You know how people say the best things in life are free? It turns out, they might have been talking about investing – as long as they’ve been using WiseBanyan, a robo-advisor that opts out of management fees entirely.
What is WiseBanyan?
WiseBanyan is one of the new crop of robo-advisors working to make sure people have access to effective, low-cost investing methods. They base their investing decisions, and build their clients’ portfolios, on trying to match the market’s performance, not beat it. To do that, they build you a diversified portfolio made up of exchange-traded funds. That way, you’re exposed to so many stocks and bonds that you might as well own little pieces of the whole market – so if one stock tanks, your portfolio will be just fine.
They also build up different portfolios based on your goals, so if you’re all “bring on the risk!” they can make sure your portfolio is as close to Daredevil as you can get outside of Hell’s Kitchen. If you’d prefer a lower-risk approach? They’ve got you covered, too.
Turning the industry on its head
Most of the businesses in the investing industry today – yes, even most robo-advisors – operate under a business model called assets under management, or AUM. They charge you a percentage of the money you have invested with them every year, and in exchange, they manage your investments.
Now, robo-advisors can compete with traditional advisors because their AUM fees are all much lower than traditional advisors. That’s great, but it keeps one fundamental factor in play: the more you invest with them, the more money they make.
Sometimes that might not be in your best interest, so WiseBanyan took it one step further and doesn’t charge you based on the amount you have invested with them. The ETFs they use to build portfolios still have fees – that’s unavoidable, since they’re managed by other companies – but WiseBanyan doesn’t take an additional percentage of your money on top of that.
Nothing. Nada. $0. 0%.
They manage your money for free.
But how do they make money?
Anytime – and I mean anytime – something is offered to you for free, the question in the back of your mind should always be, “But how do you make money?” I don’t care if it’s free investment management or Facebook or that free Starbucks drink on your Gold Card. They’re not just doing it out of the goodness of their hearts: they’re making money somehow.
Luckily, in this particular case, WiseBanyan is doing it entirely on the up and up. They’ve gotten rid of investment fees so that they can entirely focus on doing what’s best for you, and they offer paid services that are there when you need them. Their team of advisors can help you answer questions like, “Am I saving enough for retirement?” or “Is this the most efficient way I could be investing my money to achieve my goals?”
Paying for advice when you need it, and not paying when you don’t? This is my kind of investing.
Those ETF fees? They’re still super low
While yes, there are still fees associated with the exchange-traded funds (ETFs) WiseBanyan uses to build you a diversified, balanced portfolio, here’s what you need to know. Those fees come standard with every robo-advisor, and are set by the company that manages the ETF – so if you see a robo-advisor charging a set fee, like 0.25%, that’s on top of your ETF fees.
WiseBanyan has chosen a list of ETFs with very low management fees, though, so their average portfolio will only cost 0.12% in underlying ETF fees. Trust me when I say, that is bonkers low, especially when they don’t charge you anything on top of that.
So if you’ve been looking for a free place to stash your cash – and watch it grow? WiseBanyan should be on your radar.
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*This piece is meant only to expand awareness of available financial tools and products and should not be considered an official endorsement of the product or its outcomes by GenFKD.