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WiseBanyan Review: Can You Really Invest for Free?

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WiseBanyan allows you to start investing for free. Read my WiseBanyan review to see how you can start investing as little as $1!

Do you think it’s possible to invest for free? The growing robo-advisor WiseBanyan not only allows you to invest for free, but they also manage your investments for you. Many hold back from investing in the stock market because they believe they can’t start investing with little money, they don’t have investing goals or they simply don’t know how to invest.

I speak with readers on a daily basis who deal with all of these concerns, and more. Too often we give into different lies about investing and don’t start. As I’ve written before, that ultimately that holds us back. If you’re in that situation, WiseBanyan wants to help you set and reach goals so that you can see financial success. If you want to start investing and have limited funds or don’t know how to start, this WiseBanyan review will help you see if they’re the right fit for your investing needs.

Features of WiseBanyan

 

WiseBanyan, like Betterment or Wealthfront, is part of the growing robo-advisor space. A newer player on the scene, WiseBanyan has been managing investment portfolios since it opened for business in 2014. The service is fully automated and manages your portfolio based on your specific goals.

When you open an account with WiseBanyan, you select a specific goal (known as Milestones, and covered below) and they customize your portfolio after you select your Milestone and answer a handful of questions. Below are some of the key features of WiseBanyan:

They manage everything for you: Like any other robo-advisor, WiseBanyan manages your portfolio. This is great for a newer investor or someone who simply wants help with their investing. This admittedly may not be a good fit for a DIY investor, but is great for someone who knows they need to start investing but simply needs help.

They follow a sound philosophy: Much like other robo-advisors in the space, WiseBanyan follows very closely to the Modern Portfolio Theory (MPT). They really don’t care what specific investment you hold; rather, they want to make sure you have the right allocation with an eye towards the long-term. As you can see in the below screenshot, they suggest a mix of stocks and bonds – though you can change the allocation if you like.

WiseBanyan

Active rebalancing: Rebalancing your portfolio is a critical aspect of investing. With that in mind, WiseBanyan rebalances your portfolio every time you make a deposit or withdrawal or receive a dividend. According to the WiseBanyan site, “WiseBanyan buys the most under-allocated securities relative to target to get you closer to your target allocation. If you withdraw funds, we’ll first sell the most over-allocated securities relative to target.” They also rebalance if your portfolio moves more than five percent from your target allocation.

Milestones: This is a new feature recently added by WiseBanyan that helps you align your goals with your investing. WiseBanyan currently has four Milestones: Build Wealth, Rainy Day, Retirement and Custom. As you can see from the picture below each one describes the intent. After you answer a few questions they come back with your target allocation – which you can change if you like. I did to make it a little more stock heavy.

WiseBanyan

Solid fund selection: Like other robo-advisors, you won’t invest in individual stocks through WiseBanyan, rather you’ll invest in a selection of low-cost index funds. The WiseBanyan site claims a fund average of .12 percent for an expense ratio, which is tough to beat. They use nine main funds and those are as follows:

Vanguard Total Stock Market – VTI

Vanguard FTSE Developed Markets ETF – VEA

Vanguard FTSE Emerging Markets ETF – VWO

Vanguard Intermediate Term Government Bond Fund – VGIT

Vanguard Short-Term Government Bond Index – VGSH

iShares Investment Grade Corporate Bond ETF – LQD

State Street Global Advisors Barclays Short Term High Yield Bond Index – SJNK

iShares Barclays TIPS Bond Fund – TIP

Vanguard REIT Index Fund – VNQ

Things to Like About WiseBanyan

 

Low minimum deposit: You can open an account with WiseBanyan for as little as $1. I love this as you can start investing with as little as you want. You don’t need thousands of dollars to start investing; you begin with what you have and build from there.

Free management: Thanks to automation WiseBanyan is able to significantly lower cost and that gets passed on to clients. This is great as more of your money works for you and doesn’t line someone else’s pocket. This begs the question of how they make money, which I’ll cover later.

They support fractional shares: Some robo-advisors won’t invest in partial shares, but WiseBanyan does, which means you don’t have money sitting there doing nothing.

No fees: WiseBanyan does not nickel and dime you with fees. While they do charge $75 to transfer out non-retirement accounts and $95 for retirement accounts (which is a common charge) they do not have any hidden fees.

Milestones: Many people struggle aligning their goals with their investing. I love how the Milestones WiseBanyan offers help you be more strategic with your investing.

Drawbacks of WiseBanyan

 

I really like the philosophy behind WiseBanyan, but there are two drawbacks I see. Those are:

Few account types: WiseBanyan currently offers four account types: Individual investment accounts, Roth IRAs, Traditional IRAs and SEP IRAs. This may not be a concern if you’re just starting out investing but would be a drawback to many, especially considering they don’t offer a simple joint brokerage account option. I think a lot of this goes back to their youth as a company so hopefully more account options will come out in the near future. That being said, if you want a simple account then nothing will hold you back at WiseBanyan.

Paid Tax-Loss Harvesting (TLH): Remember how I mentioned that WiseBanyan is free of charge? Well, they make their money through paid add-on services, mainly in TLH, which they call WiseHarvesting. This is a service many other robo-advisors offer free of charge but is the main add-on at WiseBanyan. The charge is relatively minimal at a .25 percent annual charge, which hits your non-retirement account on a monthly basis and is capped at $20 per month. To be clear, this isn’t a required charge, so you can certainly have an account and not run into this charge, but you would encounter it if you were to ever take advantage of the service. It’s also important to keep in mind that not all clients actually need a service like this. If you only have a retirement account through WiseBanyan, or don’t need the additional feature then you simply customize your account not to include the WiseHarvesting feature.

WiseBanyan allows you to start investing for free. Read my WiseBanyan review to see how you can start investing as little as $1!

WiseBanyan Review: Bottom Line

 

Taking a look at WiseBanyan, I believe there’s a lot to like. They basically have no minimum balance requirement, follow a solid investment philosophy and offer management for free. If you’re a new investor or just want some help investing for a specific goal those are all good things to have.

On the flipside, the add-on services aspect and few account types are somewhat concerning. I’m not a fan of either, but if you want a straightforward account I don’t believe that should hold you back from taking a look at investing with WiseBanyan. Open an account with WiseBanyan today to start investing and reach your goals.

 

Why do you think many believe they can’t invest if they don’t have a lot of money? Would you ever consider handing over your investments to an algorithmic based service? What do you do to cut down on fees with your investing?

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more.

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6 Comments

  • Syed says:

    Interesting company. I like how there are many options in the robo advisor field now. I haven’t signed up with one yet, mainly because it’s easy enough to sign up with a brokerage account yourself and do what the robo advisor does in little time. But I can certainly see how this would be a beneficial service for some people.

    • John Schmoll says:

      I’d agree Syed, I like all the options. I wouldn’t go the robo route personally, but I think they’re a great option for those new to investing or have no idea how to manage it.

  • Christopher D says:

    I have an account with WiseBanyan. Simple and effective so far.

  • John excellent review. My concern is that at some point Wise Banyon needs to be profitable on its own and what happens to their fee structure at that point? I say that assuming they are existing based on funding from investors. Also a firm that touts being free as their main attribute is always a bit suspect to me. I’m all for low cost, but sometimes you do get what you pay for.

    • John Schmoll says:

      Thanks Roger. You bring up an excellent point, on several levels. Cheap is, generally speaking, good but I’m a little concerned about the free aspect – they have to make money somehow and what is going to happen when the rubber meets the road?

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