Which platform should you choose?

Wealthfront vs. Vanguard: The Biggest Difference

Wealthfront and Vanguard offer retail investors a variety of investment options and account types.But although the vanguard is

online brokerage

with DIY and automated investing, Wealthfront only offers automated portfolio management.

It costs less to set up an automated investing account with Wealthfront ($500 minimum; $3,000 for Vanguard Digital Advisor and $50,000 for Vanguard Personal Advisor Services), but your overall investment options will be more limited than with Vanguard.

Vanguard is best for most types of investors as it provides access to stocks, ETFs, options, mutual funds, and more. If you’re a hands-off investor who strictly seeks robo-advice, Wealthfront is a better choice. The account also offers a type of investment that Vanguard’s equivalent doesn’t have: a crypto trust.

Is Fortune Front Right for You?

Wealthfront is an automated investing platform (aka “robo-advisor”) that offers individual and joint investment accounts, IRAs, 529 plans, trust and cash accounts.

It stands out from other popular automated accounts because its investment options go beyond ETFs; Wealthfront also offers crypto trusts (eg, Grayscale Bitcoin Trust [GBTC] and Grayscale Ethereum Trust [ETHE]) and index funds. It employs a variety of strategies—including tax loss harvesting, U.S. outright indices, risk parity funds, and Smart Beta investing—to create wealth for its users.

But keep in mind that you need a balance of at least $100,000 to use US Direct Indexing (formerly known as Stock-Level Tax Loss Harvest) and Risk Parity. You need at least $500,000 to purchase the Smart Beta Strategy. Wealthfront says Smart Beta is designed to increase your returns by more strategically weighting your portfolio’s investments.

As tax losses gain,

robo-advisor

Designed to minimize the taxes you owe by capturing losses in your portfolio. According to Wealthfront, the same is true for its U.S. outright index strategy, except that the strategy is designed to capture losses in stocks within the index. However, the goal of a risk parity fund is to increase your risk-adjusted return.

Is Pioneer right for you?

Dating back to 1975, Vanguard is an online brokerage with individual and joint accounts, automated investment accounts and managed portfolios, trusts, managed accounts, IRAs, and more.

Unlike Wealthfront, Vanguard offers a number of self-directed investment accounts. This means that you will make trading decisions for your account, not those who use robo-advisors.

The online brokerage also offers commission-free stocks, ETFs, and options, and you can trade with a self-directed account without meeting minimum account size requirements. You’ll primarily consider Vanguard’s Automation and Advisor Mentor accounts, Vanguard Digital Advisor and Vanguard Personal Advisor Services minimum accounts.

Wealthfront and Vanguard – Frequently Asked Questions (FAQ)

Is Vanguard better than Wealthfront?

Vanguard offers a wider range of investment types and accounts than Wealthfront. In addition, its product selection includes self-directed investment accounts and automated or advisor-directed accounts. For many investors, this is a better option.

On the other hand, Wealthfront is best for robo-forward investors looking to build wealth through automated investment accounts. Plus (and because Wealthfront is designed for robo-advisors), you’ll be able to take advantage of tax loss harvesting, direct indexing strategies, crypto investing, and more.

Your best option depends on your investment goals and preferences.

Is Wealthfront worth the fee?

It depends on what you are looking for. If you want the option to invest in assets like ETFs, index funds, and crypto trusts (and you don’t mind the $500 minimum and 0.25% fee), Wealthfront is a competitive option. The platform also offers tax loss collection, direct indexing, and more.

Costs also include fund fees ranging from 0.06% to 0.13%. Interest rates on the Portfolio Line of Credit (the product allows you to borrow up to 30% of your investment account) range from 3.15% to 4.40%.

If you plan to save for your child’s education expenses, you can turn on their automatic 529 plan. Fees for these accounts can be as high as 0.46%, but you’ll get tax-free withdrawals along the way.

Will you lose money on Wealthfront?

Yes.As with any investment platform that offers investments, any securities you buy are immune to market volatility and

volatility

.

How much does it cost to open a Vanguard account?

You do not need to meet the minimum requirements to open a Vanguard proprietary brokerage account. However, for automated investing, Vanguard Digital Advisor requires a minimum of $3,000 and Vanguard Personal Advisor Services requires a minimum of $50,000.

Is Vanguard suitable for beginners?

Both accounts are good options for beginners or those who do not want to trade without expert insight. The first is Vanguard Digital Advisor, which invests your money in a diversified portfolio of Vanguard ETFs. The expense ratio represents the additional annual fee a fund charges investors, and Vanguard’s ETFs average 0.6%

expense ratio

. In addition, this account has a minimum account balance of $3,000 and an annual fee of 0.20%.

Pioneer Personal Advisor Services, on the other hand, combines automated portfolio management with one-on-one advisor coaching.This account gives you access to Pioneer

trustee

Advisor, $50,000 minimum and 0.30% annual fee.

On the retirement front, Vanguard one-ups Wealthfront. Wealthfront only offers Traditional IRAs, Roth IRAs, and SEP IRAs. Vanguard offers these accounts in addition to SIMPLE IRAs, personal 401(k)s, and multiple all-in-one retirement funds.

Plus, it has a variety of resources—such as the Investor Education Library and the News & Views Center—that can help newbies and beginners get used to investing.