At Wealthfront, we want to help you build long-term wealth on your own terms. That’s why we’ve built a robust suite of accounts powered by automation, with the goal of keeping both your costs and taxes low. If you’re looking for guidance on which accounts are best suited to your needs and situation, we’re here to help. We’ve put together this handy cheat sheet of the highlights of our Cash Account, Automated Bond Ladder, Automated Investing Account, and Stock Investing Account.
Here’s what you need to know.
When to consider the Wealthfront Cash Account
The Wealthfront Cash Account is a high-yield cash account designed to help you earn more on your short-term money with no account fees until you’re ready to invest.
- How much you’ll earn: 4.50% APY through our partner banks1
- Level of risk: Lowest, compared to other Wealthfront accounts
- Insurance: Up to $8 million in FDIC insurance ($16M for joint accounts) through our partner banks
- Key features:
- Industry-leading APY
- Free same-day withdrawals, even on weekends and holidays
- Unlimited transfers
- Compatibility with your favorite payment apps (Venmo, CashApp, PayPal, Apple Pay, Google Pay)
- Free wire transfers
- Send and deposit checks
- Debit card with two ATM fee reimbursements per month (up to $7.50 each) and access to 19,000+ free ATMs
- Account and routing numbers so you can set up direct deposit (and get paid up to two days early) and pay bills
- Automated savings plans and categories to automate and organize your savings
- No account fees
- Good for: We built the Cash Account to be an ideal home for your short-term cash until you’re ready to invest. Because your funds are easily accessible, even on weekends and holidays, it’s also a great place to let your cash earn a high APY up until the moment you need it. When you need to pay bills, your credit card, or even your mortgage, you can do so directly from your Cash Account. And if you’re saving for specific expenses, you can organize your cash into categories and even set up an automated savings plan to take the work out of saving for your goals.
- Additional considerations: When you’re ready to invest, the Cash Account makes it easy to get into the market in minutes. And in the coming months, we’ll be rolling out even more new features that make it easier to manage your finances with a partner.
When to consider a Wealthfront Automated Bond Ladder
Wealthfront’s Automated Bond Ladder is a portfolio of low-risk US Treasuries, designed to earn you a steady yield in any rate environment, with no state income taxes so you can keep more of the interest. The Automated Bond Ladder takes the hassle out of bond ladders, a time-tested but labor-intensive strategy.
- Expected returns: US Treasury rates. Interest from US Treasuries is exempt from state and local taxes. Learn more about the average yield you could earn and how much more you could take home after taxes (compared to a fully taxed account like a savings account or CD) with our calculator.
- Level of risk: Very low. US Treasuries are backed by the full faith and credit of the US government and are considered among the safest investments in the world.
- Account protection: Up to $500K in SIPC coverage
- Key features:
- Steady yield from US Treasuries
- Exempt from state and local taxes
- Lock in current rates at purchase for 3 months to 6 years
- Choose to automatically reinvest or withdraw your funds with no early withdrawal fees (although selling before maturity can result in reduced yield)
- Low 0.25% annual advisory fee (waived for 6 months on your first Automated Bond Ladder for a limited time)
- Good for: Wealthfront’s Automated Bond Ladder can help you earn more than most savings accounts and some CDs on your extra cash with zero state taxes. It may be a good choice if you’re looking for new ways to grow your extra cash without paying state taxes, you’re not ready to invest in the stock market, or you’re saving for an important future expense like a home down payment. Our Automated Bond Ladder can also help you “lock in” an interest rate on your savings, which can be valuable if you expect interest rates to fall in the future.
- Additional considerations: If you prefer to invest in bond ETFs over owning US Treasuries, you can invest in Wealthfront’s Automated Bond Portfolio instead.
When to consider a Wealthfront Automated Investing Account
Wealthfront’s award-winning Automated Investing Account is designed to help you build long-term wealth with a diversified portfolio of low-cost index funds that’s optimized to your risk level, as well as minimize your taxes.
- Expected returns: Investment performance is impossible to predict, but you can view historical returns by risk score here. Equities (which comprise a significant portion of Wealthfront’s Automated Investing Accounts) have historically outperformed bonds and cash over the long term.
- Level of risk: Your Automated Investing Account is optimized to your risk tolerance. In general, the Automated Investing Account has a higher level of risk and, as a result, higher long-term expected returns than the Cash Account or Automated Bond Ladder. Because it is a globally diversified portfolio of index funds, the Automated Investing Account carries less exposure to risk than purely investing in individual stocks. Risk is also related to your investing timeline.
- Account protection : Up to $500K in SIPC coverage
- Key features:
- Expert-built portfolios (Classic, Socially Responsible, and Direct Indexing options)
- Tax-Loss Harvesting (an advanced tax savings strategy) at no additional cost
- Global diversification
- Fully customizable asset allocations
- Automated trades
- Automated tax-sensitive rebalancing
- Portfolio Line of Credit (borrow up to 30% of your portfolio in minutes)
- Low 0.25% annual advisory fee
- Good for: We suggest using an Automated Investing Account to build long-term wealth (which, to us, means at least 3-5 years in the future) or just to grow savings that you know you won’t need for a while. These accounts are flexible and liquid––there are no penalties for withdrawals, meaning you don’t have to worry about “locking up” your savings. You can use an Automated Investing Account to save for things like retirement, a child’s education, or even a home renovation. It can be tempting to keep your long-term savings in cash, but investing them means you’ll likely get higher long-term returns. And earlier you start, the more you can potentially benefit from compounding. Keep in mind that investing in the market involves risk and the possible loss of principal, although that risk generally declines the longer you stay invested.
- Additional considerations: If you prefer to use a tax-advantaged account to save for retirement or a child’s education, Wealthfront also offers IRAs (traditional, Roth, and SEP) and a 529 college savings plan.
When to consider a Wealthfront Stock Investing Account
Wealthfront’s Stock Investing Account lets you discover and invest in individual companies and ETFs that might not be on your radar, plus the ones you already know and love, with fractional shares and no commissions.
- Expected returns: As we explained above, investment performance is impossible to predict. This is especially true for individual stocks versus a diversified portfolio.
- Level of risk: Highest. Picking stocks is a riskier way to invest.
- Account Protection: Up to $500K in SIPC coverage
- Key features:
- Build your own portfolio with thousands of stocks and ETFs to choose from
- Fractional shares
- No commissions
- Automated trades
- Collections of stocks built around investing themes
- Built-in data and perspectives
- $1 minimum
- No advisory fee
- Good for: The Stock Investing Account allows you to invest directly in stocks and ETFs. You can either start with a stock or ETF you’re excited about and build a portfolio around it, or explore and discover stocks through the lens of investing themes, much like a music playlist might help you discover your new favorite song. We’ll also help you dig into the details with information about the potential opportunities and tradeoffs of those collections.
- Additional considerations: We act in clients’ best interests in everything that we do, so unlike many other investment apps and brokers, we don’t encourage or support frequent trading or make money from payment for order flow. We also require you to hold at least three stocks in your Stock Investing Account. As a rule of thumb, we suggest using passive index funds to help build long-term wealth, and limiting individual stocks to no more than 10% of your investments.
Build long-term wealth on your own terms
We’re delighted to offer you a suite of accounts to choose from to help you build and grow your wealth over time, whether you’re comfortable with a little bit of risk or a lot. In the coming months, we’ll be releasing additional product enhancements designed to help you lower your tax bill and keep more of what you earn. Stay tuned!
Disclosure
1 The Cash Account Annual Percentage Yield (APY) is as of 09/30/24. The APY may change at any time, before or after the Cash Account is opened. The APY for the Wealthfront Cash Account represents the weighted average of the APY on the aggregate deposit balances of all clients at the program banks. Deposit balances are not allocated equally among the participating program banks.
Fees and Eligibility requirements may apply to certain checking features, please see the Deposit Account Agreement for details.
The mention of “Award winning” in this article refers to Investopedia’s Best Robo-advisor, 2024 award. Investopedia receives cash compensation for referring potential clients to Wealthfront Advisers, LLC (“Wealthfront Advisers”) via advertisements placed on their website which could create an incentive creating a material conflict of interest. While they receive compensation for referring potential clients, the statements and rankings provided above represent independent endorsements by Investopedia, which are not directly tied to such compensation. Investopedia and Wealthfront Advisers are not associated with one another and have no formal relationship outside of this arrangement. Investopedia’s opinions are their own. Their ratings are determined by their editorial team. Investopedia is not a client of Wealthfront Advisers.
Investopedia designed a system that rates robo-advisors based on nine key categories and 59 variables. Each category covers critical elements users need to thoroughly evaluate a robo-advisor. The ratings reflect data and evaluations for the 12-month period ending in February 2024. Learn more about their methodology and review process: https://www.investopedia.com/robo-advisor-ranking-methodology-4693455. Investopedia ranking as of March 2024.
FDIC insurance: The cash balance in the Cash Account is swept to one or more banks (the “program banks”) where it earns a variable rate of interest and is eligible for FDIC insurance. FDIC insurance is not provided until the funds arrive at the program banks. FDIC insurance coverage is limited to $250,000 per qualified customer per banking institution. Wealthfront uses more than one program bank to ensure FDIC coverage of up to $8 million for your cash deposits. For more information on FDIC insurance coverage, please visit www.FDIC.gov. Customers are responsible for monitoring their total assets at each of the program banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits at program banks are not covered by SIPC..
Real-Time Payments (RTP) transfers: These may be limited by destination institutions, daily transaction caps, and by participating entities such as Wells Fargo and the RTP® Network. New Cash Account deposits are subject to a 2-4 day holding period before becoming available for transfer. Wealthfront doesn’t charge for transfers, but receiving institutions may impose an RTP fee.
ATM access and transactions: Fee-free ATM access applies to in-network ATMs only. The domestic out-of-network ATM fee reimbursement program (the “Program”) allows Wealthfront Brokerage clients with open and funded individual Wealthfront Brokerage Cash Accounts (“Cash Account”) who have requested and received an accompanying debit card (“Debit Card”) issued by Green Dot Bank (“Green Dot”) to be eligible for certain account benefits when using their Debit Card for a domestic out-of-network ATM cash withdrawal of U.S. dollars (“ATM Transactions”). In order to maintain eligibility for this Program, all your Wealthfront accounts and Green Dot accounts (collectively, “Accounts”) must remain in good standing and your Cash Account and Debit Card must remain open and active.
Each calendar month, current eligible clients with ATM Transactions will receive a reimbursement of certain fees associated with their first two ATM Transactions. Wealthfront Brokerage will utilize its best efforts to reimburse Green Dot’s $2.50 “out-of-network fee” and up to $5.00 of any operator or owner’s fee for your ATM Transactions, up to a maximum reimbursement of $7.50 per ATM Transaction (the “Reimbursement”). Your maximum total monthly Reimbursement shall be $14.50 ($7.50 + $7.50). If an ATM operator charges fees other than out-of-network fees and/or owner’s fees, Wealthfront Brokerage will not reimburse any portion of those fees. Once the maximum total monthly Reimbursement has been reached, no subsequent out-of-network ATM fees or charges that occur that calendar month will be reimbursed.
Your Reimbursement(s) will be credited to your Cash Account typically within one business day, though this timing is not guaranteed (“Reimbursement Date”). To receive the Reimbursement, your Cash Account must remain open until after the Reimbursement Date or you will forfeit any pending Reimbursement(s). If any of your Accounts are placed under review or are deemed not in good standing by Wealthfront Brokerage, Wealthfront Advisers and/or Green Dot, you may not be eligible to earn or receive Reimbursement(s) during the time your Account(s) are in such status. ATM Transactions completed before September 16, 2024 shall not be eligible for Reimbursement in connection with this Program. See full Terms and Conditions here.
Early direct deposit: The availability depends on payor type, timing, payment instructions, and bank fraud prevention measures and may vary from pay period to pay period. The name and Social Security number on file with your employer or benefits provider must match your Account to prevent fraud restrictions on the account.
Additional Cash Account disclosures: We’ve partnered with Green Dot Bank. The checking features offered on your Wealthfront Cash account are provided by and the Wealthfront Visa® Debit Card is issued by Green Dot Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa International Service Association. Checking features for the Cash Account are subject to identity verification by Green Dot Bank and the Wealthfront Visa® Debit Card is optional and must be requested. Wealthfront products and services are not provided by Green Dot Bank. Green Dot Bank operates under the following registered trade names: GO2bank, GoBank and Bonneville Bank. All of these registered trade names are used by, and refer to, a single FDIC-insured bank, Green Dot Bank. Deposits under any of these trade names are deposits with Green Dot Bank and are aggregated for deposit insurance coverage. Fees and Eligibility requirements may apply to certain checking features, please see the Deposit Account Agreement for details. Copyright 2024 Green Dot Corporation. All rights reserved.
Apple Pay, Face ID and Touch ID are trademarks of Apple Inc. Google Pay is a trademark of Google LLC.
Cash Account is offered by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a Member of FINRA/SIPC. Neither Wealthfront Brokerage nor any of its affiliates are a bank, and Cash Account is not a checking or savings account. We convey funds to partner banks who accept and maintain deposits, provide the interest rate, and provide FDIC insurance. Investment management and advisory services–which are not FDIC insured–are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and financial planning tools are provided by Wealthfront Software LLC (“Wealthfront”).
For more information about wires, visit www.wealthfront.com/legal/online-transfer-agreement.
Automated Bond Ladder: Investing in U.S. Treasuries involves risks, including but not limited to interest rate risk, credit risk, and market risk. While U.S. Treasuries are considered to be among the safest investments, they are not entirely risk-free, and there is a potential for loss of principal. Returns on U.S. Treasuries can also be affected by changes in the credit rating of the U.S. government, although such occurrences are rare. Investors should consider their tolerance for these risks and their overall investment objectives before investing in U.S. Treasuries. Past performance does not guarantee future results.
The yield earned from U.S. Treasuries is exempt from state and local income taxes. However, interest income from Treasuries is subject to federal income tax. Tax treatment may vary depending on your individual circumstances. To understand implications for your specific financial situation, consult with a tax professional.
Tax-Loss Harvesting: The effectiveness of the tax-loss harvesting strategy to reduce the tax liability of the client will depend on the client’s entire tax and investment profile, including purchases and dispositions in a client’s (or client’s spouse’s) accounts outside of Wealthfront Advisers and type of investments (e.g., taxable or nontaxable) or holding period (e.g., short-term or long-term).
Wealthfront Advisers’ investment strategies, including portfolio rebalancing and tax loss harvesting, can lead to high levels of trading. High levels of trading could result in (a) bid-ask spread expense; (b) trade executions that may occur at prices beyond the bid ask spread (if quantity demanded exceeds quantity available at the bid or ask); (c) trading that may adversely move prices, such that subsequent transactions occur at worse prices; (d) trading that may disqualify some dividends from qualified dividend treatment; (e) unfulfilled orders or portfolio drift, in the event that markets are disorderly or trading halts altogether; and (f) unforeseen trading errors. The performance of the new securities purchased through the tax-loss harvesting service may be better or worse than the performance of the securities that are sold for tax-loss harvesting purposes.
Tax loss harvesting may generate a higher number of trades due to attempts to capture losses. There is a chance that trading attributed to tax loss harvesting may create capital gains and wash sales and could be subject to higher transaction costs and market impacts. In addition, tax loss harvesting strategies may produce losses, which may not be offset by sufficient gains in the account and may be limited to a $3,000 deduction against income. The utilization of losses harvested through the strategy will depend upon the recognition of capital gains in the same or a future tax period, and in addition may be subject to limitations under applicable tax laws, e.g., if there are insufficient realized gains in the tax period, the use of harvested losses may be limited to a $3,000 deduction against income and distributions. Losses harvested through the strategy that are not utilized in the tax period when recognized (e.g., because of insufficient capital gains and/or significant capital loss carryforwards), generally may be carried forward to offset future capital gains, if any.
Portfolio Line of Credit is a margin lending product offered exclusively to clients of Wealthfront Advisers by Wealthfront Brokerage LLC. You should consider the risks and benefits specific to margin when evaluating your options. Learn more about these risks in the Margin Handbook. PLOC eligibility is subject to a minimum account balance which is subject to change.
Other disclosures: The information contained in this communication is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as a solicitation, offer or recommendation to buy or sell any security. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront Advisers, Wealthfront Brokerage or any affiliate endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.
All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Please see our Full Disclosure for important details.
Wealthfront Brokerage is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. It is important to understand that SIPC protects customer accounts against losses caused by the financial failure of the broker-dealer, but not against an increase or decrease in the market value of securities in customers’ accounts.
Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products, including the Cash Account, are provided by Wealthfront Brokerage LLC, a Member of FINRA/SIPC.
Wealthfront, Wealthfront Advisers and Wealthfront Brokerage are wholly owned subsidiaries of Wealthfront Corporation.
Copyright 2024 Wealthfront Corporation. All rights reserved.
About the author(s)
Dave Myszewski is the Vice President of Product at Wealthfront where he oversees product development, consumer research, and client support. Prior to Wealthfront, Dave worked at Apple for 12 years including an engineering role on the first iPhone. Dave holds an MS and BS in Computer Science from Stanford University. View all posts by Dave Myszewski