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Saturday, February 17, 2018

The Decision to Finally Start Using a Robo Advisor (Wealthfront)

I feel like I've been stalking Wealthfront. I've been following the company for years. Wealthfront is a Robo Advisor. In other words they do what a financial advisor would generally do but in a automated, less expensive way. You give them your money, they ask you a bunch of questions, you tell them your risk tolerance and they invest it in a mix of stocks, bonds etc using software and algorithms.

Ever since I got my first big boy job, I've been a student of personal finance. For a long time though, after learning the basics, my wife and I were focused on cash flowing grad school, paying off any debt and building an emergency fund that could last six months. After all my research I believe those are important steps before investing (besides your 401k). I also believe that looking for low fee, long term investments are your best bet for building wealth through investing. Even after we had a little bit of money to invest, I was hesitant, but at the beginning of the year decided to start investing in Wealthfront and here is why.

1. Their executives/company seem to believe in sound financial principles. I follow their executives on Twitter and read their blog. After consuming their content for years, I believe their leadership teams investment philosophies are pretty aligned with mine.

2. I was not doing a good job on my own. While you can do a lot of figuring out what your risk tolerance is on your own and buy into a bunch of different stocks and bonds etc (which can be cheaper), I just was not doing it. It took too much time. Wealthfront makes it pretty easy. I had more than I needed for my emergency fund sitting on a online bank account making a lowly 1.5% interest. It was time to put that money to work.

3. The first $15,000 is managed for free. That takes a lot of the risk out of trying it, so at the beginning of the year I gave it a go. It's actually the first $10,000 is free, but if you sign up with someone's referral link they get $5,000 more managed for free and so do you. Shameless plug, if you need a referral link you can use mine.

How's it going so far? Not bad, but I put my money right before the last correction, so I'm down a little but not much. Does not bother me though, I'm in it for the long haul and will continue to put money in each month. Wealthfront has been really easy to use. Happy with my experience so far.

I'm interested to learn about other people's experiences, so please post it in the comments.

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