Robots Got Me To Start Investing

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Whether it be spending half an hour to write a simple email, waiting until I had the perfect desk set up before I started working, or spending an hour in Sam’s Club trying to buy all the things in order to get my money’s worth. Yes, I definitely need that 30 pack of paper towels. Err…

My Type A tendencies are partly to blame. My personality seems to prefer when things are organized, put together, and backed with several hours of research.

This bad habit somehow trickled into my retirement planning. I read several (read: dozens) of blog posts about ways to save for retirement, different accounts to have, how to maximize, amounts to save and so forth.

I gobbled all the information up and had a craving of curiosity for more. I read more about the different types of investments to buy and why low-cost index funds were great. I stared at so many graphs showing the importance of compound interest that I started having dreams about it.

It felt great reading all of it! I was inspired and went out and set up a Roth IRA account with Fidelity. I felt semi-obligated into opening an account with them because my 401k with my then employer was there and I wanted to keep the accounts under the same branch.

Then, for the next several months, my Roth IRA just…sat there. I was contributing to it but the money wasn’t invested in anything because I didn’t have the minimum investment amount to buy into any funds.

Most of the funds Fidelity offered required a $2,500 minimum to invest. I wasn’t near that, given my situation. My quick thinking made Vanguard pop into my head. Lots of people in the personal finance blog world use them! Awesome! I’ll switch to them! Nope. Vanguard required a minimum to invest for many of their funds. The only way to get around the minimums was to enable auto-deposits, which I couldn’t do.

I looked up ways on how to invest with little money, not expecting to find anything worthwhile.

I was still under the assumption I needed a good sum of money before I could invest. When I found a robo advisor, like Wealthfront, I found out the possibilities of being able to invest with a small amount.

Holy moly. These things can be really awesome! Robo-advisors make investing less scary.

After reading countless articles on investing to make myself more comfortable with it, I realized I’m more of a hands-off type of investor. At least for now. No matter how much I read about index funds and ETF’s, I still don’t feel comfortable buying them and rebalancing my portfolio myself.

When I finally realized this. I went out to find the robo-advisor to go with. While there are many, the two big ones are Betterment and Wealthfront. It seems like eeeevery PF blogger has covered Betterment. So I knew a lot about them already from the many articles I had already read.

Ultimately I ended up choosing Wealthfront. 

Wealthfront won out over Betterment due to their fee structure. Betterment charges $3 per month for accounts under $10,000. 0.35% for account under $10,000 and $100/month auto-deposit enabled. The fees drop to 0.25% after $10,000 account balance and 0.15% after $100,000 account balance.

Wealthfront’s fee structure was more simplified. The first $10,000 is managed for free. Then it’s 0.25% afterwards. I signed up through a referral and was able to get my first $15,000 managed for free! Whooo!

I love it. With my first $15,000 being managed for free, I’m just paying the ETF fees (which average 0.12%). So I’m getting the simplicity and peace of mind of having a robo-advisor without having to pay the additional fee for the service (at least right now).

Setting up the account was super easy. I answered 10 or so questions relating to my age, when I want to retire, risk tolerance, and goals. The Wealthfront account dashboard was really well designed and laid out. Everything was easy to find and visually appealing.

They even had cool charts showing what my contributions could turn into over time. Everything about the setup felt way better than Fidelity’s interface. Even the mobile app feels better!A robo advisor got me to finally stop procrastinating about investing

A robo advisor got me to finally stop procrastinating about investing

A great thing about robo-advisors is the low minimum required get started investing. Wealthfront only requires $500 to get started. Betterment has no account minimum. This is great for people who know they should get started investing, but don’t have the $2,500 or $3,000 that many brokerages require. A lot of people say they can’t invest because they don’t have enough money. Robo-advisors, like Wealthfront and Betterment, are a way around this problem

I was able to let go of my restlessness from waiting around while I grew my savings enough to meet the minimum balance at Fidelity. Now I’m investing! Finally!

Do you use a robo-advisor for investing? What are some of the pros and cons to robo-advisors? 

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Colin // RebelwithaPlan

Colin Ashby is the writer behind Rebel with a Plan, a website dedicated to people who choose to rebel against the norm of living in debt and feeling financially unenlightened. He believes everyone has an eccentric quality to embrace and that lattes are sometimes a necessity (despite what the personal finance community tells you).

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