Money For the Rest of Us Are Robo Advisors Worth It Even With Tax Loss Harvesting and Direct Indexing?
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Jun 25, 2025 Explore how robo-advisors have transformed over the years and if their fees are worth it. Discover the top players in the market and why direct indexing is gaining traction for tax loss harvesting. Dive into the nuanced benefits of tax strategies and how they can enhance your investment returns. Learn who can truly benefit from using robo-advisors and the role of customization and technology in optimizing financial strategies. It's a deep dive into making informed investment decisions!
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How Robo-Advisors Work
- Robo-advisors automate portfolio allocation and management using ETFs based on risk profiles.
- They provide automated rebalancing and tax-loss harvesting to reduce taxable income.
Robo-Advisors' Massive Growth
- Robo-advisor assets grew from $10 billion to $700 billion in a decade, showing investor acceptance.
- They mainly use low-fee ETFs and offer diverse portfolios with varied strategies.
Robo-Advisor Fee Structures
- Fee structures vary: Vanguard charges 0.15%-0.2%, Schwab 0% but holds 8% cash with lower yield.
- Wealthfront and Betterment charge 0.25% and offer tax loss harvesting services.