it will manage multiple accounts as a single portfolio, placing assets that are taxed more into more favorably taxed accounts (like IRAs). Note that this only works across accounts that are held at Betterment. It does not adjust for non-Betterment accounts. This is called their Tax-Coordinated Portfolio (TCP).

Use dividends and new contributions to rebalance. They will use your dividends and new contributions to rebalance your asset classes in order to minimize sells and thus minimize capital gains.

Daily tax-loss harvesting. Betterment’s Tax-loss Harvesting+ (TLH+) software monitors your holdings daily and attempts to find opportunities to harvest tax losses by switching between “similar but not substantially identical” ETFs. If you can delay paying taxes and reinvest them, this can result in a greater after-tax return. The exact “tax alpha” of this practice depends on multiple factors like portfolio size and tax brackets. You can read the Betterment side of things in their whitepaper. Here is an outside viewpoint arguing for more conservative estimates.

My opinion is that there is long-term value in tax-loss harvesting and especially daily monitoring to capture more losses. However, I also think it’s wise to use a conservative assumption as to the size of that value. (DIY investors can perform their own tax-loss harvesting as well on a less-frequent basis. I do it myself, but it’s rather tedious and I’m definitely not doing it more often than once a year. I would gladly leave it to the bots if it was cheap enough.)

Invest your excess cash automatically. Automatic contributions are good, but perhaps you don’t want to commit to a set amount each month. (Ideally, you do commit to a set amount, and this service invests more money on top of that.) Called SmartDeposit, you link your checking account and choose your Checking Account Ceiling and Max Deposit amount. If your checking account balance goes above the ceiling, Betterment will automatically sweep over money and invest it for you. Betterment will account for future scheduled deposits so you don’t over-contribute.

Fee schedule. Betterment has a fee structure with two tiers.

  • Betterment Digital. No minimum balance. Digital portfolio management and guidance. Unlimited access to “licensed financial experts” via mobile app with ~1 business day turnaround time. Flat fee of 0.25% of assets annually. The management fee on any assets over $2 million is waived.
  • Betterment Premium. $100,000 minimum balance. Digital portfolio management and guidance. Unlimited access to “CFP professionals” financial experts” via e-mail or phone. Includes more in-depth advice on investments outside of Betterment. Flat fee of 0.40% of assets annually. The management fee on any assets over $2 million is waived.

In my opinion, the main concern of any outside advisor is the same: you are handing over control to someone else. Betterment could change their investment philosophy, their pricing structure, and feature set in the future. Digital advisors are constantly changing, and some of their new features could be great or it could just be a fad.

Bottom line. Betterment is an independent digital advisory firm with nearly $10 billion in assets, which means they aren’t tied to any specific brand of funds like Vanguard, Fidelity, or Schwab. Their main differentiators from the other independent firms (see my Wealthfront review) are (1) access to human advice available to all customers and now (2) the ability to customize your target asset allocation ($100k+ in assets). Other notable features include: Retirement planning software that syncs with external accounts, tax-loss harvesting, tax-coordinated portfolios (when you have both IRA/401k and taxable at Betterment), and SmartDeposit which automatically invests excess cash from your checking account.

Special offer. Open a new Betterment account and you can get your management fee waived for up to 1 year, depending on how much you roll over or deposit within 45 days of account opening. Here’s the breakdown:

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My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Amazon Prime Rewards Visa Signature Card Review: 5% Back at Amazon + Whole Foods

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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(Updated: Now with 5% back at Whole Foods for Amazon Prime members. Amazon recently announced free 2-hour delivery from Whole Foods in 4 US cities, with nationwide rollout expected later this year…)

Chase and Amazon have rolled out the Amazon Prime Rewards Visa Signature Card, a new credit card (not store card) available only to Amazon Prime members. Highlights:

  • 5% back at Amazon.com and Whole Foods Market for Amazon Prime members. If you stop your Prime membership, you’ll be downgraded to 3% back.
  • 2% Back at restaurants, gas stations, and drugstores.
  • 1% Back on all other purchases.
  • Sign-up bonus of variable amount based on each person’s account. I was offered a $70 Amazon Gift Certificate. Click on the “Apply Now” link to see your personalized offer, you’ll have time to stop the application.
  • No foreign transaction fees.
  • No annual fee.
  • Extended warranty protection. Extends the time period for the U.S. manufacturer’s warranty by an additional year, on eligible warranties of three years or less.
  • Purchase Protection. Covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.

Existing Amazon Rewards Visa Signature cardholder? If you have the original card and are an Amazon Prime subscriber, you should be “upgraded” to this new card automatically. You may see the change online first (your linked purchases will start earning 5% back instead of just 3% back) before you actually receive a new physical card.

Commentary. I recently did a Amazon Store Card review, about a retail card issued by Synchrony Bank that was only valid at Amazon.com. My overall opinion of this credit card is similar, except for the extended warranty protection. If you use gift cards to buy things at Amazon, you will forgo the extended warranty protection and purchase protection that many other credit cards offer. With this card, you will get the extended warranty protection and 5% cash back. How much is an extra year’s warranty worth? Depends on how many big-ticket items you buy at Amazon and how likely you’ll actually remember to use this benefit.

My rough rule of thumb is that a “hard” credit check can reliably net me at least $500 in value, usually from credit card sign-up bonuses but also potentially from bank bonuses and higher interest. It is very rare that I shop at any specific retailer enough to get $500 in savings. For example, it would take $10,000 of Amazon purchases at 5% back to net me $500 in cash back. (2% back at restaurants, gas stations, and drugstores only draws a yawn when I can get that much cash back on everything. 1% cash back on everything else… zzzz.)

Now, the addition of the 5% back at Whole Foods adds a wrinkle for those that shop at Whole Foods regularly. If you were only getting 2% back before, now 5% on the combined spending at Amazon and Whole Foods might become more compelling. (Amazon recently announced it will offer free two-hour delivery of Whole Foods groceries in four cities – Austin, Cincinnati, Dallas and Virginia Beach. The plan is to expand delivery nationwide later in 2018.)

For the casual Amazon shopper, 5% rotating category credit cards often have Amazon or a place that sells Amazon gift cards as an eligible category. Other cards like the American Express Blue Cash Preferred offer 6% back at grocery stores (that sell Amazon gift cards) or Chase Ink Business cards offer 5% back at office supply stores (that sell Amazon gift cards). Basically, there are other ways that I can stock up on Amazon gift cards at 5% off without having this card.

Bottom line. If you are a loyal Prime member that spends a lot of money at Amazon and/or Whole Foods and prefer simplicity, the Amazon Prime Rewards Visa Signature Card can add up to serious rewards. Be sure to make it your default card for your Amazon account. You can then track all your Amazon spending on one card, and also get extended warranty protection and purchase protection. As with any rewards credit card, you should always pay off your bill in full as the annual interest rate on balances is significantly higher than 5%.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Robinhood App Review: Free Stock Trades, Free Options Trading, No Minimum Balance

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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Updated. The Robinhood app just announced free Bitcoin trading, which expands their suite of services to the following:

  • Unlimited free stock and ETF trades with no minimum balance requirement.
  • Free options trading. No commission and no per contract fee, plus no exercise or assignment fees.
  • Trade Bitcoin & other cryptocurrencies, 24/7 & commission-free. I’m not into Bitcoin myself, but hey y’all are adults.
  • Sleek smartphone app (Android and iOS) + Robinhood for Web option + API integration.
  • Free real-time market data.
  • Free share of stock for new users with referral.

Also, check out this new Bloomberg article Brokerage App Robinhood Thinks Bitcoin Belongs in Your Retirement Plan.

Background. I’ve been Robinhood beta user since mid-2014. I was skeptical as I’ve been an long-time early adopter of free trading platforms (read: cheapskate investor). In August 2015, they rolled out both iOS and Android app and reported processing over 2 million free trades. As of 2017, they have over a million users and processed $30 billion in trades. According to Bloomberg, they recently raised money at a $1.3 billion valuation.

Application process. You must provide your personal information including Social Security number, net worth, income, investing experience, etc. This is the same as any other brokerage firm, but this may also be the first such account for many users. Everything was done online; there were no paper documents that required mailing or faxing.

Core features review.

  • Legit. Robinhood Financial is a member of the SIPC which protects the securities in your account up to $500,000. Data is encrypted with SSL. Apex is their clearing firm.
  • $0 commission trades. Yes, it works, all with no minimum balance requirement. You could open an account, put in five bucks, and buy a single share of Zynga (ZNGA) if you wanted to (maybe two on a bad day…).
  • Market orders, limit orders, stop limit orders, and stop orders available. Certain orders may be entered as good for the day or good till canceled (GTC).
  • Individual cash or margin accounts available.
  • Free options trading: No commission and no per contract fee upon buying or selling options, as well as no exercise or assignment fees. Level 2 self-directed options strategies (buying calls and puts, selling covered calls and puts) as well as Level 3 self-directed options strategies such as fixed-risk spreads (credit spreads, iron condors), and other advanced trading strategies are available.
  • Customer service details. You are encouraged to go through their e-mail “support@robinhood.com”, but they have added a phone number now during market hours (9:30am – 4:00pm EST) at (650) 940-2700.

Funds transfers. You can manually link any bank account with your routing number and account number, but you can also directly use your username and password at these banks: Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, Charles Schwab, PNC, Silicon Vally Bank, and USAA. ACH transfers are free and take approximately 3 business days (same as other brokerages). There is also a automatic deposits feature where you can schedule ACH transfers on a weekly, biweekly, monthly, or quarterly basis.

ACAT account transfers. Robinhood now accepts incoming stock transfers from outside brokerage accounts. To do this, go your app account menu, select “Banking”, then select “Stock Transfer” and follow the on-screen instructions. Incoming transfers are free. Outgoing transfers will incur a $75 fee.

Robinhood Instant. Robinhood Instant is a free upgrade that gets you a “limited margin account” that has the following features:

  • Immediate access to funds from selling stock. That means you can reinvest those funds without waiting two days for settlement. (All brokerage margin accounts offer this.)
  • Limited instant deposits. Use up to $1,000 of your pending bank deposits right away. No waiting 2-3 days for a bank transfer to complete.

What’s the catch? Getting free trades is great, but be aware of the following:

  • Although they announced that a web interface is available, I have been on the waitlist since early November (currently #600,000 in line). Full rollout is not scheduled until some time in 2018. Everyone can access their account via a mobile Apple iOS or Android device (iPhone, iPad, iPod Touch, Android phone, Android tablet).
  • There are unofficial sites that use the Robinhood API to provide web access, but I would be wary of sharing your login credentials with a 3rd-party.
  • I’m currently on a wait list for the free options trading as well.
  • Broker-assisted phone trades are $10 each, according to their fee schedule.
  • Electronic statements are the default and only free option. I don’t even see an option to enable paper statements in the app, but according to their fee schedule paper statements cost $5 a pop.

How do they make money? First, Robinhood will make some money the same way other brokers do: collect interest on your idle cash, charge you interest for margin loans, and sell order flow. The most innovative prospect is to the plan to sell API access to other financial apps.

The fact that Robinhood sells order flow may leave you with a slightly worse execution price as compared to other brokers with more complex order routing. If you are making large value trades, then this small percentage difference may add up to something significant that matters more than commission price. With my tiny order volume, I am fine with them selling my order flow if they are giving me commission-free trades.

Robinhood Gold is their premium service tier that gives you extending trading hours and interest-free margin for $10 a Month. My Robinhood Gold review.

User interface. Over the last 10 years, I’ve opened an account at the majority of the “discount” brokerage firms. I’ve had $0 trades before, along with $2 trades, $2.50 trades, $4.95 trades and so on. What makes Robinhood special is their modern, app-centric approach. I agree with this quote from Wired:

But the app’s simplicity is meant to be about more than style. Ease of access and understanding is meant to make Robinhood compulsively engaging for a new generation of investors that don’t find the stock market very accessible from the mobile screens at the center of their lives.

Screenshots.

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Recap. Robinhood delivers on their $0 stock trades promise with no minimum balance. The app interface is clean and intuitive. Customer service is on the lean side, but my requests were responded to within a day or so. They continue to make incremental improvements. They’ve been open to the public since March 2015, which is honestly longer than I expected. They announced a web interface on November 1, 2017. They announced free options trading in December 2017.

Sign up for Robinhood with my referral link and get a free share of stock, and I’ll get one too. Details on this promotion here.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

DietBet Review: Using Money To Motivate You To Lose Weight

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

dietbet180It’s that time of year, and since I eventually lost 50 pounds with the help of this and other weight-loss betting sites (and have kept it off since), and I wanted to share my experiences including both positive and negative aspects.

DietBet.com runs weight-loss challenges where I bet my own hard-earned cash that I could lose 10% of my body weight within 6 months. More specifically, a group of folks (strangers or friends) agreed on a weight loss goal, put money into a community pot, and the winners split the pot. Here’s a look back at how the process worked along with some helpful tips and detailed numbers.

Game basics. You pick from a list of available “games” that are starting soon. All of them have a goal of either losing 4% of your body weight in 4 weeks (Kickstarter), or 10% in 6 months (Transformer). I chose the 10% goal and picked the group with the most participants because Dietbet uses the poker rake model where the winners take money from the losers. This is smart because Dietbet doesn’t risk any of its own money (also doesn’t have any incentive for you to lose).

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Weigh-in rules and tips. Your weight is verified each round by uploading two pictures: one with your feet on a digital scale, and another of your entire (lightly-clothed) body on the same scale. You are given a special keyword to ensure that the weigh-in is done during a 48-hour window. Here are my tips:

  1. Use the smartphone app. Having the smartphone app made it so much easier to snap the pictures and upload with a few taps. iOS and Android only.
  2. Check the dates with your work schedule. During one of my weigh-ins, I was on the road. Dietbet says digital scales are “preferred” but the only thing at my hotel’s gym was a non-digital balance scale. My submission was still accepted. If my hotel gym didn’t have a scale at all, I would have had to search for a Wal-Mart or something.
  3. Know the rules and give yourself time for rejections. One of my submissions was initially rejected because I was wearing running shoes (in that same hotel gym) and I forgot that shoes aren’t allowed in the pictures. You only get a 12-hour grace period after a rejection to re-submit a qualifying weigh-in.

Overall, I felt that Dietbet was fair and quick when judging my weigh-in pictures. You may also be “audited” and be required to submit a video verification. I did not get audited.

Money details. The bet amounts can vary by game, but mine was for $25 a month times 6 months. I was offered one month free ($25 discount) if I paid $125 upfront, but since this is all about the behavioral component for me, I wanted the monthly charge to show up on my credit card bill. Players who have chosen to place their bets on a monthly basis may drop out at any time and avoid being charged for future, unplayed rounds.

There is one round per month; Rounds 1 to 6. Half of the total money bet is put towards Round 1 through 5. That is $25 x 6 / 2 = $75, split across 5 rounds is $15 per round. The other half is put toward the final weigh-in round. So $75 is bet on Round 6. Here’s a screenshot that shows my actual winnings from each round:

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  • Round 1 Breakdown: $16.09 (7% ROI on $15 bet)
  • Round 2 Breakdown: $26.94 (80% ROI)
  • Round 3 Breakdown: $31.36 (109% ROI)
  • Round 4 Breakdown: $31.50 (110% ROI)
  • Round 5 Breakdown: $30.42 (103% ROI)
  • Round 6 Breakdown: $152.87 (104% ROI)

I ended up winning $289.19, for a net win of $139.18. That’s a solid 93% return on my $150 initial bet! According to their documentation, the average “win” is 50% to 100% of your contribution. I would venture to guess that the 6-month games have a higher overall payout due to a higher difficulty level.

As noted above, Dietbet makes their money by taking a cut of the gross pot before distribution, between 10% to 25%. In a previous post, I erroneously assumed that the numbers being reported above were before fees were taken out. The numbers are actually net of fees. (You are always guaranteed never to lose money if you win, which otherwise technically could happen if enough people win.)

Your winnings can be withdrawn either via PayPal or paper check, but you have to pay a $5 fee and make special request for a paper check. When withdrawing via PayPal, you won’t pay any fees, and I was sent my money within a hour. Here’s screenshot proof of my winnings payout showing no fees.

Warnings. When signing up for a challenge, Dietbet will automatically add $20 of “Official Weigh-in Tokens” to your cart. These are not mandatory. I think using the word “Official” is misleading. They should use “Optional” or “Additional” instead. You should treat them as extra raffle tickets for prizes like Fitbits and such. If you want that, fine, but otherwise be sure to remove them otherwise it’s just wasted money.

Bottom line. I committed to a Dietbet Challenge to lose 10% of my initial weight over 6 months. You can see upcoming Dietbet games here. I lost the weight, completed my verifications without hassle, won the bet, and was paid my winnings. There were a lot of factors that helped me lose weight and change my eating habits:

  • Loss aversion is quite a strange thing. Even though 25 bucks a month isn’t all that much money, the prospect of losing it was a powerful motivator.
  • The Dietbet community board for my challenge was quite positive in supporting other people towards their weight-loss goals.
  • I created extra motivation by telling people about the challenge as I didn’t want to admit publicly to failure.

While Dietbet was not there to cook my healthy meals, exercise for me, or keep me away from the late-night Doritos, it was the missing catalyst that I needed to get my health back on track. For other people this might be a heart attack or other medical issue. I’m glad I didn’t have to wait for something like that. Even if I “lost” the challenge but also lost 5% of my body weight, I might have still seen it as an overall positive experience.

See my separate Healthwage Review, a similar service. You can do both at the same time.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Lemonade Insurance Review: Home & Renters Insurance With No Incentive To Deny Your Claim?

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

lemon_logoUpdated July 2018. Lemonade continues its rollout – see map above. Get a free quote from Lemonade and see if they are cheaper than your current homeowner’s or renter’s insurance policy. Feel free to leave a comment about whether they were more or less expensive at the same coverage and deductible level.

Right or wrong, many people view insurance companies with suspicion. Even though you pay them money every month for protection, you worry if you’ll actually get paid when you experience a problem. The problem is that with most insurance companies, every dollar they don’t pay you ends up in their pocket. The incentives are not aligned. Will they find a reason to deny your claim? Will they make it such a pain that you’ll just give up? Recall the Insuricare scene from the movie The Incredibles.

Lemonade is a new insurance company that takes a flat cut upfront, and the rest is put aside to payout claims. They are starting out with homeowner’s and renter’s insurance. The specific breakdown is below.

  • 20% to Lemonade.
  • 40% into a pool to pay out for claims (or charity).
  • 40% to reinsurance in case that pool is exhausted (catastrophic cases).

Reinsurance is basically what is sounds like – insurance for insurance companies. This provides additional safety that there will be money to pay out your claim in cases of catastrophic losses (i.e. certain natural disasters). Examples of reinsurance companies are Lloyd’s of London and Berkshire Hathaway.

If there are fewer claims than expected, Lemonade will donate the money to a charity of your choice. Therefore, they have no direct incentive to deny a valid claim. In turn, hopefully their customers will also not make false claims because they will only be taking money away from charities and not the big bad insurance company. When signing up, you even take a “honesty pledge”. Here’s how behavioral economist Dan Ariely, who is their “Chief Behavioral Officer”, puts it:

Knowing that every dollar denied to you in claims is a dollar more to your insurer, brings out the worst in us all… Since we don’t pocket unclaimed money, we can be trusted to pay claims fast and hassle-free. As for our customers, knowing fraud harms a cause they believe in, rather than an insurance company they don’t, brings out their better nature too. Everyone wins.

Lemonade is also structured as a Public Benefit Corporation (B-Corp), which makes it the “World’s Only Public Benefit Insurance Company”.

Update: In July 2017, TechCrunch reported that Lemonade made its first annual donation of $53,174 or 10.2% of first year revenues. So that’s 10% out of the 40% pool reserved for claims (or charity).

Lemonade also saves money with tech start-up tricks. No human salespeople. No brokers. No physical branches. Apply online. File your claim online. You can do nearly everything via smartphone app (iOS and Android) with a chat-based AI interface. (Fewer adjusters and customer service reps.) If you have to file a claim, you can take a video of the damage using their app and explain the situation.

It remains to be seen if they can truly disrupt the industry. In the meantime, they need competitive premiums. Uber would not be so successful if they weren’t also cheaper than traditional taxis.

Live Policy and Zero-deductible option. In September 2017, Lemonade rolled out a new option with a zero deductible. If you pick this option, you won’t have to pay any deductible and thus get the full value of even a smaller claim like a $250 bike or smartphone. Importantly, Lemonade also promises not to hike your premium after making a claim (you are limited to two claims per year). You can preview how much this option changes your premium with their “Live Policy” system where you can make changes to your policy instantly via the Lemonade app.

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As of July 2018, Lemonade offers renters, condo and/or homeowners insurance in Arkansas, Arizona, California, Connecticut, District Of Columbia, Georgia, Iowa, Illinois, Maryland, Michigan, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Wisconsin. Get a free online quote from Lemonade and compare with what you have now. Prices start at $35 $25 a month for homeowner’s insurance and $5 a month for renter’s insurance.

Also see: I asked for more clarification on how Lemonade differs from mutual insurance.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Wealthfront Review 2017: Feature Breakdown and Comparison

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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(Updated August 2017. Added details about Advanced Indexing (smart beta), portfolio line of credit (lower rates than HELOC), customized company stock sales, and 529 college saving guidance.)

Wealthfront is one of the largest independent digital advisory firms (i.e. not tied to a specific brand of funds like Vanguard or Schwab). With a younger target audience (20s to 40s), their offering is for folks that are comfortable having nearly all interactions via smartphone or website. They frequently announce new features and improvements, so I will work to keep this feature list updated.

Diversified portfolio of high-quality, low-cost ETFs. Their portfolios are a diversified mix of several asset classes including: US Total, US Dividend, International Developed, US Corporate Bonds, Muni Bonds, Emerging Market Bonds, REITs, and Natural Resources. For the most part, low-cost Vanguard and iShares ETFs are used. You could argue the finer points of a specific portfolio, but overall it is backed by academic research (Chief Investment Officer is Burton Malkiel).

Direct indexing. If your account is over $100,000, Wealthfront will buy all the stocks in the S&P 500 individually and commission-free. ETF expense ratios are pretty low now, so this is mostly used as an opportunity for more tax-loss harvesting. No other robo-advisor offers this feature. Here is whitepaper that details their position. As long as you meet the $100k minimum, there is no additional cost fee above the standard management fee.

Smart-beta. If your account is over $500,000, Wealthfront created Advanced Indexing as their answer to “smart-beta” investing. It works within its Direct Indexing feature in order to improve tax efficiency. As long as you meet the $500k minimum, there is no additional cost fee above the standard management fee.

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Financial planning software with outside account integration. Path is Wealthfront’s new financial planning software, launched in February 2017. This service links your external accounts from other banks, brokerages, and 401k plans (similar to Mint and Personal Capital) in order to see your entire picture without having to manually input your balances and transactions. How much do I have invested elsewhere? How much am I spending? How much am I saving? How much can I spend in retirement?

Path can forecast your saving rate using the last 12 months of transactions. Investment returns are estimated using Monte Carlo analysis. It also accounts for your household income, birthdate, and chosen retirement age to estimate how Social Security will affect your retirement income needs. You can change up the variables and see how it will affect your retirement outlook.

College Savings Planning. You can select a college for real-time expense projections, get a customized estimate of financial aid, and receive a personalized college savings plan to cover the difference. This works with or without their own Wealthfront 529 College Savings account.

Account types. Wealthfront now supports taxable joint accounts, trust accounts, 401k rollovers, Traditional IRAs, Roth IRAs, and SEP IRAs. They also offer a 529 College Savings account.

Tax-sensitive account transfers. This is good news if you already have an existing portfolio with unrealized capital gains. Other robo-advisors may have a “switch calculator” to help you decide whether to move over or not, but Wealthfront will actually accept your existing investments and manage it for you alongside your new investments.

If you want to switch advisors or move your brokerage holdings into a diversified portfolio, you typically have to sell all your holdings and move in cash. This means you will more than likely have a large tax bill. Instead of selling your holdings, Wealthfront will directly transfer them into a diversified portfolio tax efficiently, saving you that tax bill.

Tax-efficent asset location. They will place different asset classes in your taxable accounts vs. tax-deferred accounts (IRAs, 401ks) for a higher after-tax return. However, they do not treat them holistically (i.e. putting all one of one asset in IRA and none in taxable). Non-Wealthfront accounts are also not taken into consideration.

Use dividends and new contributions to rebalance. They will use your dividends and new contributions to rebalance your asset classes in order to minimize sells and thus minimize capital gains.

Concentrated holding of a single stock? Wealthfront caters to the tech start-up crowd with a unique Selling Plan service for people with much of their net worth tied up in a single stock. They’ll help you sell your positions gradually in a tax-efficent manner. Currently available to shareholders of: Alphabet, Amazon, Apple, Arista Networks, Box, Facebook, Pure Storage, Square, Twilio, Twitter, Yelp, Zillow.

Daily tax-loss harvesting. Wealthfront software monitors your holdings daily and attempts to find opportunities to harvest tax losses by switching between “similar but not substantially identical” ETFs. If you can delay paying taxes and reinvest them, this can result in a greater after-tax return. The exact “tax alpha” of this practice depends on multiple factors like portfolio size and tax brackets. You can read the Wealthfront side of things in this whitepaper and Schwab comparison. Here is an outside viewpoint arguing for more conservative estimates.

My opinion is that there is long-term value in tax-loss harvesting and especially daily monitoring to capture more losses. However, I also think it’s wise to use a conservative assumption as to the size of that value. (DIY investors can perform their own tax-loss harvesting as well on a less-frequent basis. I do it myself, but it’s rather tedious and I’m definitely not doing it more often than once a year. I would gladly leave it to the bots if it was cheap enough.)

Portfolio Line of Credit. If your taxable balance is over $100,000, Wealthfront will automatically give you a line of credit of up to 30% of your balance. There is no application, no fees, low interest rates, and you can get cash in as little as 1 business day. The rates are advertised to be even lower than a Home Equity Line of Credit (HELOC). Keep your loan balances modest though, as this is a margin lending product and they may force you to sell your investments if your outstanding balance exceeds your available margin.

Fee schedule. The fee schedule for Wealthfront is simple – Everyone gets charged a flat advisory fee of 0.25% of assets annually (first $10,000 waived). All of the features listed above are included. As your asset size increases, you get access to some additional features like Direct Indexing and Advanced Indexing (Smart-Beta).

Bottom line. Wealthfront is an independent digital advisory firm with over $7 billion in assets. Independent which means they aren’t tied to any specific brand of funds like Vanguard, Fidelity, or Schwab. Their main differentiators from the other independent firms (see my Betterment review) are (1) Direct Indexing and Advanced (Smart-Beta) Indexing portfolio management for optimal tax-efficiency and (2) customized assistance with transferring in your existing investments (including company stock) and then selling them tax-efficiently. Other notable features include: Financial planning software that incorporates external accounts, tax-loss harvesting, 529 college saving plan and guidance software, and a portfolio line-of-credit.

Special offer. Open a Wealthfront account via my invite link and get your first $15,000 managed for free, forever. This is an additional $5,000 above the standard $10,000 balance waiver. You can then invite your own friends for more savings (your friend gets $15k managed free as well, and you get another $5k managed for free.)

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.