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What financial planning basics should you consider to maintain a healthy financial life? Join the conversation on common financial planning strategies on education, retirement, taxes and estate planning.



You Don’t Need to be a Parent to Benefit from 529 Accounts

When I learned that our investment team, a group of talented PhDs, was helping our clients with the problem of saving for their children’s future college education and building our own tax-advantaged 529 college savings plan, I was excited because I have two eight year old girls and I still hadn’t started a 529 plan for them. Now I have one for each of them. Get Ahead of the Chaos Parenthood Brings Since launching our own 529 College Savings Plan, we have spoken with many clients who found clever ways to save on taxes today, while simultaneously saving more towards their future financial goals. These clients know that one of the beautiful things about 529s is that, whether you already […]

Your 2016 Year-End Personal Finance Checklist

Unfortunately, it’s human nature to push off thinking about personal finances until the end of the year, if at all. If this describes you, don’t despair! There’s still time left before 2016 draws to a close to make some meaningful decisions, which is why we put together a checklist of important tasks you should consider before the New Year. Top off your emergency fund Give yourself and your family the gift of an emergency fund. We typically suggest you set aside three to six months of your monthly spending, but everyone’s situation is different. To help determine what’s right for you, we suggest you read Build the Emergency Fund That’s Right for You. Our recommendation is to keep your emergency […]

Navigating Taxes for the Self-Employed

If you’re one of the many people who work as an independent contractor or self-employed individual, you’ve probably wondered if you’re doing the right thing when it comes to your tax returns.  Are there tax benefits you’re missing out on?  Should you form a business entity?  These are common questions and the answers will vary depending on circumstances.  Let’s explore some basic guidelines for dealing with taxes when you’re self-employed. What’s deductible? I tell my clients that nearly every dollar you spend in relation to your business is tax deductible in some fashion.  There are three keys to remember for staying out of trouble: Expenses should be ordinary and necessary. You can’t deduct personal expenses. Don’t spend more money than […]

Let Wealthfront Help You Save for College

We are pleased to announce that after weeks of internal testing we are ready to make the Wealthfront 529 College Savings Plan available to everyone. We are so excited about this new plan because we think 529s are the best type of account Congress has provided to parents who are saving to help pay for the college expenses of their loved ones. Why? Because they allow your investments to grow tax-free, so long as they are used for qualified higher education expenses, which include tuition, fees, books, computers and a variety of other expenses. Unfortunately, three out of every four Americans have never heard of a 529 and the plans are therefore being underutilized. A recent Sallie Mae study shows […]

Not all software is created equal

I am constantly amazed at how often people ask me, “Why can’t any bank or broker with a large budget hire a bunch of engineers and easily replicate Wealthfront?” The answer is simple: not all software is created equal. If it were, you probably wouldn’t be doing all your searches on Google and buying most things from Amazon. We believe our software is simply better than our competitors’. Real World Example: Tax-Loss Harvesting A great example of our superior software is tax-loss harvesting, an important feature Wealthfront pioneered in October 2012. The goal of our daily tax-loss harvesting service is to minimize investment taxes for our clients. The service does this by selling securities that are trading at a loss […]

Financial Advice for Young Lawyers in Debt

What to Do First? Invest or Pay off Debt? Among the many decisions facing young professionals as they embark on their careers is how to begin a lifetime of financial planning. And young attorneys have an especially tough call. Most of them leave law school with significant student debt, but without the sort of starting salary necessary to quickly pay off their loans. At the same time, they are usually smart enough to appreciate that they need to start saving for major life events, including a home, college for their children, and their own retirement. So what to do? Pay off their loans, or start in on a nest egg? The answer for young lawyers, just like it is for […]

The Miracle of Compound Interest

Your Most Powerful Investment Ally is Time If you’ve ever heard compound interest described as “the most powerful force in the universe,” it’s probably on account of a quote to that effect attributed to Albert Einstein. As it happens, the quote itself is probably an urban legend. But if Einstein didn’t make such a reference, (or, as an alternative version has it, call compound interest “the most important invention of all time,”) it was probably because he was too busy with E=MC2 to give the matter much thought. E=MC2 is the formula that describes converting mass into energy. Compound interest, by contrast, is the formula that describes converting time into money. Lots and lots of money. Compounding Turns Time Into […]

The Right Way and the Wrong Way to Benchmark a Diversified Portfolio

One of the biggest challenges for an investor is to determine how well her diversified portfolio is performing. The two most common benchmarks featured in published advice are: S&P 500 A 60/40 Stock/Bond portfolio Unfortunately, most published advice is incorrect. That’s because it usually encourages comparison to an irrelevant index or too generic of a model portfolio. In our opinion, the right way to benchmark a diversified portfolio is to take into account risk and taxes. Let’s Start with Indexes Most individual investors think they should benchmark their diversified portfolios against a stock index like the S&P 500®. That’s probably because such indexes are the only indexes with which they are familiar or the only indexes their financial advisors used in […]

It’s About Automation, Not Fees

Automated investment services are successful because they are automated, not because they are low priced. They are low priced because they are automated, but that’s not why most people choose them. Broadly, preference for automation is a generational thing, much like music. Baby Boomers who grew up on rock ‘n roll didn’t transition their musical taste to classical when they got older. They were conditioned as a generation to like a particular style of music, and stuck with it. We believe the same is true for the way people interact with the Internet. While older people like the convenience of the Web, they also like talking to people “in person.” In contrast young people who grew up “digitally native” prefer […]

529 Series, Part 2: The Benefits of Superfunding

On June 1, 2016, Wealthfront announced its new 529 College Savings Plan. This post is the second in a three-part series updating our previous advice on saving for college using 529 plans. This post is based on an original 2014 post by Adam Nash. One of the largest financial obligations that many parents decide to take on is funding their child’s college education. With the current four-year cost of a California public education at UCLA at $136,000 and a private education at Stanford at $267,000, this can be a daunting task even for professionals with high-paying careers. The 529 plan is the most popular of several deferred savings plans for college. While contributions to a 529 plan are not deductible […]